Belgians and Dutch battle to maintain confidence in Fortis

Belgian and Dutch officials are keeping in close touch in the fight to maintain confidence in financial group Fortis as liquidity concerns hammer its shares, officials said Saturday.

Dutch Finance Minister Wouter Bos is in "regular contact" with his Belgian counterpart Didier Reynders, ministry spokesman Jilles Heringa said, as were the respective financial watchdogs of each country.

But Heringa said he could neither confirm nor deny reports of a crisis meeting between Bos, Renders and the head of the Eurogroup, Luxembourg's prime minister and finance minister Jean-Claude Juncker.

In Brussels a spokeswoman for the Belgian financial sector supervisor, the CBFA, said that along with the Belgian national bank, "we are working on initiatives to restore confidence in Fortis."

"We are in frequent contact with the prime minister and the finance minister," as well as "anyone else who can play a role in these initiatives."

She said that while it was too early to give details, further statements might follow during the weekend.

Fortis late Friday said it had replaced its chief executive, Herman Verwilst, with Filip Dierckx, currently head of the banking division.

After two days of steep slides in its share price, the Belgian-Dutch banking and insurance group hastily arranged a news conference to assure clients that their deposits were safe and that it had ample funding.

But shares in the group only fell further, chalking up a loss of nearly 21 percent Friday -- down 71 percent since the beginning of the year.

The group, burnt by turmoil on the credit markets, insisted that its "solvency is solid and well above the regulatory minimum."

Nevertheless, it increased the amount of non-core assets it planned to sell, with plans now to raise from five billion to 10 billion euros through disposals both inside and outside its main Benelux operations.

However, it said that there were no plans for a new capital increase and that its capital needs were covered for the next 12 to 18 months.

The share slide comes even though Belgian and Dutch authorities have placed restrictions on short-selling, a technique used to speculate on a drop in a stock price that has been blamed for driving struggling financial shares lower worldwide.

Belgian Finance Minister Reynders appealed Friday "for calm and responsibility from all market participants."

He also insisted that the group's customers should not worry about the situation, saying "as everywhere in Europe, we will not leave any client in Belgium in difficulty."