Dutch government nationalizes Fortis

AMSTERDAM, Netherlands, Oct. 4 (UPI) -- The Dutch government says it is temporarily nationalizing the embattled Benelux bank Fortis after its financial situation proved more dire than expected.

The government's move came only days after the governments of the Netherlands, Belgium and Luxembourg announced a partial takeover of the Dutch lender. But Dutch banking officials said Friday Fortis needed more help, and so purchased its core assets for $55 billion, the British newspaper The Independent reported.

Dutch officials said they made the moves to protect the country's assets and it was necessary to ensure "the continued proper functioning of vital financial functions for the Dutch economy," the newspaper reported.

The nationalization was temporary, they said, with plans in place to privatize it again once the financial markets stabilize.

The Independent said Fortis' participation in the three-way takeover of ABN Amro had put a strain on the bank's balance sheet and had undermined public confidence, sending its shares down and threatening a run on deposits.