The Amsterdam Court of Appeal has approved a settlement worth €1.3bn between Ageas – the successor company to the Fortis financial services group – and organisations pursuing claims for financial losses arising from the group’s collapse in late 2008.
The claimant groups include Deminor, a provider of investment recovery services, and the foundation Stichting Investor Claims Against Fortis (SICAF), which both represent hundreds of institutional investors, including pension funds from Europe, North America and Asia.
Other groups involved in the settlement are Stichting FortisEffect and the Dutch shareholders’ association VEB.
Several court actions in Belgium and the Netherlands were brought by or on behalf of investors that held Fortis shares during the several months preceding the group’s collapse in early October 2008.
It was alleged that Fortis misrepresented the value of its collateralised debt obligations, its exposure to subprime-related mortgage-backed securities, the evolution of its financial position, and the extent to which its acquisition of ABN Amro – in a consortium with Royal Bank of Scotland and Banco Santander – had compromised its own solvency.
The claimants also alleged that Fortis materially misled investors with public disclosures made in connection with a September 2007 rights issue, aimed at funding the acquisition of ABN Amro, including in the prospectus.
In the 18 months between April 2007 and October 2008, the Fortis share price dropped from €30 to under €1.
Fortis’ banking operations were jointly nationalised by the Belgian, Dutch and Luxembourg governments in September 2008. The Dutch insurance business was also nationalised by the Dutch state.
Its investment management operation was acquired by BNP Paribas, which later also acquired 75% of the nationalised Fortis Bank.
Meanwhile, the Belgian and international insurance arms remained in the group and continued operating as Ageas.
Charles Demoulin, partner at Deminor, which represents more than 500 institutional investors in Fortis, said: “The law gives you rights as a shareholder and we think you should exercise them and even enforce them in court. But you have to select cases with a good chance of winning.”
He added: “Awareness among investors, including pension funds, is increasing as they consider litigation to be part of their fiduciary duties to protect their assets. Ten or so years ago, participation in litigation was the exception – now it is much more the rule.”
Dutch pension fund ABP – one of Fortis’ largest shareholders at the time of the collapse – declined to comment.
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