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Fortis shares slump on Greek debt fears

Source: Reuters - Wed 28th Apr 2010

Fear of exposure to Greek debt pushed down stock in Fortis as much as 10.3 percent on Wednesday as Belgian shareholders backed a name change the insurance group hopes will mark a break from its troubled past.

Fortis had some 4.1 billion euros of Greek bonds and 3.1 billion euros of Portugal, whose rating Standard & Poors cut on Tuesday.

It reduced its exposure to some southern European sovereigns last year, but Deputy CEO Bruno Colmant said Fortis's overall strategy was to hold bonds until maturity.

"It's buy and hold" he told shareholders, adding that the company would give more details of its portfolio when it issued a trading update on May 12.

"We continue to evaluate these bonds ... The solvency of thecompany is very robust at this stage" Colmant continued.

Fortis shares dropped 10.3 percent to a nine-month low of 2.15 euros before recovering to stand 6.6 percent lower at 1509 GMT.

Colmant also said that Fortis was not exposed to the Abacus synthetic collateralized debt obligation deal that is the focusof the SEC fraud investigation into Goldman Sachs.

Fortis was carved up by the Dutch, Belgian and Luxembourg governments in October 2008 after an 11.2 billion euro cash injection failed to stem the slide of Fortis shares.

The break-up left Fortis as a pure insurance player with astake in a portfolio of toxic assets and a queue of legal claims.

Shareholders in Brussels approved changing the group's name to ageas, assuming investors in the Netherlands also give their support on Thursday. An overwhelming 97.14 percent of share capital represented in Brussels backed the new name.

"Fortis has begun a new future" Chairman Jozef De Mey told shareholders at the start of a six-hour meeting in Brussels.

It was a year to the day since shareholders in Belgium finally approved the split-up of the group and the sale of its Belgian banking arm to BNP Paribas.

At that time the shareholders meeting descended into chaos with some investors throwing shoes and coins at the chairman.

Wednesday's meeting was far calmer, although many of the 200 investors present were still smarting at their losses and some hooted when a motion to raise the payments to board members was adopted.

Security was also tight, with airport-style metal detectors at the entrance.

Shareholders rejected a motion to allow a capital increase of up to 168 million euros ($223.8 million) in shares to meet obligations left over by the company's break-up. They did thoughback separate authorisation for a potential capital hike of upto 88.2 million euros to cover coupon payments. ($1=.7508 Euro)

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