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Fortis records US$27.5b loss

FORTIS Bank yesterday reported a loss of 20.6 billion euros (US$27.5 billion) for 2008 due to the forced sale of its Dutch business and write-downs of securitized debt and other investments.

The bank, once the largest in Belgium and the Netherlands, was carved up into separate units to avoid collapsing from a heavy debt burden during the credit freeze last September and October.

Fortis Bank, which now operates only in Belgium, is waiting for shareholders to approve its sale to France's BNP Paribas. It was bailed out and sold to the Belgian government in October.

The massive loss comes a year after it reported net profit of 1.8 billion euros for 2007.

Total 2008 revenue was 6.69 billion euros, down 15 percent from 7.88 billion euros in 2007, it said.

Fortis said it lost 9 billion euros when the Dutch government took over its banking operations in the Netherlands, including ABN Amro's retail banking arm which Fortis bought as part of a joint bid for the bank in 2007 that loaded it with loans.

It said it was hit by another 4.8 billion euros from the sliding value of its structured credit portfolio and reported other losses from writing down assets, loan defaults, goodwill impairments and bad deals in interest rate and credit derivatives.

Without these exceptional charges, the bank said it made an underlying profit of 903 million euros which it claimed was an estimate of normal working conditions. Even that was 61 percent down from the 2.3 billion euros underlying profit it made in 2007.

Fortis said it made less money from fees and commissions than last year.


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