Another day, another bank seeks capital to shore up its balance sheet – this has become quite a regular occurrence in recent times. Belgian-Dutch financial group Fortis NV today became the latest European casualty of the sub-prime crisis to seek fresh financial succor, saying it aims to boost its solvency position with €8 billion ($12.54 billion) worth of measures, including a €1.5 billion capital increase and asset disposals.

Fortis also said it will cancel its interim 2008 dividend and to pay the full-year dividend in shares. Following this announcement, its shares fell 17 per cent to €10.49, the lowest in more than five years.

"We believe that 2008 will be a difficult year for our industry and we do not expect an improvement in the economic environment soon," CEO Jean-Paul Votron said.

Fortis now follows in the footsteps of Royal Bank of Scotland Group PLC, UBS AG and Credit Agricole SA, which were all forced to raise capital to restore their damaged balance sheets.

The bank also plans to sell and lease back some of its property, sell non-core assets and issue up to €2 billion of non-dilutive capital instruments, such as preference shares.

The decision not to pay an interim 2008 dividend will preserve solvency as the interim dividend was expected to impact second quarter solvency by €1.3 billion. A proposal to pay the full-year 2008 dividend in shares will be made to the annual shareholders meeting in March 2009.

The measures outlined will increase the core Tier 1 ratio of Fortis Bank, which at the end of the first quarter stood at 8.5 per cent, and will - considering full consolidation of the acquired ABN Amro assets - enable Fortis to keep the core Tier 1 ratio well above 6 per cent by year-end 2009, under Basel I guidelines.

The bank was part of the consortium with Royal Bank of Scotland and Santander that bought ABN Amro last year for €70 billion. Fortis ended up with ABN's Dutch operations, as well as its private banking and asset management businesses. (See: Royal Bank of Scotland- Fortis- Santander consortium acquires ABN Amro in world's biggest banking takeover)

Commenting on the second quarter, Fortis said "the underlying commercial performance of the banking and insurance activities continues to be resilient and is expected to be in line with or slightly up on the previous quarter. Lower capital gains are anticipated to be offset by lower impairments on the structured credit portfolio."

The company said difficult market conditions, caused by a global credit crunch, meant it had to take "exceptional measures".

Fortis took a charge of €380 million from sub-prime losses in the first three months of the year. It will publish its second-quarter results on 4 August.