Societe Generale, BNP Paribas Considered Favorable Buyers Of Fortis' Belgian Arm

Amsterdam, Netherlands (AHN) - The Dutch government is likely to temporarily nationalize Fortis NA on reports that the ninth biggest financial-services firm is still struggling to raise capital following the earlier rescue plan.

On Friday, the Dutch government decided to purchase 16.8 billion euros ($23.3 billion) Fortis' Dutch operations including Fortis' interest in ABN AMRO.

The latest capital infusion follows the investment of 11.2 billion euros ($16.3 billion) by governments of Belgium, Luxembourg and the Netherlands in the respective branch of the bank in each country on Septmeber 29.

After the bailout plan was announced, the company said it has decided to sell its interest in ABN AMRO (RFS Holdings) at a price below the acquisition price that would lead to an impairment.

Last year, the firm spent as much as 24 billion euros on ABN Amro Holding NV assets, just at the beginning of U.S. subprime mortgage contagion during the summer.

Over the weekend, the regulators continue to secretly discuss with the firm about the ways to restore confidence of investors in the company, according to the country's leading newspaper called De Tijd.

According to the newspaper, BNP Paribas SA is one of the three or four potential buyers of Fortis' Belgian operations, if the government decides to broker a sale to its rival banks.

In that case, the Dutch government is likely to temporarily nationalize the company before the Belgium's largest financial-services company is privatized to prevent it from collapsing.

Other reports speculate that Societe Generale SA is another likely candidate as a buyer of the firm's Belgian arm.

The company had suffered after its clients withdrew as much as 5 billion euros ($7.30 billion) of their deposits, which may be only 3 percent of its total deposits but the signs of lowering confidence in he company are clear.