Fortis plans to raise £1.2bn

| June 26, 2008

Fortis, the Belgian-Dutch bank, has announced fundraising plans of €1.5 billion (£1.2 billion). It said current circumstances necessitate these measures.

Following the announcement, its shares dropped by 6.9% in Brussels trading this morning.

The bank, like many others, needs extra capital to ride out the credit squeeze. It also requires the cash to fund its €24 billion acquisition and integration of parts of its former Dutch rival ABN Amro.

Fortis was part of the consortium with Royal Bank of Scotland and Santander that bought ABN Amro in 2007 for €70 billion.

It also plans to improve its solvency by over €8 billion over the next couple of years, this includes issuing new shares and selling off assets.

Fortis chief executive, Jean-Paul Votron, believes that this year will be challenging for the industry and an improvement in the economic climate is not expected anytime soon.

The cash call will help Fortis through the current challenging market environment, concluded Mr Votron.

Fortis took a charge of €380 million from sub-prime losses in the first quarter of the year. The bank, which is one of Europe’s largest financial institutions, is valued at around €28 billion.

Tags: ABN Amro, cash call, credit squeeze,

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