BNP Paribas sees greater cost savings from Fortis buy

French bank BNP Paribas on Tuesday raised its savings target from the acquisition of Belgian lender Fortis, saying it expects annual synergies of euro900 million ($1.35 billion) by 2012. When it announced plans to take over most of Fortis in October last year, BNP Paribas set a goal of euro500 million annual cost savings by 2011. The Fortis purchase made BNP the largest financial institution by deposits across the 16 countries that use the euro. BNP Paribas also raised expectations for restructuring costs from integrating Fortis — to a total of euro1.3 billion over 2009 to 2011. It previously forecast costs of euro750 million. The Fortis operations should start boosting earnings next year before restructuring costs, BNP Paribas said. In a statement, France's largest bank said that by combining forces with Fortis, it "is not only deepening its European domestic retail presence but also transforming its asset gathering capabilities. "The group is well positioned for growth and value creation in the new environment." Combining the two banks' corporate and investment banking activities should lead to euro368 million in annual savings, and joint retail banking operations will economize euro252 million per year. Most of these savings will come from joint organization, information technology, procurement, and human resources activities. Job cuts will be "mainly" from attrition and voluntary departures, the company said. Fortis ran into trouble during the financial panic last fall as investors doubted it could both handle investments losses and repay the massive debt it incurred in buying parts of ABN Amro of the Netherlands. Facing a run by depositors, Fortis struck a deal with the Dutch, Belgian and Luxembourg governments to save the company from a spectacular bankruptcy. The governments carved it up along national lines. Belgium's government then sold a majority stake in the Belgian banking operations to BNP Paribas.