Page last updated at 21:22 GMT, Friday, 19 December 2008

Belgian PM proposes resignation

Prime Minister Yves Leterme
Prime Minister Yves Leterme has been in an emergency cabinet meeting

Belgian Prime Minister Yves Leterme has offered his government's resignation amid a growing row over the break-up and sale of the stricken bank, Fortis.

King Albert II has deferred the decision on whether to accept it, and has begun talks on how best to proceed.

Earlier, Justice Minister Jo Vandeurzen quit after a judge said there were signs the government had tried to stop a court freezing the sale of Fortis.

The appeals court ruled shareholders had not been properly consulted.

Fortis has been among the European banks hardest-hit by the current financial turmoil, which left it desperately short of cash.

'Suspending response'

Mr Leterme's spokesman, Peter Poulussen, confirmed the government's decision to resign had been approved by the cabinet at an emergency session on Friday.

"The cabinet has decided to tender the resignation of the entire government to the king," he said.

A man walks out of a branch of the Fortis bank in Brussels on 18 December 2008
The government is embroiled in a row over the sale of its stake in Fortis

Under Belgium's constitution, the king must now decide whether to accept the resignation. However, he has said he will defer the decision.

"The king is suspending his response and is immediately beginning consultations," the palace said in a statement.

Mr Leterme only took office in March, nine months after a general election had resulted in political deadlock founded in tensions between Flemish and Walloon groups.

He tendered his resignation in June after he failed to push through plans to devolve more power to the regions, but the king rejected it.

Correspondents say the king could refuse the resignation again on the grounds that being without an administration would be dangerous during the current financial crisis.

Court report

The BBC's Europe business reporter, Ben Shore, says the root of the government's crisis can be traced to New York in the middle of September and the bankruptcy of Lehman Brothers.

After that, bankers almost completely stopped lending to one another and Fortis could not refinance its debts, forcing the Belgian government to take over and sell almost all the company's assets, our correspondent says.

Hundreds of thousands of investors were left with virtually nothing and so began a successful legal action effectively preventing the asset sale.

Last week, the Brussels appeal court ruled in favour of the shareholders and froze the sale of most of Fortis to France's BNP Paribas, which was supposed to have been finalised this week.

Then, in a judgement earlier on Friday, Belgium's Supreme Court president said there were "undoubtedly significant indications" that members of the Belgian government had attempted to influence the outcome of the court case.

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