French bank cuts weekend deal with governments of Belgium and Luxembourg. BNP Paribas is set to become the biggest non-Swiss private bank in Europe and a top-five European money manager. The Paris-based financial-service company plans to buy 75% of Fortis Bank Belgium (FBB) and 37% of Fortis Bank Luxembourg (FBL) in a $20-billion stock-and-cash swap with the two governments.

This would give Belgium a 10% stake in BNP and Luxembourg about 2% of it.

Dutch treat

With a fat stakes in FBB and FBL, BNP gains access to the thrifty and lucrative domestic retail-banking markets of Belgium and Luxembourg to add to its presence in France and Italy. It could also nearly double its wealth-management assets under management .

The planned acquisition follows the takeover by Dutch authorities of Fortis' Dutch operations late last week due to "increasing liquidity problems in the banking activities," according to Dutch finance minister Wouter Bos. Late the previous week, the governments of the Netherlands, Belgium and Luxembourg came through with emergency liquidity funding for Fortis, which was suffering from a free-falling stock price, a run of withdrawals by depositors and other banks' unwillingness to extend it credit.

Fortis' failure as a standalone institution has infected financial institutions around the world, especially in Asia where it had a significant presence. Closer to its home, German authorities, following examples set in Ireland and Greece, scrambled to assure customers of that their nest eggs were safe by boosting coverage on deposits and other savings instruments. -FWR

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