Ping An to block Fortis asset sale

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By Hu Yuanyuan (China Daily)
Updated: 2009-04-28 08:19

Ping An Insurance (Group) Co, the largest shareholder in the collapsed Belgian-Dutch financial group Fortis, will vote against the sale of Fortis assets to French bank BNP Paribas SA at a shareholders' meeting this week.

"We believe that the dismantlement of Fortis, which was not approved by shareholders, violates corporate governance procedures and destroys shareholder value," China's second-biggest insurer said in a statement on Sunday. "Other credible and viable solutions exist and should be considered, in the interest of all parties."

Fortis Holdings will hold shareholder meetings in Belgium on Tuesday and the Netherlands on Wednesday to vote on the deal to sell most of its former banking businesses in Belgium and Luxembourg to BNP Paribas SA, as well as the transfer of a 25 percent stake in its Belgian insurance unit.

The French bank must secure agreement from both votes this week to move ahead. BNP Paribas Chairman Baudoin Prot has said his institution will withdraw if it is rejected by either meeting.

The second version of the deal was proposed after a shareholders' meeting on Feb 11 rejected a BNP Paribas takeover of Fortis Bank.

According to Wang Xiaogang, a senior insurance analyst with Shanghai-based Orient Securities, as long as Fortis tries to sell its banking unit to BNP Paribas, Ping An will vote against the plan.

"Ping An bought the Fortis stake as they expected to learn from its counterparts on the coordination between banking and insurance business," said Wang. "Meanwhile, the sale of the banking sector will also dampen Fortis's profitability by nearly 80 percent."

"But if the proposal was rejected, it should be good news," Wang added.

Sheng Ruisheng, spokesman for Ping An, told China Daily that Ping An will support proposals that help to maintain Fortis's original business framework, brand value and shareholders' interests.

He said that the principle of a proposal put forward by Mischael Modrikamen, a lawyer representing about 2,300 Fortis shareholders, is constructive.

Under that proposal, the Belgian state would give all of Fortis Bank NV to Fortis Holding in exchange for new shares in Fortis Holding. As a result, Belgium would own 31 percent of Fortis Holding.

Ping An, part-owned by HSBC Holdings plc, holds almost 121 million Fortis shares, or about 5.15 per cent of the outstanding stock with voting rights.

Ping An yesterday reported a fall in first quarter profits after the recent interest rate cuts eroded returns on bond holdings. The company's net income fell 72 percent to 1.99 billion yuan, or 0.27 yuan a share, it said in a statement to the Hong Kong Stock Exchange.

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