30 September 2008 18:07 [Source: ICIS news]
By Peter Salisbury
MONTE CARLO (ICIS news)--The near-collapse and subsequent government intervention in Europe bank and insurer Fortis could squeeze credit lines for petrochemical traders, sources said on Tuesday.
Speaking on the sidelines of the European Petrochemical Association (EPCA) meeting, two sources from an international trading house said that they had used Fortis for credit on a variety of projects and that they were not alone.
"Fortis are lenders big time," said one of the traders. "Everyone has business with them."
Fortis's financial problems "are really slowing things down," the trader continued. "You are going to need a lot more signatures, and government signatures too [to get credit]."
Earlier in the day, another source had also said that it had used Fortis, but not as much as in the past.
"We used to use them all the time but at the moment we only have small amounts of business there."
The bank's financial woes meant that much closer attention would be paid to potential high-risk clients such as traders, the sources said.
It would be both harder to have credit approved and would take more time where it did, which would not be conducive to the fast-paced world of commodities trading, the sources said.
Earlier during the conference, a key industry analyst had said that a lack of easy and fast credit could lead to demand destruction. This sentiment was echoed by traders and industry players.
Fortis was partially nationalised by the Benelux governments on Monday, with the Belgian government investing €4.7bn ($6.8bn) in Fortis Bank (Belgium), the government of the Netherlands investing €4bn in Fortis Bank Nederland (Holding) and the Luxembourg government investing €2.5bn in Fortis Banque Luxembourg. according to a company statement.
This had been deemed necessary as confidence failed and share prices plunged.
It was not clear exactly what impact the bailout would have in terms of internal regulation but another trader said it was likely that the bank's footprint within the industry would become evident.
"They were here [at EPCA] two years ago chasing everybody for business," the source said.
A spokeswoman in the company's corporate communications department said on Tuesday that no official comment would be available until the following day.
Fortis has head offices in Brussell, Belgium, and Utrecht, the Netherlands.
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