THE HAGUE, Oct 4: The Netherlands government nationalised the Dutch activities of embattled Belgian-Dutch banking group Fortis with a euro 16.8 billion lifeline to help ease pressure on the financial system.

The $23.5 billion deal sees the government taking control of Fortis’ Dutch banking and insurance activities as well as its share in Dutch bank ABN Amro.

“The government of the Netherlands is now the 100 per cent owner of Fortis’ Dutch activities,” Dutch Finance Minister Wouter Bos told reporters in The Hague.

“Important financial activities are being conserved for the Netherlands but above all, bank clients can rest assured knowing that their money is in safe hands.” All Fortis’ Dutch savings accounts, its mortgage portfolio and credits have been transferred to the state and will remain under supervision of the Dutch central bank.

There would no change in operational management.

Bos said there would also be no change for account holders, creditors or some 45,000 employees.

“This offers a strong guarantee to all involved with these institutions and for the stability of the Dutch financial system,” added a ministry statement.

The measure was a temporary one, it said. “Once calm returns to the financial system, the institutions will be privatised.”

In Brussels, Belgian Prime Minister Yves Leterme said the decision followed negotiations on Thursday night between the two governments and that of Luxembourg.

On Sunday, Belgium, the Netherlands and Luxembourg announced euro 11.2 billion plan to partly nationalise Fortis in a three-country bid to prevent the US-driven financial crisis from claiming another victim in Europe.

Under that agreement, the three Benelux countries got 49 per cent stakes in the banking activities of the firm in each country.

It would have cost the Dutch government four billion euros, less than a quarter of the latest acquisition.

Fortis’ woes have been blamed party on its buying into one-time rival ABN Amro in October last year.

It acquired ABN Amro with two partners, Royal Bank of Scotland and Spanish bank Santander, last year for euro 71 billion, of which it contributed euro 24 billion.

The world’s biggest banking takeover occurred just months before the US subprime home loan crisis began claiming a series of banks and finance groups, among them some of the biggest names in the business such as Lehman Brothers.

At the time it launched the bid for ABN Amro last April, Fortis’ shares were worth 36 euros. The stock, which has shed nearly 70 per cent since the beginning of the year, closed on Friday down 0.79 per cent in Brussels at 5.42 euros before the latest move was announced.

The Dutch share of ABN Amro, for which no buyer has been found, is currently estimated to be worth 10 billion euros.

Dutch banking giant ING on Monday ruled out making an offer to buy ABN Amro as its own share price took a knock on rumours that it had shown an interest in purchasing Fortis’ share.

Dutch media have suggested the reworking of the Fortis deal was due to the Netherlands government’s displeasure with its impact on ABN Amro, which Fortis was directed to sell.

Belgian Finance Minister Didier Reynders said in Brussels that the part of the company not being bought by the Netherlands would be primarily held in a Belgian and Luxembourg group. —AFP