BNP Paribas Attempts To Woo Fortis Shareholders

The Wall Street Journal and Bloomberg have their eye today on French bank BNP Paribas, which has come to new terms with Belgium's government over a potential purchase of Fortis' former banking units in Belgium and Luxembourg and a stake in the insurance business. Shareholders have rejected the deal twice now and are set to meet in Brussels on April 8 for a vote that will be close, the WSJ reports. Bloomberg leads its story with Fortis Chairman Jozef De Mey saying yesterday that he thinks shareholders will approve the deal. If it goes through, the combined bank will be the largest by deposits in Belgium and Luxembourg.

Under the new terms, Paribas would get 75 percent of Fortis Bank—the same that was offered in defunct deals past—in exchange for Paribas stock. This time around, however, Paribas would pay 11.4 billion euros (or about $14.4 billion), which is 1 billion euros more than what was offered when shareholders rejected the deal in February. Paribas would also get a 1.5 billion euro guarantee, provided by the Belgium governement, on losses over 3.5 billion euros for loans currently held by Fortis.

"Fortis became a casualty of the global financial turmoil after spending €24.2 billion buying ABN Amro in the biggest bank takeover just as the U.S. subprime-mortgage market collapsed and credit markets froze," Bloomberg writes. Belgium nationalized Fortis Bank late last year, completing the 9.4 billion euro transaction in October. Luxembourg took a 49.9 percent stake in the banking unit in its own country, and the Netherlands bought Fortis' Dutch banking and insurance businesses for 16.8 billion euros.

CNNMoney tops its Sunday news roll by exploring whether Wall Street is "ripe for a rally" this upcoming week since there is not much in the pipeline as far "market-moving" economic news and the S&P 500 is at a 12-year low, making for come can't-miss deals. (On the contrary, Bloomberg forecasts dismal retail sales for February—news that will be released by the government this week.) Fred Dickson, chief market strategist at D.A. Davidson & Co., compares "pent-up demand" to "shoppers pressing against the door of a store that is about to open for a sale." But remember how that went this past holiday season?

USA Today, pulling from the Associated Press, asks: "When will this wretched economy bottom out?" For the article, the reporters examined the housing, job, and stock markets and found that a) things are bad; b) the general expectation is that they will get worse; and c) it will be at least a six more months until the stock market bottoms out, another year until the housing market starts improving, and that the jobs market will be weak for years. Sigh.

Also keep an eye on the housing market is the Washington Post, which reports that the Federal Housing Agency is now experiencing a spike in "quick defaults." "In the past year alone," the WP writes, "the number of borrowers who failed to make more than a single payment before defaulting on FHA-backed mortgages has nearly tripled, far outpacing the agency's overall growth in new loans." What is happening now is much like what independent mortgage-insurers experienced right before the subprime meltdown, the story points now. This time around, however, it is "eroding one of the main federal agencies charged with addressing it."