BNP On Tenterhooks

On Tuesday the share of BNP Paribas dropped with 9.2%. There are two big reasons for the decrease. The first one is the prediction that BNP Paribas needs a capital raise for keeping operative. There are speculations that the core capital of BNP is not adequate anymore.
The second reason is the court that must decide whether the purchase of Fortis was valid or not.The Belgian government sold Fortis to BNP Paribas without the permission of his shareholders. The shareholders went to court to argue the sale.

Like other French banks BNP Paribas has raised his capital by a government bailout. Now analysts believe that the money from the bailout was not enough. This is because other European banks have a higher core capital ratio than BNP.

I think the judgement of the Belgium court was a good thing for BNP and FortisThe court in Belgium has approved the sale of Fortis. They have done that in the advance of the households who have their saving money on the bank. I think that when they didn’t approved the purchase the Belgian government and Fortis could get in trouble. Now everything is quiet for a while and BNP can search for solutions to become profitable again. On the other hand I understand the shareholders of Fortis whose shares have a very low value. They should receive a compensation from the Belgian government for selling Fortis whiteout permission.

Source: http://www.forbes.com/markets/2008/11/18/bnp-paribas-fortis-markets-equity-cx_vr_1118markets09.html