BNP Paribas saw its shares slump yesterday following heavy losses at its corporate and investment division and claims that it could pull out of a €14.5 billion takeover of Fortis, its Belgian rival.

Concerns over the French bank's financial health were compounded by reports that Baudouin Prot, the chief executive, was prepared to abandon the Fortis bid.

After Fortis shareholders won a ruling last week from a court in Belgium freezing the acquisition procedure until February, Mr Prot is reported to have told Yves Leterme, the Belgian Prime Minister, he was ready to throw in the towel.

With BNP Paribas hoping to complete the deal for approval at its annual shareholder meeting on Friday, Mr Prot was quoted as saying that the French bank would walk away if there were further delays.

The Belgium government has appealed against the freeze, which was ordered by Brussels Appeals after Fortis shareholders claimed theu had not been consulted over the tie-up.

The acquisition would make BNP Paribas the eurozone's biggest bank by deposits, which would total about €600 billion.

Fortis said yesterday it would it would reconsolidate Fortis Insurance Belgium, the insurance division which had been hived off as part of the deal with BNP Paribas.

There was more bad news for the French group when it issued a statement to say its investment banking arm had lost €710 million in the first 11 months of the year.

As the division made a pretax profit of €879 million in the first nine months, the implication appears to be that it lost almost €1.6 billion in October and November.

The losses include €350 million lost through Madoff-linked funds.

Although BNP Paribas insisted that it remained 'largely profitable' as a whole, it announced a series of cost-cutting measure at the investment arm, where 800 jobs will cut out of a worldwide total of 16,000.

The announcement was a setback to Mr Prot, who had boasted in August that BNP Paribas was one of only two investment banks in the world to remain in the black, along with Goldman Sachs.

Both have now been dragged into the red after the US group announced a $2.29 billion quarterly loss this week - its first since it went public in 1999.

Shares in BNP Paribas fell.19.30 per cent to €33.37 in Paris in the wake of the losses and the delays over Fortis.

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