Fortis Bank Global Clearing NV

Governments of Belgium, Luxembourg and the Netherlands invest EUR 11.2 billion in Fortis

Brussels / Utrecht, 29 September 2008
Concerted action of the three governments and the respective supervisory
authorities to support Fortis
• Governments of Belgium, Luxembourg and the Netherlands invest EUR 11.2 billion in the respective Fortis bank institutions in each country
• Fortis will sell its interest in ABN AMRO (RFS Holdings)
• Maurice Lippens resigns from the Fortis Board of Directors
• Due to the change in strategy, the deteriorated business environment and the decision to further de-risk the balance sheet, total value adjustments are expected of around EUR 5 billion after tax in the third quarter
• Above measures lead to an estimated Fortis core equity of around EUR 30 billion. This results in a EUR 9.5 billion excess core equity for Fortis and a Bank core equity ratio of above 9% (Basel I) at end of the third quarter 2008. This translates into a total regulatory capital ratio for Fortis Bank of 13%
• The announced sale of the participation in RFS Holdings will trigger an impairment, potentially negatively impacting core equity Fortis and the Governments of Belgium, the Netherlands and Luxembourg announce that they
have entered into an agreement, whereby the Government of Belgium has agreed to invest EUR 4.7 billion in Fortis Bank (Belgium), the Government of the Netherlands has agreed to invest EUR 4.0 billion in Fortis Bank Nederland (Holding) N.V., and the Government of Luxembourg will invest EUR 2.5 billion in Fortis Banque Luxembourg SA.
’The actions taken by the Belgian, Luxembourg and Dutch governments are a sign of confidence in Fortis and of comfort to customers and all other stakeholders alike,’ reacts Fortis CEO elect Filip Dierckx. ‘These actions ensure the financial strength and stability of our company going forward.’
Divestment of ABN AMRO activities
The sale of the stake in RFS Holdings will represent the acquired activities of ABN AMRO, excluding Asset Management (already transferred in the 2nd quarter of 2008). This sale, at a price below the acquisition price of EUR 24 billion will lead to an impairment. This impairment will not impact total regulatory capital. However, a sales price below EUR 12 billion would, for that difference, negatively impact core equity.
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Expected value adjustments in the third quarter
Due to the change in strategy, the deteriorated business environment and the decision to further de-risk the balance sheet, total value adjustments are expected of around EUR 5 billion after tax in the third quarter, related to, among others, the deferred tax assets, goodwill on the separately managed asset managers and the structured credit portfolio.
Within the CDO origination portfolio, the high grade assets are anticipated to be written down to 25% and the mezzanine and warehouse positions to 10%. On average 78% of the total CDO origination portfolio is written down. The remaining net exposure on the CDO origination portfolio is expected to amount to EUR 1.1 billion, subject to approval of the external auditors.
In addition to the impairments on the CDO origination portfolio, further impairments are expected to be taken on the remainder of the structured credit portfolio.
In addition, Fortis will impair EUR 1.2 billion of US deferred tax assets.
Fortis Capital position after the announced measures
All the measures announced will lead to a core equity for Fortis of around EUR 30 billion, EUR 9.5 billion above target. Fortis Bank Core Tier 1 ratio is estimated at above 9% (Basel I), well in excess of regulatory minimum. The total regulatory capital ratio of Fortis Bank under Basel II is estimated to be around 13%.
Governance changes
Maurice Lippens decided to step down from the Fortis Board of Directors. The new Chairman will be recruited from outside the company in consultation with the Belgian government. In addition, the governments of Belgium, the Netherlands and Luxembourg will receive significant board representation in the respective Fortis banks
Structure of Capital injection:
The terms of the investment by the respective governments are as follows:
• the Government of Belgium has agreed to invest EUR 4.7 billion in Fortis Bank NV/SA (Belgium) in exchange for a 49% share in the common equity of this entity
• The Government of the Netherlands invests EUR 4.0 billion in Fortis Bank Nederland (Holding) N.V. in exchange for a 49% ownership in this entity
• The Government of Luxembourg invests EUR 2.5 billion in Fortis Banque Luxembourg SA in the form of a mandatory convertible loan. Next to other rights, Luxembourg will be entitled, upon conversion, to 49% of Fortis Banque Luxembourg. Fortis Bank Nederland (Holding) N.V. and Fortis Banque Luxembourg SA are subsidiaries of Fortis Bank NV/SA.
The capital investment by the Dutch government will be made against the issue by FBN to DNB of a new category of shares to be created through an amendment of the articles of association to such effect. This new category will not be entitled to receive the proceeds of any sale of the stake held by FBN in RFS Holdings B.V., either by way of dividend distribution or otherwise.
Where necessary, regulatory and shareholder approval will be requested.
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Fortis is an international provider of banking and insurance services to personal, business and institutional customers. We deliver a total package of financial products and services through our own high-performance channels and via
intermediaries and other partners. We have a presence in over 50 countries and a dedicated, professional workforce of more than 65,000. More information is available at www.fortis.com.
Press Contacts:
Brussels:
32 (0)2 565 35 84 Utrecht: +31 (0)30 226 32 19
Investor Relations:
Brussels:
32 (0)2 565 53 78 Utrecht: +31 (0)30 226 65 66

Fortis reports strong progress in the integration of ABN AMRO

Timetable, synergies and integration process fully on track
At its Investor Day in Brussels today, Fortis will reconfirm the timetable that will lead to the full integration of the businesses it acquired from ABN AMRO in 2007. It will also provide further details on expected synergies, which are now confirmed at EUR 1.3 billion by the end of 2010, as previously announced.

“We are just seven months into the process and have already made excellent progress on all fronts. We have hit each of the key milestones for this process, and even at this very early stage our customers are beginning to see the first benefits,” confirms Fortis CEO Jean-Paul Votron. “We acquired high quality businesses with a recurrent and predictable earnings stream. These businesses fit our strategic profile, allowing us to build on existing strengths. We are growing in markets that enjoy attractive economic and commercial fundamentals. Customers are already experiencing the benefits of this transaction, for instance in the joint rollout of new investment products. The intention to take full control of ABN AMRO’s insurance activities, as announced on 20 May 2008, fits Fortis’s ambition to fully leverage its bancassurance skills to the ABN AMRO client base.”


Integration process on track and timetable reconfirmed

Fortis has decided to implement its operating model, leveraging ABN AMRO’s best practices, and has nominated the future leadership teams to take the enlarged group through the integration period and beyond. The demerger of ABN AMRO Asset Management was fast-tracked and the activities were transferred to Fortis on 1 April 2008.

The legal demerger of the remaining activities will continue in a phased approach over the next two years until the integration is finalised, which is expected to be by the end of 2010. The Private Banking activities outside the Netherlands, Factoring, Leasing, Cards and Groenbank are expected to be transferred as of the fourth quarter of 2008. The remaining Dutch activities, including Private Banking, are expected to be transferred as of the fourth quarter of 2009. The divestment of part of the Dutch commercial banking activities (EC remedy) is on track and expected to be completed before the year’s end.

The separation and integration of the activities involves a large scale programme of IT and operations projects. However, clear IT architecture choices and the leveraging of existing capabilities allow for an orderly and rapid process with comparatively low risk, resulting in a relatively smooth integration. In doing so, Fortis can build on its extensive experience of acquiring and integrating companies. Resources have been allocated in such a way that the resources for ongoing business are mostly untouched.


Synergies and integration costs detailed and confirmed

Total synergies of EUR 1.3 billion, to be realised by the end of 2010, and related integration costs of EUR 1.5 billion, are confirmed today. The synergies are in line with the update given in September 2007. Total cost synergies are expected to be EUR 1.1 billion, or 83% of total synergies, and the revenue synergies targeted are EUR 0.2 billion, or 17% of total synergies. As for the timing, 26% of the synergies are expected to be realised in 2008, 55% in 2009 and 100% in 2010. Based upon the latest assessment, additional synergies may be realised as from 2011 onwards.

Customer Benefits

Some of the best expertise and funds from both companies are already available to both retail and institutional investors. For instance, the current Fortis NITSH II transaction is offered through the retail network of both organisations. The customer benefits and improvements in service will continue to accelerate over the coming two to three years as the integration plans progress.

“This acquisition is transforming Fortis into one of Europe’s most dynamic and sustainable financial services brands,’ concludes Jean-Paul Votron. ‘We are creating long-term value for our shareholders, career prospects for our staff, and a leading competitor in the markets we operate in. We’re committed to further solidifying our leadership position in the Benelux, and internationally.”


All presentations can be downloaded from and viewed at www.fortis.com on a live video webcast. Further details are provided below.


Investor Day – 22 May, 10.00 CET (09.00 UK time)

www.fortis.com

When dialling in by phone (listen only): Participants should mention 949005#
44 (0)20 7784 1022 (United Kingdom)
1 212 999 6646 (US)
+ 32 (0)2 789 8730 (Belgium)
31 (0)20 794 7886 (Netherlands)


Fortis is an international provider of banking and insurance services to personal, business and institutional customers. We deliver a total package of financial products and services through our own high-performance channels and via intermediaries and other partners. Fortis ranks among Europe’s top 20 financial institutions, with a market capitalisation of EUR 38.5 billion (30/04/2008). Together with ABN AMRO, we have a presence in over 50 countries and a dedicated, professional workforce of more than 85,000. All this makes us a leader in financial services in Europe, a top 3 private banker and a top tier asset manager. More information is available at www.fortis.com.

Press Offices:






Brussels:

32 (0)2 565 35 84

Utrecht:

31 (0)30 226 32 19
Investor Relations:






Brussels:

32 (0)2 565 53 78

Utrecht:

+31 (0)30 226 65 66

Fortis first quarter net profit of EUR 808 million driven by resilient operational performance

Despite challenging markets continued growth in income supported by strict cost management

# Sustained organic operational growth, especially in banking, and strict cost management result in a first quarter net profit of EUR 808 million, including EUR 380 million net of tax impact of the credit market turmoil.

# Banking
- First quarter net profit of EUR 721 million, including EUR 231 million of after-tax impairments on structured credit portfolio
- Income growth of 17% year-on-year driven by higher income from treasury and financial markets as well as strong underlying growth in net interest income in all banking businesses
- Strict cost containment resulted in a 2% increase in expenses and an improvement of the efficiency ratio
- Credit loss ratio of 12 basis points, excluding impairments on the structured credit portfolio, reflecting continued strong credit quality of loan portfolio
- Asset Management and Private Banking saw a net inflow of EUR 2.6 billion in the first quarter
- Good underlying pro forma net profit of acquired ABN AMRO activities of EUR 319 million
- Well on track with the integration of ABN AMRO, Asset Management transferred as per 1 April 2008

# Insurance
- First quarter net profit of EUR 219 million, including EUR 149 million of after tax impact of the credit market turmoil
- Life gross inflow up 5%, compared with a very strong first quarter 2007, to EUR 4.0 billion
- Non-Life gross written premiums advanced 3% to EUR 1.9 billion driven by strong growth in Belgium and the Netherlands
- Tight cost control in all countries resulted in a 2% increase in operating costs, fully related to the inclusion of Fortis Insurance Company Asia in Hong Kong
- Combined ratio of 96.6% in Non-Life due to improved efficiency and focus on profitable underwriting

# Net profit doubled compared to the fourth quarter which was heavily impacted by the write-downs on the structured credit portfolio, only partly offset by the gain on the sale of CaiFor
- Further growth in revenues quarter-on-quarter while costs were significantly lower as a result of a strict management, especially visible in non-staff related expenses