Fortis' Dutch operations nationalised

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Amsterdam, October 4:: The Dutch Government has said it will buy the operations of Fortis NV in the Netherlands for USD 23.2 billion and nationalise them, after a previous bailout failed and the troubled bank teetered on the edge of insolvency.

Finance Minister Wouter Bos said the deal, which effectively splits Fortis in two along national lines, would give the Belgian-controlled part of the company cash it needs badly to survive.

Bos said that clients had been withdrawing money and other banks were refusing to lend to Fortis because troubles "hidden" in its Belgian operations were becoming apparent.

The deal safeguards the Dutch operations "from the danger of infection from the part that's less healthy," Bos said at a press conference in The Hague.

His Belgian counterpart Didier Reynders said in Brussels that Belgium would continue to "guarantee the solvability and the liquidity" of the remaining operations.

Fortis, once one of Europe's largest financial companies, has been in escalating trouble since it agreed to purchase the Dutch banking operations of ABN Amro last year for USD 33 billion as part of a larger deal that was the largest takeover in banking history.

Bos said the deal was negotiated with Belgian officials and Fortis this week as the company showed signs of "really large liquidity problems" despite a USD 15.5 billion bailout package announced on Sunday.