Fortis Says Subprime May Hit Profit by 1 Bln Euro

By Julien Ponthus

BRUSSELS (Reuters) - Fortis (FOR.BR) said on Sunday its 2007 profit could be hit by 1 billion euros ($1.5 billion), depending on the valuation models the Belgian-Dutch bank chooses to assess the value of its subprime portfolio.

Fortis said its net profit before divestments could be lowered to 3 billion euros from 4 billion if its board decided to apply higher coverage ratios than the ones it now uses.

"Since January 2008 a number of peers applied substantially higher coverage ratios," the bank said in the statement.

"If these scenarios were to be applied to the closing of the accounts of 2007 -- which would be subject to approval by the board of 6 March 2008 -- the net profit of Fortis is to be around 3 billion euros," it added.

The bank was under pressure to communicate on its subprime exposure after a newspaper report on Saturday said it would need to write off up to 2 billion euros in its subprime portfolio.

Also, shares in Fortis fell more than 10 percent on Friday on market talk of profit warnings and possible exposure to U.S. subprime mortgages, traders said.

Fortis said it would present 2007 results on March 7 and that they would reflect the most recent views on subprime in the markets.

A source briefed on the situation told Reuters on Friday there would be higher-than-announced write-offs due to Fortis' subprime exposure, declining to give precise figures.

Fortis also sought to reassure investors in its Sunday statement and said its capital and solvency position were sound and it planned to maintain its dividend at last year's level.

It also said it was not considering issuing new shares.

Fortis said it was on track to complete its 24 billion-euro financing plan for the acquisition of the Dutch activities of ABN AMRO.

"At the end of 2007 around 20 billion euros of capital has been secured," it said.

Financial markets remain nervous after a week that started with plummetting stocks on fears of a U.S. recession and saw both a massive rate cut by the U.S. Federal Reserve and the biggest trading scandal in banking history after a junior trader at France's Societe Generale (SOGN.PA) was accused of secretly amassing a $7 billion loss in bad bets.

(Editing by Braden Reddall)

($1=.6825 Euro)