Fortis Losses Shareholders' Confidence As Belgian, Dutch Regulators Find Solution

September 28, 2008 10:03 a.m. EST

London, UK (AHN) - Dutch-Belgian financial services firm Fortis reportedly plans to sell itself as Belgian and Dutch regulators discuss the ways to restore confidence in the company.

Reports have emerged suggesting that the company that saw its stock value plunge by 35 percent last week in Brussels is likely to put itself up for sale or sell one of its acquisitions.

Media reports indicated the company may plan to sell the ABN AMRO Dutch banking business it took over in 2007 as the financial services group struggles to raise capital to shore up its balance sheet.

Last year, the firm spent as much as 24 billion euros on ABN Amro Holding NV assets just at the beginning of U.S. subprime mortgage contagion during the summer.

The company's clients have withdrawn as much as $7.30 billion (5 billion euros) of their deposits, which may be only 3 percent of its total deposits but the signs of lowering confidence in the company are clear.

Experts speculate that it might send a wrong message to the investors and trigger further withdrawals from the bank, leading it to collapse.

A representative from the Belgian Banking, Finance and Insurance Commission (CBFA) has said that officials from both Belgium and the Netherlands along with the Dutch Central Bank are trying to find a solution to avert the collapse of the keystone of banking in Holland and Belgium.

The ninth biggest financial-services firm in the world sent a shiver down the spines of its shareholders after the company reported that it has to raise $12 billion (8.3 billion euros), which may lead Fortis to sell its assets at very low rates.

Shares of the firm plunged a record 20 percent late on Friday after it replaced Herman Verwilst, chief executive officer, with Filip Dierckx as the head of its banking segment.