FACTBOX-Finances at Belgian-Dutch group Fortis
Sept 27 |
Sept 27 (Reuters) - Belgian-Dutch Fortis FOR.BR FOR.AS is the latest European financial group to be in trouble, with shares trading at 15 year-lows amid investors' concerns over its liquidity. [ID:nLR128009]
The following overview details some of the financial issues facing Fortis:
* Fortis is sitting on a funding base of more than 300 billion euros ($439 billion) from its deposits, and with central bank support can obtain short-term financing despite frozen money markets in Europe.
* The main risk to Fortis would be a large-scale withdrawal of deposits, analysts say, which so far has not happened. Withdrawals since the beginning of the year have totalled 3 percent, Fortis said, which translates into about 5 billion euros.
* Fortis, together with Royal Bank of Scotland (RBS.L) and Spain's Santander (SAN.MC) took over Dutch bank ABN AMRO a year ago for more than 70 billion euros ($102 billion) in order to break it up and buy its Dutch operations, but has since struggled to raise financing for its 24 billion euros part of the deal.
* Fortis has taken 2.3 billion euros in post-tax writedowns related to its collateralised debt obligation investments and other assets linked to the souring of mortgages made to risky U.S. borrowers. One key question is whether Fortis will be forced to take further charges on its structured credit portfolio of 41.7 billion euros.
* Fortis shocked investors in June when it announced a 8.3 billion euros solvency plan that would raise funds by withholding dividends, issue equity, real-estate lease-backs, issuance of hybrid capital and divestment of assets. Then-Chief Executive Jean-Paul Votron lost his job as a result.
* On Friday, Sept. 26, Fortis management said that they had already raised 3.1 billion euros of the June solvency plan and that it would expand its divestment plans to as much as 10 billion euros in order to reach the goal.
* At the end of June Fortis reported a core tier 1 equity ratio of 7.4 percent under Basel I guidelines, well above its target. That ratio is expected to dip below 6 percent -- considered a key threshold -- as Fortis digests ABN but recover after it raises funds and integrates the business. Some analysts fear that it could dip lower, depending on how its structured credit portfolio fares.
* Shares in Fortis are now worth 12.3 billion euros, a fifth of their value since the acquisition of ABN and half of what it is paying for the Dutch bank. The shares fell nearly 20 percent on June 26 when Fortis announced its solvency plan and are down 60 percent since then.
* Currently, Fortis is trading a price-book ratio of 0.53, the lowest among Europe's banks. Although many banking valuations have been battered over the past year, most are trading between 1 and 2 times book value. (Reporting by Reed Stevenson)
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