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World news: Fortis board gets booed by angry shareholders
Posted by:Tom 36 days ago • Discuss
UTRECHT, Netherlands – Shareholders of Fortis NV, the Belgian-Dutch lender which saw most of its operations sold or nationalized last month due to the credit crunch, booed members of the board at a meeting Monday and vented their anger over seeing their investments in the company decimated.
Shareholders set the tone for the company's annual meeting at the outset by showering the board members with scorn and shouting "for shame!" as they walked in to the hall.
One shareholder accused acting chairman Jan Michel Hessels of "having no understanding of business" after hearing his defense of the board's actions in the past year.
"Alas, none of us is sitting here with a good feeling," Hessels said. "Too much of shareholders' money has been lost."
Later in the day, shareholders approved a new chairman and chief executive, but rejected Hessels as a board member.
Fortis shares have plummeted from above euro30 ($38.18) at the time it launched a bid for parts of ABN Amro in April 2007 to less than euro1 on Monday.
Hessels noted that a large majority of shareholders approved the euro24 billion ABN Amro bid that led directly to Fortis' failure when it was caught with too much debt as the global credit crunch began.
After Fortis' attempts to sell assets failed, the Dutch government bought all the Dutch operations for euro16.8 billion on Oct. 3. Two days later the Belgium government nationalized Fortis in Belgium and resold a 75 percent stake of Fortis' Belgian banking operations and all of its Belgian insurance operations to BNP Paribas for euro14.5 billion.
These moves were challenged by shareholder groups in both Belgium and the Netherlands, who said they should have been subject to shareholders' approval. Courts rejected those objections, saying the deals were emergency measures.
What is left of Fortis NV are the company's insurance operations outside the Benelux countries. Shares in the company fell 9.7 percent in Amsterdam to euro0.65 Monday morning, representing a market capitalization of euro1.5 billion.
Belgium said it plans to use future BNP profits to partially compensate shareholders.
Outside the hall, shareholder Tie Danhoed said he didn't expect to be refunded of any of the money he lost.
"You cannot pluck a featherless chicken," he said.
He said he wouldn't participate in verbal attacks on the boards, since they were mostly not the same people who oversaw Fortis during the period before its collapse.
"They've all disappeared," he said.
Fortis replaced its chief executives three times as investor confidence slumped this summer. Two recent CEOs were present, but former chairman Maurice Lippens and former CEO Jean Paul Votron, who oversaw the ABN buy, were not.
Jan Maarten Slagter of the Dutch small shareholders organization VEB said he wasn't satisfied with the board's summary of events leading up to Fortis' failure.
"What I missed in your list was 'what did we do wrong?" he said.
"The impression that you leave is that this is something that overcame you...but it's not about circumstances, it's about how do you deal with circumstances."
He noted that many banks have not been near bankruptcy during the crisis.
Hessels said the question was 'justified' and conceded that "with the benefit of hindsight" the ABN Amro bid was too risky and too expensive.
He also said the company had poorly communicated plans to restore its capital ratios by selling assets.
He said that, in the board's defense, the financial crisis was an "unheard of event" that "no one saw coming."
"I can't see that we should have done things very differently," he said.
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