Fortis Q4 profit halves on subprime, hints at deal

By Reed Stevenson

BRUSSELS (Reuters) - Dutch-Belgian financial group Fortis (FOR.BR: Quote, Profile, Research, Stock Buzz) said its profit halved in the fourth quarter after a 1.5 billion euro ($2.3 billion) subprime writedown, and hinted on Friday at a big deal that lifted its shares.

Net profit, which also included gains from Fortis's (FOR.AS: Quote, Profile, Research, Stock Buzz) 2007 acquisition of ABN AMRO's Dutch business and divestment of a joint venture, fell by a worse-than-expected 48 percent to 414 million euros from a year earlier, below the 538 million euros projected, on average, by analysts polled by Reuters.

Fortis said it was in talks on a deal that would boost its solvency, but Fortis Chief Executive Jean-Paul Votron gave no further details. "We have been engaged in exclusive negotiations on another transaction that will further strengthen our solvency substantially," he said.

Including 2 billion euros from the yet-to-be-announced deal and other steps to shore up capital, Fortis said it would be able to boost its solvency by 3.2 billion euros.

The market seized on the news of a deal and pushed Fortis shares higher, said one Amsterdam trader, reversing a near 5 percent decline. Belgian financial markets regulator CBFA had no immediate comment on the move.

Another trader said there was relief that Fortis had confirmed its subprime impact.

Fortis shares, which fell 34 percent in 2007 as it pursued ABN AMRO and during the subprime crisis, stood at 14.79 euros at 1322 GMT, up 3.5 percent. The DJ Stoxx European banking index was off 0.4 percent.

Fortis is the latest among the world's biggest financial groups to report a loss from exposure to subprime-related debt, which has caused UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) and Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) in Europe to take billions of euros in writedowns.