Montageschema fortis

 

FORTIS

00.01.24.00

It’s now a few months since Fortis was dismantled. A few members of the top management wanted to look back on the past period.

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Herman Verwilst is 61 and came to Fortis via the ASLK. He was chairman of the management     committee from ’98 and CEO of Fortis between July and September of last year.

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Gilbert Mittler is 59. He has been with Fortis for twenty years. In 2000, he became CFO, or financial director of the Fortis Group.

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Karel De Boeck is also 59. He began his career in banking at the Generale Bank. He has been a member of the management committee at Fortis since 2000. At present, he is senior executive of the Fortis holding.

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Jozef De Mey is 65. He too has been with Fortis for nearly twenty years. For years, he ran the insurance branch of Fortis and is now chairman of the board.

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We tried, unsuccessfully, to get Maurice Lippens to agree to an interview. He remained adamant in his non-cooperation via mail, telephone and even text message.

 

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In the early eighties, a young titled man in his forties joined the AG insurance company in Brussels. His name was Maurice Lippens. A lawyer by profession, as the nephew of one of the company directors, he was parachuted into the company. He is a descendant of the noble family Lippens and originally from Moerbeke in East Flanders,  The Lippens family made its fortune in the sugar industry after which it moved to the borough of Knokke on the Belgian coast. Mayors, governors and ministers make up the ranks of the family. The young Maurice had hardly made a name for himself before arriving at AG.

00.03.14.00

CROES Maurice Lippens...

 

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Valere Croes was at that time general manager at AG, and for many years would be the right hand of Lippens. Croes remembers the fresh approach of the young member of the board.

 

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CROES “Dat wil zeggen...

 

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AG, or Assurances Générales, is a traditional insurance company, with strong links to the French-speaking financial establishment. AG is roughly as old as Belgium, and was in need of a new look.

 

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DENDOOVEN: Lippens toen...

 

00.05.00.00

It is in 1988 that Maurice Lippens’s name first hits the headlines. The Generale Maatschappij van België, Belgium’s most important industrial holding, with capital in dozens of major Belgian companies, is under threat of being taken over by the Italian entrepreneur, Carlo De Benedetti. Maurice Lippens becomes involved. The Generale Maatschappij is the major shareholder of AG and AG is in danger of falling, indirectly, into Italian hands.

 

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LIPPENS Mr De Benedetti ...

 

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However, Lippens organises a defensive strategy with the French group, SUEZ, and together they manage to ward off De Benedetti’s frontal attack.

The Generale Maatschappij is saved and from that moment on, Maurice Lippens becomes a force to be reckoned with in the Belgian financial world.

 

00.06.01.00

LIPPENS Ik geloof…

 

00.06.09.00

At that moment, the Fortis story still has to begin.

 

The 90s are just around the corner. The banking sector is nervous. Numerous mergers and takeovers are already on the horizon in the unified European market. Major European banks will be created. It’s a case of eat or be eaten.

In 1990, Lippens merges his AG with the Dutch insurer, AMEV. It’s the first transnational merger in Europe. Fortis is born. A good deal for whoever had put their money in AG, so says Lippens.

 

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LIPPENS iemand die in AG investeerde...

 

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Lippens wants solid shareholders on whom he can rely to expand his company. A few of Belgium’s wealthy families allow themselves to be won over to invest their private fortunes in Fortis.

Frank Arts for instance. He is doctor Paul Janssen’s brother-in-law. He had managed Janssen Pharmaceuticals pension fund in the eighties and since then the private fortune of the Janssen family.

Together with a few other families, Frank Arts sets up the investment group, Asfalés.

 

00.07.24.00

ARTS Asfales, mijn echtgenote........

 

00.07.37.15

Frank Arts will also be a director of Fortis for 9 years. Luc Bertrand, CEO of the Bel-20 Holding, Ackermans Van Haaren, also invests in Fortis via Asphales.

 

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BERTRAND: Ik denk dat wij...

 

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In a little less then ten years, Fortis was to grow into the biggest company in Belgium.

In 1993, Lippens lays his hands on half of the savings bank, ASLK. It is the first step in a long series of takeovers. In ‘95 Fortis takes over the NMKN, also known as the Blauwe Fabriekje, as well as the Dutch private banker, MeesPierson.

In 1998 he turns his sights on the Generale Bank. It is the last major Belgian bank on the market. The Generale Bank would be a real coup for Lippens and his company would immediately become the biggest comprehensive financial service provider in Belgium. He has excellent contacts with the owners, the Generale Maatschappij and Suez, whom he had helped ten years ago in the battle against De Benedetti.

Lippens makes an offer for the Generale Bank. Just when he looks to have made the deal of a lifetime, two Dutchmen manage to put a spoke in his wheel. Peter-Jan Kalff and Rijkman Groenink, two senior executives of the Dutch bank, ABN AMRO, come to Brussels with a higher bid.

 

Fragment hollanders    deal

 

00.09.16.00

CROES Wie doet een tegenbod? .........

 

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Fortis wins through, but ABN AMRO had cost Lippens a lot of money.

 

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DENDOOVEN

 

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CROES 110 miljard...

 

00.10.07.00

At the end of the nineties, Fortis is the largest company in Belgium with 65,000 employees. Share prices hit the ceiling. Maurice Lippens is now one of the most important figures in the Belgian financial world. Lippens was already titled when in 1999 he’s made a count.

 

00.10.26.00

LIPPENS  Je hebt fotografen....

 

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In the first years following 2000 a lot of energy is put into integrating the Fortis group. Countless bank branches are closed followed by redundancies. The growth stagnates, the share price drops dramatically. Lippens starts looking for a new CEO.

 

00.11.07.00

DENDOOVEN Vervolgens zocht Lippens...

 

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The new CEO is Jean-Paul Votron. Head-hunted from Citibank. Votron has to breathe new life into the Fortis group

 

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VERWILST Hij heeft naar fortis....

 

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DENDOOVEN Hij kon een boodschap...

 

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And Votron is successful in his mission. The profit figures explode, the share price increases dramatically once again… but at the same time, things start to change within Fortis.

 

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DEMEY  Wel, ik bedoel, in de jaren 90...

 

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VERWILST  Dat betekent dat...

 

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Fortis has to look for new products to be able to continue to reach that high yield.

 

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DEMEY  Wat men dan gaat zoeken...

 

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In 2005, Fortis gets wind of new high yield products. They are American investment products with a very high return, the famous CDOs, subprime mortgages. These low quality mortgage loans are repackaged into complex financial products and then resold all over the world.

 

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VERWILST  Ik denk dat in de activiteit ...

 

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Fortis invests billions in buying these products. And in 2006, Fortis decides to produce them itself.

 

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VERWILST  Wij hadden waarschijnlijk...

 

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And in 2006, Fortis actually buys a small team from the French bank, Société Générale,  a team of some twenty-odd financial engineers, specialised in the production of CDOs. The team is to be known as Fortis USA.

However, Fortis has come rather late to the game to launch itself into the CDO story.

 

00.16.14.00

DE BOECK Dat was niet met ...

 

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In the same period, Rabobank, another major bank of the Benelux, also hears about the American products. 

 

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BRUGGINCK De eerste persoonlijke ....

 

00.17.13.00

In contrast to Fortis, Bert Brugginck, the senior financial executive of Rabobank, decides to distance himself from the CDOs.

 

00.17.24.00

BRUGGINCK we zijn toen actief...

 

00.17.39.00

In 2007 the Fortis share price reaches record heights. In March of that year Lippens receives a visit from Sir Fred Goodwin, the chief executive of the Royal Bank of Scotland. It’s a crucial moment in the Fortis story.

 

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Goodwin asks Lippens if he is interested taking over the Dutch ABN AMRO bank together with the Royal Bank of Scotland and the Spanish bank, Santander. Both the Royal Bank of Scotland and Santander belong to the absolute top in Europe’s banking world.

 

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DE BOECK Ge kunt u de vraag stellen...

 

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Fortis agrees. It joins the consortium with Royal Bank of Scotland and Santander to buy ABN AMRO, to cut it up in three parts and divide it among themselves.

 

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DENDOOVEN Wel kijk, het is al...

 

00.18.56.00

Lippens sees his chance to get his revenge… however, Fortis has to put 24 billion euro on the table… which is roughly 50% of its own quoted value.

 

00.19.07.00

DENDOOVEN. De maatschappij moet...

 

00.19.19.00

According to the management it has absolutely nothing to do with revenge, it’s simply a unique opportunity. In a flash, Fortis could become the biggest bank in Holland. Moreover, Fortis would be buying the secure parts of ABN AMRO, namely the branch offices, the asset management and the insurance side. 

 

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DE MEY Dus dat betekent...

 

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And yet the take-over of ABN AMRO was to prove one bridge too far for Fortis.

 

 

00.20.04.00

BERTRAND De overname is gebeurd...

 

00.20.26.00

And sure enough, the first clouds became visible on the horizon. In July 2007, the American ratings agencies, such as Moodys or Fitch, drastically lower the values of the CDOs and subprimes. In Augustus 2007 alarm bells start to ring in Europe. Panic suddenly breaks out, banks stop lending to one another and the European Central Bank is forced to pump billions into the banking system.

 

00.21.10.00

BRUGGINK ik kan me nog ...

 

00.21.35.00

However, at Fortis optimism reigns. In the same week in the beginning of Augustus 2007, the takeover of ABN AMRO is submitted to the shareholders. They endorse the decision with 95 % of the votes. The shareholders agree that 13.4 billion new shares should be issued to create new capital to be able to buy ABN AMRO.

 

00.22.02.00

LIPPENS Our shareholders are great….

 

AANDEELHOUDER Al ‘tgeen graaf Lippens...

 

00.22.12.00

And yet alarm bells start ringing among some of the Fortis shareholders when they hear that the new shares will only cost 15 euros.

 

00.22.23.00

ARTS  In juli, waren...

 

00.22.55.00

In the same month, at the end of Augustus, a document is placed on the senior Fortis management’s table. The French-speaking newspaper, Le Soir, publishes the document one year later.

 

00.23.04.00

GERARD Ce document montre…

 

MITTLER  Wat vertelt ge aan de markt? ....

 

00.24.42.00

Fortis remains vague about the possible losses. The increase in capital comes on 21 September.

 

00.24.52.00

GERARD On annonce au moment….

 

ARTS Zo misleid worden...

 

MITTLER Luister, je houdt geen....

 

00.25.56.00

In October the increase in capital is successfully completed. In spite of negative rumours, Frank Arts once again invests million of euros in Fortis.

 

ARTS  Aan ons werd gezegd...

 

00.26.32.00

The end of 2007 sees the start of the total collapse worldwide of the whole CDO house of cards. Wherever you turn, major banks announce huge losses. Fortis is no exception.

 

00.26.48.00

GERARD En puis effectivement, …

 

MITTLER Eind januari komen ...

 

00.27.58.00

The Fortis management remain optimistic. After all, there was a 4 billion euro profit in 2007, it says. The integration of ABN AMRO is running smoothly. The future is looking good.

 

00.28.22.00

However, at the same time the investment bank, Bear Stearns, on Wall Street collapses. The bank had too many subprime mortgages and suddenly was unable to borrow from other banks. In just a few days Bear Stearns is finished. JP Morgan takes over the bank for a song. Peace returns, for the time being anyway…

 

00.28.44.00

MITTLER  We zien dat maart-april-mei…

 

00.28.55.00

However, the management realises only too well that there’s a storm brewing. And there’s an additional problem. Under Europe’s regulations, Fortis, has to resell a part of ABN AMRO in July. Fortis will book a loss on this sale of nearly a billion euros. To make good that loss and to build a buffer against the storm that’s brewing, Fortis decides to raise capital again although it had said that this wouldn’t be necessary.

 

LIPPENS …………

 

00.29.39.00

Moreover, they decide to cancel the interim dividend and to sell other activities. 

 

VERWILST Dat was het plan...

 

Fortis share price collapses.

 

JOURNAAL-stuk:

 

MITTLER. Op die fameuze dag...

 

VERWILST  En je kan rustig zeggen...

 

NEWS

 

00.30.37.00

All of a sudden Fortis seems to be adrift. The management comes increasingly under fire and in mid-July, following a tumultuous meeting of the Board of Directors, CEO Jean-Paul Votron resigns. Herman Verwilst is his successor. It’s true, only as ad interim until an external bureau has found a new CEO.

 

00.30.50.00

MITTLER Je kan natuurlijk...

 

VERWILST Het Ik had dat... 

 

MITTLER Het is natuurlijk ...

 

00.31.25.00

 

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