Fortis, the Belgo-Dutch bancassurance group, which starred in the 2002 Global Custodian Offshore Fund Administration survey, has a reputation for conservatism belied by its exposure to the hedge fund business. Hammered by a mixture of bad debts, bond defaults and shrinking commission income, Fortis had already prepared shareholders for the worst with a series of fourth quarter profit warnings.
It was nevertheless embarrassing to announce today that it was booking additional provisions in the fourth quarter to cover setbacks in its lending and investment portfolios. It seems the main problem was the US insurance arm was long Enron bonds. As a result of these problems alone, operating profit for 2001 was expected to fall 5 per cent below the EUR 2,355 million scored in 2000. But by bunging in a further post-tax provision of EUR 195 million “restructuring of those activities that suffer most from changing market conditions” (code for retiring workers early, but expensively) Fortis expects a net earnings to come in 7 per cent below the EUR 2,768 million of 2000.
Full results will be published on 13 March.