Netherlands nationalizes Dutch Fortis units

By Ingrid Melander and Niclas Mika

BRUSSELS/AMSTERDAM (Reuters) - The Netherlands nationalized the Dutch banking and insurance activities of Fortis (FOR.BR)(FOR.AS) on Friday after the troubled financial services company hit an acute cash crunch.

Dutch Finance Minister Wouter Bos said the second state rescue of the Belgian-Dutch group in less than a week was made necessary by "increasing liquidity problems in the banking activities."

The transaction, effectively breaking up the cross-border group along national lines, is worth 16.8 billion euros ($23.3 billion) and includes Fortis's interest in ABN AMRO, the Dutch bank it bought in a consortium with Royal Bank of Scotland Plc (RBS.L) and Banco Santander SA (SAN.MC) last year.

RBS said cost savings and revenue benefit targets from its purchase of ABN AMRO assets remained unaffected.

Belgian Prime Minister Yves Leterme said the decision was "aimed at maintaining the durable solvency" of Fortis, which the Belgian, Dutch and Luxembourg governments rescued last Sunday with an emergency 11.2 billion euro capital injection.

Leterme told the Belgian Senate on Thursday the country's banks were not yet out of the danger zone.

In a VRT television interview on Friday, he said Fortis' market capitalization had fallen and the government was watching the situation at Fortis and other Belgian banks "hour by hour."

The decision came on the eve of a Paris meeting of leaders of Europe's four major powers with the chiefs of the European Commission, the European Central Bank and euro zone finance ministers to discuss a response to the global financial crisis.