Belgian finance minister quits over banking dispute

Reuters News
Posted: Mar 05, 2013 12:27 PM
Belgian finance minister quits over banking dispute

By Robert-Jan Bartunek and Ben Deighton

BRUSSELS (Reuters) - Belgium's finance minister resigned on Tuesday and his party hurriedly appointed a lawyer and university professor to succeed him ahead of imminent talks on further austerity savings.

Belgium only emerged at the end of 2011 from 18 months of political paralysis which saw its bond yields shoot to euro-era highs as investors worried about its ability to rein in deficits and tackle a debt burden approaching 100 percent of output.

Steven Vanackere's departure follows a dispute over a favorable interest rate paid to a labor union linked to his Flemish Christian Democrats party by state-owned bank Belfius, the former retail banking arm of bailed-out Franco-Belgian group Dexia. Lawmakers have questioned in parliament whether the finance minister knew about the terms of the loan.

"Through my political inspiration, which is rooted ... in the Christian Democratic workers movement, some can't imagine me doing my duty as a finance minister in an impartial way, even though the allegations cannot be firmed up at all," Vanackere told a news conference on Tuesday.

The Flemish Christian Democrats, which retained the post, later appointed Koen Geens, a partner with a law firm and a professor of company and financial law at the University of Leuven, as Vanackere's successor.

Geens, who also studied at Harvard, coordinated efforts to produce Belgium's company code in 2001. He was also chief of staff of the premier of the Dutch region of Flanders from July 2007 to March 2009, when the financial crisis forced state bailouts of Belgian banks.

The 55-year-old is also a director at BNP Paribas Fortis.

Geens will have little warm-up before the government starts negotiations this month on adjusting its austerity program.

Belgium cut its budget deficit to about 3 percent of gross domestic product in 2012 from 3.7 percent in 2011, with 14.5 billion euros of savings, including plans to raise the effective retirement age. It aims to trim the deficit further, to 2.15 percent of GDP, with a 3.4 billion euro savings package agreed.

But with the plan based on growth of 0.7 percent and the central bank forecasting stagnation this year, a further 2 billion euros in savings is likely to be needed.

Vanackere became finance minister in December 2011, having served as foreign minister for two years.

(Writing by Philip Blenkinsop; Editing by Catherine Evans)