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Ping An plans to block sale of Fortis assets

By Hu Yuanyuan (China Daily)
Updated: 2009-02-10 08:11

Chinese insurer Ping An, the largest shareholder in the collapsed Belgian-Dutch financial group Fortis, said it will vote against the sale of Fortis assets to French bank BNP Paribas SA at a shareholders' meeting on Feb 11.

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"The decisions, initiated by the government, to sell Fortis assets have not only destroyed its value but also severely impaired shareholders' interests as a whole," Ping An said in a statement on Sunday night.

For that reason, "Ping An will vote against the sale as such transactions had breached the corporate governance principles of Fortis," the statement said.

BNP Paribas SA had revised its offer to take over the banking business and part of the insurance units of Fortis. However, a negative vote would cancel the improved deal.

According to Wang Xiaogang, a senior insurance analyst with Shanghai-based Orient Securities, Ping An's decision to vote against the sale of Fortis assets is easy to understand.

"Ping An, which is striving to become a financial holding group, bought the Fortis stake as they expected to learn from its counterparts on the coordination between banking and insurance business. If BNP Paribas SA's offer is approved by shareholders, Fortis will have no banking business anymore, and the profitability will also shrink by 80 percent," said Wang.

Sheng Ruisheng, spokesman of Ping An, told China Daily that what the company really cares about is shareholders' proper rights in Fortis' decision-making process.

"To make sure that Fortis profitability is sustainable, we are willing to work with other shareholders to find out other feasible plans," said Sheng.

Based on the turnout at Fortis shareholder meeting in December 2008, Ping An holds more than a fifth of the votes.

So far, Ping An's investment in Fortis has already lost 90 percent of its value. The company took a 15.7 billion-yuan writedown on its Fortis investment in the third quarter and faces an additional loss of about 576 million euros based on Fortis' closing price on Feb 6.

Chief Financial Officer Louis Cheung Chi Yan resigned from the Fortis board on Feb 1, citing heavy workload. Andrew Spencer Doman, one of the two board nominees backed by Ping An, withdrew his candidacy the same day, Fortis said.