updated 10/3/2008 1:48:35 PM ET 2008-10-03T17:48:35

The Dutch government said Friday it will buy all operations of Fortis NV in the Netherlands for $23.2 billion as the troubled bank teetered on the edge of insolvency.

The Dutch government had participated in a three-way bailout plan for Fortis announced last Sunday that also involved the governments of Belgium and Luxembourg, where Fortis also has operations.

Dutch Finance Minister Wouter Bos said the move to full nationalization of Fortis' Dutch businesses was needed to prevent "the danger of infection" as Fortis appeared to be on the brink of failing this week.

Bos said clients had been withdrawing money and other banks were refusing to lend to Fortis. "We have today ensured that savers and clients know their money is in safe hands in our banks," Bos said.

With the Dutch government now buying outright Fortis' operations in the Netherlands, it's not yet clear whether the governments of Belgium and Luxembourg would also follow suit.

In a press conference with the Dutch prime minister and central bank president, Bos said the country's other banks were in no danger. "We assume this was a one-time affair," he said.

Having all Fortis' Dutch operations in strong hands will clear the way to merge Fortis' and ABN Amro's Dutch banking operations, said Nout Wellink, the central bank president.

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