Fortis Forced to Call Off €3bn Asset Sale

Fortis, the embattled Belgo-Dutch bank, has been forced to call off the sale of around €3bn (£2.4bn) in assets because of the financial turmoil.

The company, part-nationalized on Sunday by Belgium, Holland and Luxembourg, said overnight it had scrapped plans to sell half its asset management business to Chinese insurer Ping An for €2.1bn.

Belgium's biggest bank also said the Dutch central bank had suspended approval of the sale of €709m of ABN Amro assets to Deutsche Bank. It blamed uncertainty in financial markets for both decisions.

Before its €11.2bn bail-out on Sunday night, Fortis had planned to dispose of up to €10bn in assets as part of its efforts to recapitalise itself – or twice as much as originally planned.

It has also been forced to sell all its ABN Amro assets for which it paid €24bn during last year's takeover by an RBS-led consortium.

Ping An, which owns 5% of Fortis, said it accepted the decision and fully understood it. Ironically, the suspended sale of assets to Deutsche could help Fortis as it would have made a €300m loss on the transaction, which was forced on it by the European Commission.

Shares in Fortis rose by 11% in Belgium today, with analysts predicting that it might eventually raise more capital by selling all its ABN Amro assets as a single package.

Separately, the bank said it had taken over the 32.9% of City-based Artemis Asset Management it did not already own for €397.2m.

These moves came as Charlie McCreevy, EU internal market commissioner, prepares to publish later today a revised capital requirements directive and plans for greater supervision of cross-border European banks.

The Irish commissioner, under fire from European capital market players, has watered down his earlier plans to force banks to retain at least 10% of securitised products and set the limit at 5%.

The French government would ideally like McCreevy to propose a single, pan-European banking regulator but he is expected to stick to his plans for a college of supervisors, with one leading regulator based in a banking group's home country.

The French, who hold the current EU presidency, are also proposing changes to accounting rules that would loosen the current "mark-to-market" valuations of distressed assets. They have called for emergency EU talks this weekend involving Britain, Germany and Italy to discuss the changes, including proposals to curb banking executives' pay.