Luxembourg Plans to Sell Stake in BGL BNP Paribas to Cut DebtJohn Martens and Stephanie Bodoni
Luxembourg plans to sell its minority stake in BGL BNP Paribas SA, the country’s second-largest retail bank, to reduce debt before a $2.6 billion bond matures in December.
Luxembourg still owns 34 percent of BGL BNP Paribas, which it acquired in the first government attempt to rescue Fortis in 2008 by converting 2.5 billion euros ($3.3 billion) of debt into equity of Fortis’s local banking subsidiary. The Grand Duchy raised 2 billion euros from the sale of a 3.75 percent bond that matures on Dec. 4, 2013, to help finance the transaction.
“The Luxembourg state is prepared to withdraw as a shareholder of BGL at that point,” Prime Minister Jean-Claude Juncker told lawmakers in the parliament yesterday. “If at the end of the year or early next year the price is right, so if we get the amount from BNP Paribas that we would see appropriate, then we will sell.”
BNP Paribas SA, based in Paris, controls BGL BNP Paribas through its Belgian unit BNP Paribas Fortis SA. The largest French bank also bought a direct stake of almost 16 percent in BGL from the Luxembourg government in an all-share transaction in May 2009 that gave the country a 1 percent holding in BNP Paribas.
BGL BNP Paribas had shareholders’ equity of 5.59 billion euros at the end of 2012, according to its annual report. Pretax profit rose to 460.4 million euros last year from 322.4 million euros in 2011.
State-owned Banque et Caisse d’Epargne de l’Etat is Luxembourg’s largest retail bank.