Moody's puts Fortis on review

Moody's Investors Service said it placed the A1 long-term debt and deposit ratings of Fortis Bank SA/NV and Fortis Bank Luxembourg (now renamed BGL) on review with direction uncertain. The ratings had previously been on review for possible upgrade.

The short-term debt and deposit ratings of both entities were affirmed at Prime-1.

The agency also placed the ratings of Fortis NV and its related entities under review for possible downgrade, including the Baa2 long-term issuer rating; Fortis Finance NV's Baa2 backed senior unsecured debt rating, Baa3 backed subordinated debt rating and Prime-2 backed commercial paper rating; Fortis Hybrid Financing's Ba1 backed junior subordinated debt and backed preferred stock debt ratings; and Fortis Bank's Ba1 Cashes.

The reviews follow the decision of Fortis' shareholders to reject the proposed sale of 50% plus one share of Fortis Bank to the Belgian State and the subsequent acquisition by BNP Paribas (Aa1/B/negative) of Fortis Bank and BGL. The agency said that as a result of this vote, the current stake of 99.93% in Fortis Bank held by the Belgian State could be contested even though the government effectively assumed ownership in October.

Moody's said the review reflects the uncertainties surrounding the future ownership of the banks. While the likelihood of Fortis Bank being acquired by BNPP has now decreased, completion of the transaction remains a possibility and, the agency said, would be a positive development. Moody's is concerned, however, that a further delay in completing the transaction or even a termination thereof could have negative implications for the bank's franchise.

The review for possible downgrade of the Fortis group of companies reflects the new uncertainties on the future of the group resulting from this vote, considerable uncertainties in respect of the extent of any support from BNP Paribas to Fortis and the increased risk profile of the group, Moody's said.

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