Dutch government nationalises Fortis and ABN Amro

The government of the Netherlands is to take over all Dutch operations of financial services company Fortis.

The Netherlands Central Bank bought Fortis Nederland and Fortis insurances as well as the ABN Amro operations that Fortis acquired a year ago, for 16.8 billion euros.

The move was announced on Friday evening by prime minister Jan Peter Balkenende, finance minister Wouter Bos and central bank president Nout Welling. The nationalisation came after last weekend's bail-out plan. Dutch, Belgian and Luxembourg governments pledged to inject 11.2 billion euros in the multinational company on Sunday. Secret negotiations for the new agreement started on Tuesday and were finalised on Friday.

Fortis had come into "severe solvency problems", Bos said, because consumers had withdrawn their savings and other banks wouldn't loan money to the company.

Wellink said that two banks which are "part of the capillary system of the Dutch economy have been rescued". Fortis and ABN Amro have a 40 percent market share in the small business sector. The three parts of Fortis employ 45,000 people in the Netherlands.

Finance minister Bos said that it is important to stabilise the Dutch banking sector, "but above all for Dutch savers and customers to know their money is safe."

Wellink said the integration of ABN Amro into Fortis will proceed. The merger will offer "substantial benefits", according to the central bank president.

According to the ministry of finance the nationalisation is "a temporary move". Fortis is to be sold once the crisis on the global financial markets has quieted down.