French bank BNP Paribas said a revised deal to buy assets of stricken Belgian-Dutch financial group Fortis would not boost its core capital ratio, sending its shares down over 14 percent. The purchase would add to earnings, excluding restructuring costs, from 2010, BNP said in a statement on Monday.
BNP Paribas, Belgium and Fortis on Friday agreed revisions to a deal to carve up Fortis after a revolt by Fortis shareholders over the initial terms. BNP Paribas would now take a 10 percent stake in Fortis Insurance Belgium for 550 million euros ($706.6 million), instead of 100 percent planned previously.
It would also buy 75 percent of Fortis Bank Belgium and 16 percent of Fortis Bank Luxembourg, as originally agreed in October. "BNP Paribas now expects this deal to have a neutral pro forma - as at December 31 2008 - impact owould be to around 8 percent. France agreed last year to subscribe to subordinated debt issued by BNP for 2.55 billion euros as part of a 10.5 billion aid package to the country's top banks to encourage them to lend to business.
The government plans a second similar tranche. At 1015 GMT, BNP Paribas shares were down 12.6 percent - the biggest laggards on the FTSEurofirst 300 index of top European shares - falling behind the DJ Stoxx banking index, which was down 5.6 percent. After only 90 minutes of trading, volumes on the stock represented 51 percent of its 90-day average daily volume, compared with 16 percent for France's CAC 40 index.
Shares of BNP, which tumbled 59 percent in 2008, had gained 40 percent last week, propelled by a recovery in the banking sector as well as hopes of a revived Fortis deal. "BNP is taking the bulk of the risk in the Fortis deal, that's what the market doesn't like.
But all the banks are down today, and BNP has had a few good sessions lately, so no surprise to see the stock hammered," one trader said. Fortis shares meanwhile rose as much as 23 percent on Monday to 1.90 euros. The stock was 10.97 percent higher at 1.72 euros by 1015 GMT.