Fortis bank to scrap dividends
Dutch bank Fortis will issue $2.35 billion in new shares and scrap cash dividends for the year to shore up its balance sheet.
Fortis was one of three European banks that joined in a $110 billion buyout of rival ABN Amro Holding last year just before the mortgage market in the U.S. blew up, sending ripples across the global financial industry.
The bank and insurance company in May reported first-quarter earnings had fallen by 31%, as its investments soured and assets declined in value.
On Thursday, the bank said the sale of some operations in the Netherlands will not raise as much money as hoped.
Fortis "anticipates a continued challenging market environment."
There is no immediate threat to solvency ratios required by banking authorities, Fortis said in a statement released Thursday cashadvance.
Shares of Fortis dropped 8.6% to $18.11.
Analyst Ton Gietman of Petercam repeated a "reduce" advice on shares.
"We should be extremely cautious with our profit forecast and moreover should not exclude further write-downs" to shore up the company’s capital position, he said.
The largest Dutch bank said it would not pay an interim dividend and would propose a full-year dividend be paid in shares - which would improve its solvency by an additional $2.04 billion.
Gietman estimated that would increase outstanding shares by 15%.
"Evidently we will reduce our estimates" for per-share earnings, he said.
Filed under: legal by Wolf