Fortis today denied it had liquidity problems, saying it had a funding base of €300 billion and solid solvency ratios as its shares fell for a fifth straight day in feverish trading.
As market concerns persisted about the Belgian-Dutch financial group's liquidity and funding levels, it said it was expanding the range of possible divestments and was in talks to sell assets that would raise €5 to €10 billion ($7.32 billion-$14.63 billion).
Fortis bank President Filip Dierckx said he would give good news regarding the bank before the end of December.
Chief Executive Herman Verwilst said the sharp share price declines reflected "nervousness" in the market, and the sum of Fortis' businesses were worth far more than the €14 billion indicated by the group's market capitalisation.
Fortis, part of a consortium that took over Dutch bank ABN AMRO last year, has become the latest European financial institution to become a focus of concern, prompting the Belgian Finance Ministry to say it was consulting with market regulators and the central bank.
The latest phase of Fortis' woes began in June when it announced an €8 billion capital programme, including a €1.5 billion share issue and dividend suspension to shore up its capital. Shareholder anger at that prompted the resignation of previous CEO Jean-Paul Votron.
But traders said on Friday they were worried about the liquidity and funding of the bank, and Germany's Dresdner said that although Fortis' liquidity risk appeared moderate, there was an increasing likelihood that Fortis would be taken over by BNP Paribas or ING Groep.
Europe's money markets remained paralysed today, despite increased liquidity injections from central banks around the world, as US political wrangling appeared to stall the passing of a $700 billion bailout plan.
Liquidity concerns push credit default swaps (CDS) on Fortis' five-year senior debt 75 basis points wider to 425 basis points today.
"It has been decided to implement a wider range of activities of assets to be divested, sold," Fortis said in a statement, adding that more than 10 deals have been earmarked in its banking and insurance businesses.
"These activities to be divested are located as well in and outside Benelux. The total estimates are between €5 billion and €10 billion. So far on every file concrete interest of potential buyers is indicated and confidentiality agreements have been signed."
Fortis shares were down 9.04 per cent at €5.94 at 11.30am after touching a 14-year low of €5.5 yesterday.
Reuters