Deal agreed for Euro bank Fortis

A deal to partly nationalise European banking and insurance giant Fortis has been agreed.

The move comes after talks between the European Central Bank and the Netherlands, Belgium and Luxembourg.

Ministers for the three countries agreed to pour almost £9bn into the bank to save it from possible collapse.

Belgian Prime Minister Yves Leterme said the bail-out showed Fortis would not be allowed to fail, after its share price plunged in recent days.

Under the deal, Fortis will have to sell its stake in Dutch bank ABN Amro which it partially took over last year. The Dutch government has not named any potential buyers.

Mr Leterme said: "We have taken up our responsibility, we did not abandon the savers."

The deal will see Belgium contribute 4.7bn euros (£3.7bn), the Netherlands 4bn euros (£3.2bn) and Luxembourg 2.5bn euros (£2bn).

Each government will take a 49% share in Fortis in their countries.

The rescue by the ECB and the three countries came after no serious bidder could be found for the whole of the Fortis group.

The presence of ECB chief Jean-Claude Trichet at the talks to save Fortis underlined the seriousness of concerns about the integrity of the eurozone's financial system.

Fortis was seen as too big a European bank to be allowed to go under.

In Belgium the bank is the country's biggest private sector employer and more than 1.5m households or about half the country bank with the group. It employs 85,000 staff worldwide.

European financiers said that US financial crisis was partly to blame.

"What is happening in the US has most certainly had an impact on the financial sector in the rest of the world," said Dutch central bank head Nout Wellink.

"Due to rumours, Fortis became a bank in a special position," he said.

Dutch finance minister Wouter Bos said: "We could not have intervened - but the question was whether Fortis would have survived."

"We are giving people security, Fortis will be stronger," he said.

Fortis was seen as too big to be allowed to fail

Mr Lippens has been criticised by shareholders for concealing problems at the bank.

The bank's interim chief executive Herman Verwilst has also stepped down and his replacement Filip Dierckx has already taken over.

Insolvency fears saw the company's shares fall to their lowest level in more than a decade before the deal was announced. The shares have lost more than three-quarters of their value in the past year.

Fortis, which has its joint headquarters in the Belgian capital Brussels and in Utrecht in the Netherlands, has denied any solvency problems were imminent.

The bank's problems have their origin in its participation - along with Britain's Royal Bank of Scotland and Spain's Santander - in the 70bn euro (£55bn) purchase of the Dutch bank ABN last year.

Fortis has been weighed down by the 24bn euros (£19bn) it paid for its share of ABN.

Before this bail-out Fortis said it needed to raise around 5bn euros as it absorbed ABN's Dutch retail banking arm.

It had said it could meet the shortfall by selling other assets, but has so far found it hard to find any buyers.

Last month, Fortis announced its profits for the first six months had fallen by 41% to 1.6bn euros (£1.2bn) against a year ago.