Fortis rebels flog a dead cheval

May 12, 2009

REUTERS— Margaret Doyle is a Reuters columnist. The opinions expressed are her own —

Belgians may like a tasty cheval-burger with their frites, but they ought to desist from flogging a dead one. The European Commission has thrown out an attempt to have the sale of Fortis Bank in Belgium to BNP Paribas cancelled, but the rebels are now threatening to take their case to the European Court of Justice.

Rebel Fortis shareholders may have secured useful concessions from the Belgian government in its dismemberment of Fortis, but there is little to be gained from this latest legal foray.

The shareholders haven’t much of a moral case. Fortis was bust last autumn, and would not have survived without the backing of the Dutch, Belgian and Luxembourg governments.

The investors have already arguably received more than they strictly deserve. They obtained a court ruling requiring a shareholder vote on the sale of the Belgian Fortis Bank to BNP, even though they no longer had any economic interest in it.

This forced the Belgian government to sweeten the deal to win their support. Having banked these gains — adding a Belgian insurer to the rump group, and reducing their exposure to dodgy credit — they don’t deserve a further dip.

The Commission is right to reject their appeal that it should stop the deal on the grounds that the whole transaction involves illegal state aid.

Sure, the investors might have preferred it if the Belgians had helped them in a different way — by extending guarantees as it did for Dexia, another Belgian bank.

However, surely state aid is either wrong or it isn’t. It is inconsistent to bleat about state aid because you don’t like a deal, and then passing round the cap for a different kind of handout.
The rebels are now considering their chances with the Court of Justice. They should recognise that their cause is well and truly dead.

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