FORTIS (EBR:FORB) Information On The New Structure Of Fortis SA/NV And Fortis N.V.

FORTIS (EBR:FORB) This announcement relates to Fortis SA/NV and Fortis N.V. (Fortis), listed on Euronext. After the closing of the announced transactions, it will no longer include the Banking and Insurance activities that have been acquired by the Dutch and Belgian States and of which the non-Dutch activities will be acquired by BNP Paribas subsequently. As a result of these steps, Fortis has undergone a complete metamorphosis. Fortis always operated as an integrated financial services company. Its financing policy was based on optimization from a Group-consolidated point of view, whilst of course respecting the regulatory requirements for the underlying entities. This has resulted in an inter-related, complex financing and reporting structure. Unravelling this is a task that cannot be done in a few days with reasonable assurance about the outcome. Particularly, risks are associated with the still unknown effects of third quarter developments on the balance sheet and income statement of Fortis in its new constellation. Nevertheless, Fortis wishes to provide information to the market to the best of its ability. The figures in this press release are non-audited pro-forma figures representing the expected impact of the recent transactions on Fortis using the last published accounts (half year 2008 results) as a basis. Third quarter result contribution or balance sheet movements are not taken into account, except when explicitly mentioned. In view of the far-reaching effects of the recent transactions, Fortis will seek to be exempted from publication of its third quarter results (originally foreseen for 3 November 2008). Fortis will publish full disclosure on the starting position of Fortis in its new constellation as soon as this can be provided. Pending this, all figures are indicative estimates and should be treated accordingly.

Fortis, like many financial institutions, has been confronted with a systemic financial crisis of ever-growing, unparalleled proportions. Faced with this situation of mounting crisis and the need for immediate resolute action, and given the role and responsibilities of the governments, Fortis had to safeguard the interest of all stakeholders by ensuring that the operations of its large Banking and Insurance units would continue to function. In the prevailing market conditions this could only be realised by agreeing to sell these to available strong parties.

Recent developments On 3 and 6 October, Fortis confirmed the sale of all its Banking activities and of its Dutch and Belgian Insurance activities. As a result of these sales, Fortis will receive a total cash consideration of EUR 14.4 billion. * The sale, on 3 October, of the Dutch activities to the Dutch State raised EUR 16.8 billion, of which EUR 4 billion benefits Fortis, the remainder benefits Fortis Bank * The sale, announced on 6 October, of the remaining 50% + 1 share of Fortis Bank to the Belgian State raised EUR 4.7 billion. The Belgian government agreed with BNP Paribas on the subsequent transfer of 75% of Fortis Bank to BNP Paribas while continuing to own the remaining 25% of the company * Finally, the sale of 100% of Fortis Insurance Belgium to BNP Paribas will raise EUR 5.73 billion subject to certain conditions precedent and to final closing adjustment (minus EUR 200 million)
Fortis assets Fortis will henceforth include the International Insurance activities, a stake in a structured credit portfolio entity and financial assets and liabilities of the different financing vehicles (further details are provided in this release).

* Fortis Insurance International is present in UK, France, Hong Kong, Luxembourg (Non-Life), Germany, Turkey, Russia, Ukraine and has joint-ventures in Luxembourg (Life), Portugal, China, Malaysia, India and Thailand. The largest profit contributors are Fortis UK, Millenniumbcp Fortis (Portugal) and Fortis Hong Kong. As of 30 June 2008, Fortis Insurance International had a total equity of EUR 1.6 billion, funds under management within consolidated companies in the Life Business of EUR 21 billion, and posted a net profit of EUR 73 million over the first half of 2008. Since the structured credit portfolio will reside in a separate legal entity, the operating companies of Fortis Insurance International are shielded from any impact of this portfolio (see below). * Fortis will own 66% of a Structured Credit Portfolio entity, the rest will be held by the Belgian State (24%) and BNP Paribas (10%). This entity will contain a structured credit portfolio acquired from Fortis Bank with a carrying value of EUR 10.4 billion (as specified in the additional information). It will be separately managed and is expected to be funded with EUR 7.4 billion external funding and EUR 3 billion equity. * Fortis will for the remainder have various financial assets and liabilities of the different financing vehicles.

The new Fortis consolidation scope as per 30 June 2008, not taking into account any result contribution and balance sheet movement in the third quarter 2008, and after closing of the announced transactions, is expected to have a total equity of EUR 8.8 billion, comprised of EUR 7.4 billion of Shareholders' equity and EUR 1.4 billion of Minority Interests (additional details are provided further on in this release). After the closing of the transactions, the number of outstanding shares will increase to 2,468 million[1].

Debt service capacity The expected net cash position of EUR 10.5 billion in the General Account will exceed the EUR 9.4 billion debt obligations out of all Fortis issuing entities. Therefore, it is expected that Fortis will be able to service and redeem all these debt obligations.

Announcement Belgian government For details, we refer you to the press release issued by the Belgian government on 12 October 2008 to be found on www.belgium.be.



Next communications Further necessary decisions to be taken by Fortis, in particular related to governance, strategy and dividend policy are under review and will be announced as soon as possible.

The Board of Directors of Fortis will call an Extra-Ordinary General Meeting of Shareholders (EGM), which will be held within 8 weeks as of today at the latest. A specific date will be set as soon as possible, i.e. when there is sufficient certainty on the necessary new governance (structure) to be proposed to the Shareholders Meeting. The Board will also prepare a shareholder circular which will be made publicly available to all shareholders at least 2 weeks prior to the EGM.

Figures provided in this press release are based on the 30 June 2008 information adjusted for the transactions announced. Pro forma figures are not audited and do not take into account any result contribution or balance sheet movement in the third quarter of 2008, nor any direct change in total equity.

Disclaimer

The statements in this press release are based on a going concern valuation and do not take into account the impact of the third quarter 2008 results. Also, the statements are based on information currently available to Fortis and reflect, to the best knowledge and belief of Fortis, having taken all reasonable care to ensure that such is the case, the impact of the transactions with the Belgian and Dutch States and with BNP Paribas mentioned herein. The information on which these statements are based may be subject to change (in particular with respect to the transaction with BNP Paribas, the closing of which remains subject to certain conditions precedent) and this announcement may also contain certain projections or other forward looking-statements concerning Fortis. These statements are based on current expectations of management of Fortis and are naturally subject to uncertainties, assumptions and changes in circumstances.

The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements. Many of these risks and uncertainties relate to factors that are beyond the company's ability to control or estimate precisely, such as future market conditions and the behaviour of other market participants. Other unknown or unpredictable factors could also cause actual results to differ materially from those in the statements. Therefore undue reliance should not be placed on such statements. Important factors that could cause those differences include, but are not limited to:

(i) The ongoing assessment by Fortis and the acquirers of the impact of these transactions,

(ii) Ongoing discussions with the acquirers, including in respect of the disentanglement of the financial instruments issued or guaranteed by entities to be held by Fortis and the acquirers and in respect of transitional services to be performed by and between such entities to enable them to be managed in accordance with past practice,

(iii) Circumstances beyond the control of Fortis and not yet known today, such as consents required from regulatory and supervisory authorities.

Fortis assumes no obligation and does not intend to update these statements, whether as a result of new information, future events or otherwise, except as required pursuant to applicable law.

[1] Shares outstanding 30 June 2008: 2,343 million to which should be added back 125 million Fortis shares for the CASHES instrument, totalling 2,468 million shares

This announcement is originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.



LINK: http://hugin.info/134212/R/1259460/275413.pdf

FORTIS

http://www.fortis.be

ISIN: BE0003801181

Stock Identifier: XBRU.FORB

US: PINKSHEETS:FORSY