BNP to decide on Fortis’ India biz by January

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Mumbai, Oct 12: French financial services major, BNP Paribas, is likely to decide on the integration of Fortis’ Indian operations with itself by January that includes Dutch Bank ABN Amro’s India asset management business.

This follows BNP Paribas agreeing to acquire Fortis’ business in certain geographies globally. Early this month, BNP Paribas has agreed to acquire Fortis’ Belgium and Luxembourg operations as well as international franchises for an estimated Euro 14.5-billion after the latter failed to survive the global financial turmoil.

If the acquisition goes through, BNP Paribas will have a combined deposit base of around Euro 600-billion and a 75% stake in Fortis Belgium.

“A clear picture will emerge on this matter in the next two-three months...given that BNP Paribas has a controlling stake in Fortis, it is likely to integrate ABN Amro’s mutual funds business here, which is a part of Fortis now,” a source said.

However, chances of BNP Paribas selling a part of the Fortis’ business in some regions to a third party cannot be ruled out if it finds that a more viable option, the source said. When contacted, BNP Paribas officials declined to comment on the matter. If BNP Paribas decides to acquire Fortis’ Indian operations, it may first exit its holding in Chennai-based mutual funds company, Sundaram BNP Paribas, as Sundaram owns a majority stake in the JV.

Since BNP Paribas doesn’t have a majority holding in the mutual funds JV with Sundaram, chances of routing the acquisition through the JV is highly unlikely, the source said. BNP Paribas is presently in the process of securing necessary regulatory and shareholder approvals for the takeover (of Fortis) and the process could take a minimum of 2-3 months to get completed, the source said.

ABN Amro’s India MF business has assets under management of around Rs 9,000-crore as on September 30, a presence in 10 locations and a headcount of around 75. Fortis is present in India through its life insurance JV with IDBI and Federal Bank. A takeover of ABN Amro’s mutual fund business would considerably strengthen BNP Paribas’ presence in the domestic MF space.

A consortium of lenders--Royal Bank of Scotland (RBS), Fortis and Santander took over the operations of ABN Amro last year. According to the agreement, Fortis took over the asset management business of ABN Amro while RBS will acquire the retail and wholesale banking operations.