BRUSSELS - Belgian-based financial group Fortis said on Monday it faces a legal claim for 362.5 million euros ($506 million) from a former unit now owned by the Dutch state.

But Fortis countered that the Dutch state is refusing to give it a stake in another nationalised business as compensation for the money, despite a contract to that effect.

Fortis, carved up by the Netherlands and Belgium in October, said the dispute concerned settlement of Class A1 preference shares issued by the unit -- Fortis Capital Co Ltd (FCCL) -- in 1999 to strengthen the capital of Fortis Bank Nederland (FBNH), also now owned by Dutch authorities.

The shares have a first call date of June 29, 2009.

FCCL's decision not to cancel the shares left holders with two options -- to stay in the instrument and receive a coupon or to exchange the shares for common Fortis shares, settlement of which could be in cash.

FCCL had opted for cash settlement, which its current and former Fortis parents were obliged to provide.

But Fortis argued that, per the terms of the original share issue deal, it should then be entitled to compensation in the form of new shares issued by FBNH.

The Dutch state, Fortis said, is refusing to allow that to happen.

Fortis Holding understands the reluctance of the Dutch State to see Fortis re-enter the capital of FBNH. However, this is the pre-agreed result of its decision not to call the instrument, Fortis said in a statement on Monday.

It added it remained open to discuss acceptable alternative forms of compensation. FCCL was expected to launch legal action against Fortis on Monday, Fortis said.

Spokespeople for FCCL and FBNH were not immediately available for comment.

In a statement, the Dutch finance ministry said it was not a party to the dispute, but that it had been briefed on the details and supported the position of Fortis Bank Nederland.

Fortis was broken up in October after an 11.2 billion euro cash injection failed to calm investors and is now essentially a Belgian insurance company with a variety of insurance operations elsewhere.

FBNH, its Dutch banking operation, is expected to be combined by the Dutch government with ABN AMRO into a new entity called ABN AMRO Bank NV, which will likely be sold off to the public in an offering in 2011 or later. (Reporting by Philip Blenkinsop in Brussels and Ben Berkowitz in Amsterdam; editing by John Stonestreet and Rupert Winchester) ($1=.7163 Euro)

ABN Amro BNP Paribas Settlement