Fortis to speed asset sales

By Edward Harrison On Sep 26, 2008

The Dutch-Belgian bank Fortis has come under pressure in the aftermath of the WaMu bankruptcy. With the credit markets seized up globally, weaker banks are being attacked regardless of nationality – Wachovia, NCC and CIT Group in the US, Bradford & Bingley in the UK, Macquarie in Australia, and Fortis in Benelux.

These are truly trying times for financial institutions.

Dutch-Belgian financial services company Fortis NV said Friday it had increased the amount of its planned divestments to boost capital in light of continuing difficult market conditions.

Fortis said it aims to raise €5 billion-€10 billion ($7.29 billion-$14.58 billion) from the disposal of banking and insurance assets both inside and outside Benelux countries.

On June 26, Fortis announced disposals of mature non-core assets. This and other measures were intended to boost solvency by €8.3 billion.

Its Friday statement aimed to calm investor worries that have pressured Fortis shares in the last two days.

Fortis said that taking into account current difficult market circumstances for issuing nondilutive financial instruments, it will divest or sell “a wider range of activities of assets,” but doesn’t plan to launch a capital increase.

It said customer deposit outflows have remained limited and that its solvency is solid and above the regulatory minimum.

The update was made “in response to continued market rumors and questions,” that have weighed on its shares in the last two days.

Fortis shares, which came under heavy selling pressure Thursday, were the hardest hit among European bank stocks Friday. In midday trading they were down 11% at €5.86. The Stoxx Europe 600 bank index was down 2%.

Fortis said it won’t need additional capital for another 12-18 months as it integrates the largest part of the ABN Amro businesses it bought.
–WSJ

Sources
Fortis to Sell Assets to Bolster Capital – WSJ
Macquarie to shed margin loan interests – SMH
Bradford & Bingley’s future hangs in balance – Telegraph
Wachovia, Nat’l City tumble on bailout, WaMu news – Reuters