Fortis says it will sell more assets, as shares fall

The Dutch Belgian bank and insurer Fortis plans to sell additional assets to improve its solvency, the chief executive said Friday in an attempt to reassure customers and investors.

Shares in the Dutch-Belgian financial services group Fortis fell 21 percent on Friday, despite reassurances from its executives and financial authorities.

The bank's top managers insisted its financing is sound, and announced plans to sell up to 10 billion euros in assets if necessary to improve its solvency. But shares in the bank and insurer fell to 5.18 euros, their lowest level in more than a decade. They have lost nearly three-fourths of their value since January.

The current share price "does not reflect the value of our company" said CEO Herman Verwilst at a news conference in Brussels, Belgium. He said he was "flabbergasted" by the sell-off.

Belgium's top politicians also tried to soothe markets. Fortis has dual headquarters in Brussels and in Utrecht, Netherlands.

Belgian Prime Minister Yves Leterme called on investors to remain calm and promised that customers would not lose their money in any case. Finance Minister Didier Reynders said the bank has "absolutely no solvency problems."

The company said in July it needed to raise 5 billion euros in additional capital by 2010 to maintain solvency targets as it absorbs operations from ABN Amro that it bought for 24 billion euros last year.

At current stock prices, the combined company is worth just 14 billion euros.

Dutch Finance Minister Wouter Bos repeated that his ministry must give final approval before ABN Amro's retail banking arm - the largest in the Netherlands - is finally turned over next year to Fortis, which is under Belgian oversight.

For the moment ABN Amro is operating independently, and its nominal owner is Royal Bank of Scotland PLC, which led the consortium that bought ABN Amro last year in the largest takeover in banking history.

Verwilst said that customers have pulled around 4.8 billion euros worth of deposits since January, around 3 percent of the total, with "spikes" around events such as Lehman Brothers' bankruptcy.

Fortis rivals ING and Rabobank have eagerly targeted the bank's customers in the Netherlands.

Analysts and other observers have questioned whether Fortis will be able to raise the 5 billion euros by selling assets or issuing debt in the current market.

The company said in a statement Friday it is now considering "a wider range of activities to be divested" than before and expects to raise 5 billion to 10 billion euros. It did not specify what activities it will sell, but it said there was "concrete interest" for all operations it is selling, in insurance and banking, in the Netherlands and abroad.

Verwilst blamed uncertainty over whether the 700 billion dollar financial bailout plan in the US will proceed for fluctuations in Fortis' share price. "This does not affect the (underlying) value of a company like Fortis," he said.

Fortis spokeswoman Liliane Tackaert declined to answer whether the Dutch or Belgian national banks would step in to lend Fortis money or underwrite a share issue if all else fails.

Verwilst repeated Friday that the company has no plans to issue more new shares. Fortis caught investors by surprise in July by announcing a share issue and canceling dividends to preserve capital. That triggered a decline in shares, credit downgrades, and the abrupt departure of former CEO Jean-Paul Votron.