Fortis (Euronext: FORA, Euronext: FORB, LuxSE: FOR) is a company that was active in banking, insurance, and investment management. In 2007 it was the 20th largest business in the world by revenue, but most of the company was sold in parts in 2008, with only insurance activities remaining.
The Benelux countries were Fortis' home base and its strength. Fortis' banking operations included network (retail), commercial, and merchant banking; its insurance products included life, health, and property/casualty lines. Products were sold through independent agents and brokers, financial planners, and through Fortis Bank branches. It is listed on the Euronext Brussels, Euronext Amsterdam, and Luxembourg stock exchanges.
History
Fortis came into being in 1990, as the result of a merger of AMEV, a large Dutch insurer and VSB, a Dutch Banking Group; these were joined later that same year by AG, a Belgian insurer.
In addition to acquiring a retail bank in Poland, Fortis acquired 89.3% of the shares of Turkey's fifth largest privately owned bank Dışbank from Doğan Group on 11 April 2005. Considering the outstanding public shares, the total bid is approximately €985 million. From 28 November 2005 on, the network of 173 branches of Dışbank were rebranded Fortis.
As of 2006, its profits were €4.56 billion according to Forbes magazine with a market value of €45.74 billion.
Fortis acquired Dryden Wealth Management from Prudential Financial on 4 October 2005.
Fortis Insurance UK has its own in-house worldwide medical emergency service, Assistance International . Fortis is the shirt sponsor of the R.S.C. Anderlecht and Feyenoord Rotterdam football clubs. Fortis is also the main sponsor of the Turkish Football Cup and the Luxembourg National Division.
Acquisitions
- MeesPierson N.V. was acquired in 1996 from ABN AMRO, giving Fortis an instant presence in investment banking
- Algemene Spaar- en Lijfrentekas / Caisse Générale d'Epargne et de Retraite (ASLK/CGER) acquired in 1999 by Fortis
- Générale de Banque / General Bank (Generale Bank/Générale de Banque) was acquired in 1999 by Fortis
- Krediet aan de Nijverheid / Crédit à l'Industrie, (now called Fintro)
- In early 2005, Fortis put Belgolaise, its sub-saharan Africa subsidiary, up for sale. Failing to find a suitable buyer, Fortis ceased all operations after October 23, 2006.
- In October 2006, Fortis signed a joint venture with An Post (Irish postal service) to provide financial related services through the An Post network of offices.
- In October 2006, Fortis acquired 100% of Polish retail bank, Dominet , which is full service retail bank with 806 employees and over 125 branches and franchises and is also in strong position in the car finance segment such as car loans.
- Pacific Century Insurance Holdings was acquired in 2007, now called Fortis Insurance Company (Asia) Limited
- On October 8, 2007, a consortium of three European banks, Royal Bank of Scotland Group, Fortis and Banco Santander, announced the acquisition of ABN AMRO. After the split, Fortis would get the retail and business activities in the Benelux and the international investment company; integration of the retail activities into Fortis Bank to be subject to permission of De Nederlandsche Bank (DNB); the business activities to be re-sold because of EU-regulations on market share.
- On October 3, 2008, an announcement was made that the Dutch Government had agreed with the Belgian Government to buy Fortis Bank Nederland, Fortis Verzekeringen Nederland and Fortis Corporate Insurance
- On October 5, 2008, the Belgian Government announced to have bought Fortis Bank Belgium, and to have re-sold 75% of it to BNP Paribas, which also bought Fortis Insurance Belgium. The Government of Luxembourg holds a third part of Fortis Banque Luxembourg. The actual Fortis Group itself remained as a virtual empty shell, holding only Fortis Insurance International, which holds insurances in Europe and Asia.
- On December 12, 2008, a court decision (see below) made the sales of October 3, 5 and 6 contingent on shareholder approval (at the latest on February 12). Until that time, the Dutch government holds the parts it bought, Fortis Bank is the property of the Belgium government, while Fortis Insurance Belgium remains with Fortis Group (together with Fortis Insurance International). On February 11 the shareholders declined to approve the sales, making the sales illegitimate; actual ownership of the various parts may well become a matter of further negotiations and/or litigation. A re-negotiation led to new deal, subject to shareholder approval (meeting at April 8 and 9).
ABN AMRO takeover
Fortis was part of the consortium with Royal Bank of Scotland Group (RBS) and Banco Santander, that announced on October 8, 2007, that an offer for 86% of outstanding ABN AMRO stock had been accepted, making way for the largest ever bank takeover in history. On November 1, 2007, an extraordinary shareholder meeting was held to change ABN AMRO's management. Mark Fisher from RBS took over as CEO. At that meeting the consortium stated that 97% of all shares were in their hands.
Fortis would use the ABN AMRO brand name for Fortis's retail banking operations in the Netherlands.
The take-over price was felt to be on the high side (on February 26, 2009, the Royal Bank of Scotland announced to book a loss of over £16 billion on its share in ABN-AMRO).
Issuing extra shares
To finance the purchase Fortis issued extra shares, available to the existing shareholders at a discount, making for the special bargain price of €15 per share.
However, by June 2008, Fortis announced that an international financial crisis was coming and that it needed to fortify its capital by raising an additional € 8.3 billion. An extra 200 million shares were issued at €10, at that time the price of the share, but in the bigger view of things still a bargain; these were placed the same day with large investors.
A major worry was the upcoming future write-off on ABN-AMRO: the price paid included a huge amount for intangibles that could not be put on the balance sheet. The write-off would only occur if and when ABN-AMRO would cease to be an independent bank (on the integration of the retail activities of ABN-AMRO into Fortis), but Fortis would then be in danger of no longer meeting the standards for capital required of banks. Another sore point was the loss on the sale of the business activities; as the sale was forced (because EU regulations) this was not effected at full value: a €300 million loss was reported on the sale. However, it later became known that although Lippens, the chairman of the Supervisory Board of Fortis had claimed to have moved heaven and earth at the EU (only stopping short of taking the EU to court) to get an extension of the time limit so as to gain bargaining space (and a better price) it had not actually applied for an extension. Commissioner Kroes reported there had been no contact whatsoever. Lippens explained that it had been merely a figure of speech.
Share value
The raising of the additional €8.3 billion was effected partly by eliminating the year's dividend, saving €1.5 billion. However, CEO Jean Votron previously had explicitly and repeatedly promised that the dividend would be paid out untouched. This dividend had for decades been one the main selling-points of the Fortis share, which was as safe and reliable an investment as a bank. Eliminating it dismayed the shareholders, and share value dropped from above €12 to just over €10 on June 26 (reducing the value of the company by over €4 billion), followed by a further decline.
In an analysis of December 12, 2008 (six months after the events), Het Financieele Dagblad describes that in drawing up the plan, Fortis had disregarded the effects on the shareholders. When approached, the British and American shareholders were surprised that Fortis needed more money so soon after the earlier share issue: they refused to buy more, feeling that Fortis had proved unreliable. Only some rather unusual shareholders, the Dutch ABP, the Russian Millennium , the Libian LIA and the Chinese Ping An were prepared to buy anew, but demanded a 25% discount and the assurance that further measures were taken. The Belgian shareholders (holding a total of 15% of outstanding shares) were neglected and heard of the plan only after it had been announced. Many of these had contracted loans to pay for the earlier share issue and were counting on the dividend to pay off these loans. They were furious to be surprised. That, by the time the announcement was made that the shares had been placed with large investors at a share price of €10, the share price had actually dropped to €10, negating the discount obtained, was co-incidence
On July 11, 2008, the CEO of Fortis, Jean Votron, stepped down (reports conflict as to the position of Lippens who was reported to be pressured to step down, but refusing or offering to step down but yielding graciously to appeals to stay). The total value of Fortis, as reflected by share value, was at that time a third of what it had been before the acquisition, and just under the value it had paid for ABN Amro's Benelux activities alone. Share price continued to waver below €10. Votron was succeeded as CEO by Herman Verwilst, who after a few weeks h
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