Shares in Fortis jumped by more than 7 per cent yesterday after the Belgian bank told investors that it would write down less than €1 billion (£754 million) on investments in US sub-prime mortgages.

Fortis shares closed at €14.21 on the back of the announcement on Sunday that it expected a net profit of about €4 billion for 2007. Profits from the sale last year of a 50 per cent stake in CaiFor, the Spanish bancassurer, to La Caixa, would add an extra €1 billion to full-year net profits.

The bank ruled out an emergency rights issue and said that its €24 billion financing for the acquisition of part of ABN Amro was on track, with €20 billion already secured.

The share price had slumped 10 per cent on Friday amid speculation that the bank was preparing to announce huge losses on its sub-prime investments. It is due to report full-year results on March 7.

The bank said that it would write down between €930 million and €2.4 billion on sub-prime investments in the final quarter, depending on the valuation model used. Using its own model, Fortis said that it would write down 40 per cent of its €600 million mezzanine super senior collateralised debt obligation (CDO) tranches and 15 per cent of its €4.6 billion high grade super senior CDO tranches. A more aggressive valuation would result in writedowns of 60 per cent and 45 per cent, cutting net profit to €3 billion for the quarter.

Analysts said that news that Fortis was ruling out an emergency capital raising outweighed the negatives. Even if it is forced to write down the maximum amount, its regulatory surplus would be above minimum requirements, the bank said.

Fortis was the biggest riser on the Bel 20 index but investors continued to be nervous about a global recession and the FTSEurofirst 300 index of top European shares ended down 1.2 per cent.

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