Fortis, the Belgian-Dutch financial services group, accelerated its big fund-raising project yesterday with the launch of a €1.5 billion (£1.2 billion) equity issue that sent its shares tumbling by almost a fifth.

More than €4.3 billion was wiped off the market value of Fortis, a part-owner of ABN Amro, the Dutch bank, after it scrapped the interim dividend and gave warning of tough times ahead. Dispensing with the halfway payout to shareholders will save Fortis €1.3 billion.

However, the bank's diving share price dragged down shares across Europe, forcing continental stock market indices to close at their lowest levels since October 2005, driven by the woes of the banking sector.

Shares in the banking and insurance group, listed in Brussels and Amsterdam, fell by almost 19 per cent on both exchanges. Fortis, valued at almost €22.6 billion on Wednesday, was worth €18.3 billion last night.

Fortis raised €13.4 billion through a huge rights issue, one of Europe's biggest cash-calls, that was completed last October. The group tapped existing investors, partly to finance its acquisition of ABN Amro. Fortis needs additional capital after its €24 billion acquisition of parts of the Dutch bank, which it bought alongside the Royal Bank of Scotland and Banco Santander, of Spain.

It bought the Dutch operations of ABN, as well as its private banking and asset management divisions, in a deal that was won after fierce competition with Barclays last year.

The consortium paid €70 billion for ABN Amro, a price widely viewed by banking analysts as far too high given the devastating effects of the credit crunch.

Fortis said yesterday that it was bringing forward its financial restructuring because “current exceptional circumstances necessitate these exceptional measures”. It said that it would be improving its solvency position by a further €8 billion over the next two years, on top of the €1.5 billion equity placing yesterday.

Merrill Lynch, JPMorgan, Morgan Stanley and Fortis itself will be running an accelerated process of building a book of shareholder interest in new shares. In an updated solvency plan, Fortis said that it would raise €1.5 billion from selling its property assets and then leasing them back.

About €2 billion would come from issuing securities that would not dilute present shareholders and €2 billion would come from the sale of other non-core assets.

Jean-Paul Votron, the chief executive, said he believed that the financial services market would remain difficult this year. He said it was unlikely that there would be an improvement in the economic environment soon.

Fortis also needs cash to buy out the 51 per cent of its Dutch insurance joint venture with Delta Lloyd. This year Ping An, China's second-largest insurer, increased its stake in Fortis to 4.99percent. It is expected to take part in the group's equity issue.

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