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Insurer faces legal claim for damages

BELGIAN insurer Fortis Holding said yesterday that it faces a legal claim for 363 million euros (US$508 million) from a former financing unit now owned by the Dutch government.

Fortis Holding was once the largest bank in Belgium and the Netherlands but was carved up in an October bailout by both governments that took over or sold off its banking operations, leaving shareholders with near-worthless stakes in a small insurance group.

The firm said the Dutch government wants it to pay cash compensation for preference shares in Fortis Bank Nederland Holding - now owned by the Dutch state - that are held by a Jersey-based financing unit Fortis Capital Company Limited, or FCCL, also owned by the state.

It says the option of a cash settlement was only ever intended to be used in an extreme situation and that the Dutch government "refuses to accept the consequences of its decision" or to provide damages to Fortis Holding, badly battered by the botched bailout and the financial crisis.


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