Fortis Bank Nederland posts record Dutch loss

Fortis Bank Nederland, which contains the bulk of ABN Amro's activities in the Netherlands, reported the biggest-ever Dutch corporate loss of 18.5 billion euros.

The net loss included a 922 million euros charge from the bank's investments with Bernard Madoff's investment business, which he admitted earlier this month was fraudulent.

Belgian-Dutch financial group Fortis, together with Royal Bank of Scotland and Spain's Santander, bought ABN Amro in 2007 for more than 70 billion euros.

The financial group was later broken up along national lines after losing the confidence of investors and depositors having fallen victim to the financial crisis while trying to complete the ABN acquisition.

Dutch central bank (DNB) President Nout Wellink, who had warned in 2007 of the risks involved in taking over a large bank such as ABN, called for an investigation into the ABN takeover deal by parliaments in Britain, Belgium and the Netherlands, Dutch broadcaster NOS cited Wellink as saying.

Governments should carry out a close examination of national supervisors' roles, including DNB, during the takeover, NOS cited Wellink as saying. A DNB spokesman confirmed Wellink talked to NOS but was not able to verify his comments.

Unlisted Fortis Bank Nederland, which contains the Dutch activities of Fortis and ABN, was fully nationalised by the Dutch government for 16.8 billion euros and is now separate from what remains of Fortis in Belgium. The newly combined bank will be run by former Dutch finance minister Gerrit Zalm.

Excluding the write-downs and other charges, Fortis Bank Nederland said in a statement that it had a 2008 operating profit of 604 million euros. The comparable business a year earlier had 1.2 billion euros in profit.

The total net loss, driven mainly by a 17.7 billion euros charge for the ABN write-down, is more than twice that of the loss by KPN in 2001.

Investment losses and a drop-off in income, which came mainly in the second half of 2008, was the main cause for the sharp fall in operating profit, the bank said in a statement.

Still, thanks to the Dutch government refinancing Fortis Bank Nederland's debt after taking it over, the bank now has a tier 1 capital ratio of 11.1 percent under Basel II guidelines, which recommends that banks keeps a capital cushion of 8 percent of risk-weighted assets.

The Dutch government is planning to merge all the activities of the group and sell it off in 2011 or later.

Still unresolved is the on-hold sale of 709 million euros worth of ABN assets to Deutsche Bank, which Fortis had agreed to sell at a loss to comply with European Commission antitrust demands.

The regulator approved the sale, but it was put on hold by Dutch central bank as it worked with the government to nationalise ABN and Fortis's Dutch business.

In Thursday's statement, the bank said that full integration would not start until the sale of the assets is resolved.