The Dutch Investors’ Association VEB has reached a settlement with Ageas, the legal successor to Fortis, on providing compensation to investors who suffered losses in 2007 and 2008. More than €1.2 billion in total is available to cover the damage incurred by Fortis investors.
Never before in Europe have investors received such a large amount in compensation for damages while legal proceedings were still in progress. It is estimated that most retail investors that belong to VEB will receive 10-15% of the nominally incurred losses. This means that the compensation amounts to more than has been won in successful American settlements. Investors who suffered losses but who do not belong to the VEB will also receive a fair amount in compensation. The exact amount that an individual investor will receive cannot be determined just yet.
The compensation arises from the misleading communication and mismanagement by Fortis in 2007 and 2008. In 2007, Fortis attracted capital from shareholders for the purchase of ABN Amro but got into serious difficulties owing to the large number of toxic credits on the ABN Amro’s balance sheet that became almost worthless when the credit crisis erupted. Fortis failed to inform shareholders properly about its exposure to these high-risk products. Investors were also not made aware of how bad the bank’s solvency and liquidity position was during the acquisition of ABN Amro. Ultimately, the Dutch, Belgian and Luxembourg governments were forced to nationalise the bank to prevent Fortis from collapsing altogether.
Since 2008 VEB has made great efforts to obtain justice for Fortis investors who suffered losses as result. The settlement announced will bring an end to the legal proceedings initiated by VEB against Ageas, its former directors and banks. For the time being, these court cases have been suspended.
Managing Director of the VEB, Paul Koster, is proud of the result that has been achieved: “The settlement announced today is an important step towards compensation for tens of thousands shareholders who suffered damage. For Ageas and the current shareholders the settlement means the conclusion of a difficult and uncertain period.”
The settlement will now be presented to the Amsterdam Court of Appeal in accordance with the Class Action (Financial Settlement) Act (WCAM). The Court will assess the fairness of the settlement to see whether all harmed Fortis investors in Europe can be compensated under the settlement. This procedure will be pursued jointly by VEB and Ageas. The settlement can only be implemented however after the Court has declared it binding and the legal opt-out period has lapsed.
The procedure pursuant to the WCAM legislation normally takes 18 to 24 months. Only after the procedure has been completed can compensation be paid to claimants. An independent claims adjustor will handle the payments.
I held shares at some point between 21 September 2007 and 14 October 2008, what should I do?
Fortis investors who suffered losses should use the separate module on the VEB website to check whether they would be eligible for the higher amount in compensation agreed for VEB members. Please have your membership number to hand.
If you are eligible for compensation, no further action is required for the time being. You will be informed in due course by the VEB about when to file your claim.
Here follows some frequently asked questions and answers. A fuller version can be found on the VEB website (in Dutch only) and on the FORsettlement website (in English).
Frequently asked questions (FAQs)
1. What do I have to do?
First of all, it is important to check whether you registered for the VEB action against Fortis and are a member of VEB.
Concerning the filing of your claim, there is no need to hurry. The news of 14 March 2016 announced the settlement reached. It will be some time before you will actually need to file your claim. VEB will inform investors in plenty of time when their claims should be filed. It is expected that the compensation will be paid out sometime in 2018.
2. Am I eligible for compensation?
Eligible investors are those who held Fortis shares at any time between 21 September 2007 COB and 14 October 2008 COB. If you have sold all your shares in the meantime, this does not affect your claim.
VEB members will receive more compensation than others (it is expected that the compensation paid to VEB members will be at least 50% more). You can easily check on the VEB website whether you are eligible for the increased compensation awarded to VEB members and if you are registered.
3. I would like to speak to someone about the VEB action against Fortis. Who can I contact?
For questions concerning the settlement and its implementation, we recommend that you first read the information provided on the VEB website. If you would like to speak to someone, please call one of the following numbers: +31302525359 (in the Netherlands) or +3225575900 (outside the Netherlands).
4. I cannot reach the VEB by phone. What should I do?
Since the announcement of the Fortis settlement, VEB has been overwhelmed with phone calls. All phone traffic has been temporarily diverted to a Fortis call-centre that will be able to answer most of your questions. If you still have Fortis questions to put to the VEB, you can send an e-mail to email@example.com. Please note that there is no need for any urgent action to be taken on your part. It will take some time before you can file your claim.
For questions that do not concern Fortis, you may send an e-mail to firstname.lastname@example.org. Please bear in mind that the response time will be longer than usual. Our apologies for any inconvenience this may cause.
5. With what questions concerning Fortis can I approach the VEB?
VEB can help you with questions concerning your registration, such as “Am I fully registered with VEB?” and “When did I become a member?” You can check on the VEB website whether you are eligible for the increased compensation to be paid to VEB members.
For all other questions, it would be best to speak to the Fortis call-centre on +31302525359 (if you are in the Netherlands) or+3225575900 (if you are outside the Netherlands). The call-centre staff will be happy to inform you about all there is to know.
6. What is my VEB membership number?
You can find your membership number on the wrapper of the VEB magazine Effect. It also appears on the annual payment giro, letters from the VEB, your bank statements (where payment is made by direct debit) and in all other VEB correspondence with you.
If necessary, you can go to the VEB website to request your membership number.
7. When will I receive compensation?
If you are eligible for the higher amount in compensation to be paid to VEB members, it is expected is that you will receive at least 50% more in compensation than other claimants. A requirement is that you are currently a VEB member and remain a member until the compensation is paid to claimants. You can register here to become a VEB member.
8. How much compensation can I expect?
At the moment it is not clear how much each investor affected will receive in compensation. Nevertheless, we will provide an indication below:
- The typical VEB member (with a buy and hold philosophy) who incurred a loss in absolute terms of €5,000-20,000 in the period 21 September 2007 to 14 October 2008 is expected to receive 10-16% compensation.
- A non-VEB member in the same situation will receive only 5-7%.
- These percentages are a rough indicator only and the amount will also depend on the timing of the various buy and sell transactions.
- The above compensation percentages are relatively high, not only compared with successful American settlements, but especially considering the fact the stock market as a whole (and financials in particular) saw major losses in value in that same period.