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Fortis plunges to €28 bln 2008 loss on banking

Stricken financial group Fortis plunged to a mammoth €28.0 billion ($37 billion) loss in 2008 due to huge negatives from banking activities stripped out by the Belgian and Dutch states.

The group, pulled apart in a state-led bailout last year, said discontinued activities lost the company €27.4 billion, including €20.8 billion for Belgium-owned Fortis Bank and €8.6 billion for Fortis Bank Nederland.

Fortis's rump insurance operations made a total net profit of €6 million, including a €639 million negative impact from their investment portfolios.

Fortis's general division made a 2008 net loss of €629 million due to net interest charges and a €295 million hit from currency transactions.

The group had already announced this month that it would be unable to pay a dividend.

Fortis was carved up by the Dutch, Belgian and Luxembourg governments in October after an €11.2 billion cash injection failed to calm investors.

The precise make-up of the company is still in doubt.

French bank BNP Paribas is poised to buy 75% of Fortis Bank, once the Belgian banking arm of listed Fortis Holding but now in state hands.

Fortis shareholders, who blocked the previous terms of the break-up deal last month, will vote on revised conditions at meetings on April 8-9.

Assuming they vote in favor, Fortis would essentially be an insurance company, with a main Belgian unit and international activities in Britain, Portugal, Hong Kong and elsewhere.

Fortis shares, previously regarded as a “safe” investment and held by many Belgians, are now little more than a penny stock. (Reuters)