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REUTERS

Insurer Ageas urged to halt dividends until Fortis legal claims settled

August 5, 2014 - 9:18am


(Reuters) — A lawyer for shareholders seeking compensation over the 2008 bailout and breakup of Dutch-Belgian lender Fortis Bank S.A./N.V. urged the succeeding company, Ageas S.A./N.V., on Tuesday to suspend dividend payments until legal claims are settled.

FortisEffect, which represents former investors, won a legal battle last week when a Dutch court ruled that Fortis had misled shareholders after a first rescue in September 2008 and should pay them compensation.

Insurer Ageas has since said it will set aside €130 million ($174.6 million) for possible payments while mounting an appeal.

Adriaan de Gier, the lawyer acting for FortisEffect, told Reuters that more than 12,000 former shareholders had registered with the claims foundation and that the required compensation was likely to be more than €1 billion ($1.34 billion).

In a letter to Ageas, Mr. de Gier said Ageas wished to make periodic dividend payments to shareholders but that such payments came at the cost of his clients' chances of securing damages.

Mr. de Gier urged Ageas to stop any existing or future dividend payments or other similar action, such as buying back its own shares.

Ageas declined to comment on Mr. de Gier's request.

The group will report first-half results on Wednesday, and some analysts have speculated that it could announce a new share buy-back program given its strong cash and solvency position.

Fortis, once one of Europe's largest banks, almost collapsed after paying a top-of-the-market €24 billion ($32.23 billion) for the Dutch operations of ABN AMRO Holding N.V. just as the credit crunch struck in 2007.

It received an €11.2 billion ($15.04 billion) capital injection in September 2008, but that failed to calm markets.

A week later it was split up. The Dutch nationalized Fortis' activities there, while France's BNP Paribas bought a majority in Fortis' banking operations in Belgium.

Ageas, the Belgium-based insurance business, is the legal successor.

 



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