Belgium felt the full force of the credit crunch as fevered selling gripped shares in Fortis, prompting the Belgo-Dutch bank to issue a fresh denial of market rumours about its financial position.

Fortis is among Europe’s hardest-hit casualties of the financial crisis. The bank has struggled to regain the confidence of investors in spite of announcing measures to strengthen its capital base by €8bn ($11.6bn) in June, and ousting its chief executive, Jean-Paul Votron, the following month.

The shares fell as much as 22 per cent on Thursday to €5.50, amid rumours that a rights issue was in prospect, and talk that the Dutch central bank was putting pressure on Rabobank, the Dutch mutual lender, to provide liquidity for Fortis.

Rabobank said the rumour was false and that it had not been asked to help Fortis.

Fortis issued the latest in a succession of formal responses to market speculation, saying: “Fortis firmly denies rumours currently in the market and confirms its earlier statements.”

It added that it denied “problems about solvency and liquidity”.

Fortis also denied a rights issue was imminent last week, warning that “speculation regarding its share price [was] being exacerbated by e-mails spreading misinformation”.

In July, Fortis responded to what it called “exceptional market speculation” with a statement that it did not envisage any additional capital increase beyond the measures it announced in June, which included a €1.5bn share placing and an extensive disposal programme.

Ton Gietman, analyst at Petercam in Amsterdam, said Fortis needed to raise more than €5bn of additional capital to be able to fully integrate the assets it agreed to acquire for €24bn last year in the break-up of ABN Amro. “Fortis does not have a solvency problem right now. It may have in a year’s time,” he said.

Ivan Lathouders, analyst at Bank Degroof, said: “As there are few viable alternatives to asset sales, we expect that Fortis will be forced to sell in excess of €3bn of assets to improve solvency.”

Naked shorting – the sale of shares that have not yet been sourced – is banned in relation to Fortis and other Dutch financial stocks traded on Euronext.

Prime broking sources said hedge funds had been investigating ways of taking a short position in Fortis using index futures and stripping out exposure to the rest of the market.

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