By staff reporter Chen Huiying

From Caijing online

China's insurance group PingAn (HKSE: 02318, SSE: 601318), the largest shareholder of the Belgian-Dutch financial group Fortis, said it will vote against the deal to sell the group’s assets to BNP Paribas in an upcoming shareholders meeting.

PingAn, which holds a 4.99 percent stake in Fortis, said it will reject a deal to sell 75 percent of Fortis' Belgian banking operations and 10 percent of its insurance business to the French bank BNP.

The company explained its decision in a press statement. “PingAn believes that other options should have been, and still can be, explored in order to sustain the operation of the business and optimize value for shareholders.”

Backed by the Belgian government, BNP Paribas and Fortis, the proposed deal is a revision of a former plan to sell Fortis' entire insurance assets to BNP Paribas. The sale will go through if it wins approval from shareholders representing more than 50 percent of the company’s equity. Votes will be cast February 11 in Brussels.

Stricken by last year’s financial turmoil, Fortis reported an operation crisis in September 2008. The governments of Belgium, Luxembourg and the Netherlands came together to bail out the bank through partial nationalization. However, the effect was limited. On October 6, Belgium decided to sell 75 percent of Fortis’ banking operation and its entire insurance operation in Belgium to BNP Paribas for a total of 14.5 billion euros.

The deal was frozen when a group of shareholders sued, claiming the sale wasn't in their interests. In December, a Belgian court ordered a shareholder vote on the deal. The government thus revised its plan for a shareholder review on February 11, hoping to generate more support. But PingAn's opposition may prove a fatal blow.

“Since September 2008, the decisions to sell assets were driven by the Belgian government and have not only destroyed Fortis' value but have also severely impaired Fortis shareholders' interests as a whole,” said PingAn. “Such transactions breached the governance principles of Fortis, and as such, PingAn disagrees with the original transactions.”

“Furthermore, given the breach of certain governance principles in the organization of the shareholders' meeting and the manner in which the revised transaction was being presented to Fortis shareholders, PingAn would vote against the proposed resolutions,” added Ping An.

BNP Paribas said earlier that it could withdraw its bid for Fortis if shareholders failed to agree on the revised deal.