Fortis and Ping An consolidate their relationship

The ambition of China’s second largest
life insurer, Ping An, to become a major player in global financial
markets has taken a significant step forward with a landmark deal
that will see it acquire a 50 percent stake in the global asset
management unit of Belgo-Netherlands bancassurer Fortis for €2.15
billion ($3.39 billion).

The deal follows Ping An’s purchase of a 4.18 percent equity
stake in Fortis in November 2007, a move that made it Fortis’
largest shareholder. Subsequently increased to 4.99 percent, Ping
An’s stake in Fortis is worth about €1.6 billion.

Under the agreement Fortis Investments will retain its current
senior management but will be rebranded as Fortis Ping An
Investments. Fortis Investments now incorporates ABN AMRO Asset
Management, part of the Netherlands and Belgian operations acquired
by Fortis in the three-way break up of Netherlands bank ABN Amro
between Fortis and European banking groups Royal Bank of Scotland
and Banco Santander in late 2007.

Commenting on the deal, Ping An’s chairman and CEO, Ma Mingzhe,
said the benefits of the combined asset management experience of
Fortis and ABN Amro would “considerably accelerate” Ping An’s
development of a “highly competitive global financial services
platform”. He added that the transaction also supported Ping An’s
three business pillars strategy, focusing on insurance, banking and
investments/asset management.

For Ping An, Fortis Investments brings with it total assets under
management of €245 billion, sales offices and 40 dedicated
investment centres in Europe, Asia and the US and 2,000 employees,
600 of whom Fortis describes as “dedicated investment
professionals”.

From Fortis’s perspective, its CEO, Jean-Paul Votron, described the
deal as a “unique opportunity to accelerate our growth plans for
asset management, particularly within high-growth markets such as
China and elsewhere in Asia.”

Certain ABN AMRO Asset Management asset management units are
excluded from the deal with Ping An. They are Artemis (UK),
International Asset Management (UK), Montag & Caldwell (US),
Veredus Asset Management (US), River Road Asset Management (US) and
ABN Amro TEDA Fund Management (China).

Meanwhile despite Fortis’ upbeat message relating to the Pin An
tie-up, rating agency Moody’s Investor Services has announced that
it has changed its rating outlook on Fortis from stable to
negative.

Commenting on the change Moody’s said it had been prompted by the
recent deterioration in Fortos’ capital position and financial
flexibility as well as what it termed “the potential for further
capital markets-led pressures.”