The Belgian-Dutch Bank Fortis said today it is accelerating its mammoth fundraising plans raising an immediate €1.5 billion (£1.2 billion) and scrapping its interim dividend this year. It said: “current exceptional circumstances necessitate these exceptional measures”. Its shares fell 6.9 per cent in Brussels trading this morning.

Fortis, one of Europe’s largest financial institutions worth an estimated €28 billion, said it planned to boost its solvency by more than €8 billion over the next two years, including issuing new shares and selling off assets.

The bank said that the decision to issue €1.5 billion worth of new shares with immediate effect was “well within the mandate given by shareholders to the Board" with Merrill Lynch International, JP Morgan, Fortis Bank and Morgan Stanley all running the book on the new shares.

The bank also announced that it was scrapping its interim dividend this year worth €1.3 billion describing the decision as an exceptional, but temporary measure. However, the bank would not confirm categorically when the dividend payment would be reinstated, saying that it intended to pay an interim dividend “probably as early” as 2009.

Fortis needs funding after its €24 billion acquisition and integration of parts of its former Dutch rival ABN AMRO. Last year, Fortis acquired ABN AMRO's Dutch operations, private banking and asset management businesses after buying Holland’s largest bank in a consortium including the Royal Bank of Scotland and Santander for €70 billion.

Like other European banks, Fortis also needs more capital to shore up finances damaged by the credit crisis.

In a statement, Fortis added: “The decision to accelerate the plan is based on the expected outcome in the coming weeks of the imposed sale of some of the Dutch commercial banking activities under the European Commission (EC) remedies ruling, the planned acquisition of the remaining 51% stake in the Dutch insurance joint venture with Delta Lloyd, and anticipates a continued challenging market environment as well as taking a prudent stance on required capital in the current environment."

In an “updated solvency plan” the bank said it aims to raise €8 billion overall. In addition to the €1.5 billion raised from the new shares, it intends to raise €1.5 billion from a sell off of its real estate assets on a “sale and lease-bank” arrangement, €2 billion from issuing “non-dilutive capital instruments” and €2 billion from the sale of it’s “mature, non-core” assets.

"We believe that 2008 will be a difficult year for our industry and we do not expect an improvement in the economic environment soon," Fortis Chief Executive Jean-Paul Votron said in a statement. "The measures announced today will help Fortis navigate through the current challenging market circumstances."

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