Fortis Could Be Eurozone’s First Major Credit Crunch Victim
Financial group Fortis looks to be headed toward the same fate as many US and UK insurance and banking giants in the past two weeks. The Belgian-Dutch banking and insurance business may be sold to ABN AMRO Dutch banking subsidiary.
The Belgian government will guarantee all retail deposits says a leading minister. Belgian law stipulates only the first 20,000 euros, around £16,000, in bank accounts are insured. Insurance policies here in the UK should be covered by the Financial Services Compensation Scheme.
According to the FSCS, if a life insurance company went bust, the FSCS can “try to arrange continuity of insurance for eligible policyholders by seeking to transfer ongoing policies to another insurance firm”. Policyholders would be protected with a compensation scheme offering 100% protection on the first £2000 and 90% of the remaining value (in a liquidation) of a claim or policy.
The fate of Fortis’s future will soon be known. Last week its shares nearly collapsed falling by as much as one-fifth however back in July Fortis alarmed markets by declaring it had a share issue and cancelled its dividend.
Nearly half of Belgium bank with the group.
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