The financial crisis in the US seems to be catching up in Europe as Belgian-Dutch banking giant Fortis denied rumours of being on the verge of collapse as it announced selling assets worth up to $14.6 billion in order to bolster its capital even as its stock plunged 35 per cent this week, forcing Fortis to change its CEO to restore investor confidence.

Fortis has come under intense pressure because of market speculation that the bank will find it extremely difficult to raise $12.2 billion it requires to bolster capital, and even that may not be sufficient as financial markets worsen. Speculation about its financial health also sparked rumours that it might be taken over by rival banks such as France's BNP Paribas.

Interim chief executive Herman Verwilst, said that the firm may sell more assets than earlier thought as it has become difficult to raise money from other sources but denied rumours that it was experiencing liquidity problems.

Fortis share had plunged to depth of nearly 23 per cent at one point and its shares closed the day with 20 per cent of its stock market capitalisation wiped out at €5.20 a share. Its stock has fallen 71 per cent this year having fallen for the past five days in a row.

Fortis had admitted that it had a significant exposure to sub-prime loans totalling €2.9 billion creating fears of a run on the bank.

As investor confidence plunged along with its share prices, Fortis changed its interim chief executive Herman Verwilst today with company insider Filip Dierckx, group executive committee member responsible for merchant banking. Chairman of Fortis Bank, to restore investor confidence. This comes when the previous CEO Jean-Paul Votron stepped down in July amid criticism of his managing the problems of the credit crisis.

Belgian Prime Minister Yves Leterme and finance minister Didier Reynders were forced to step in to calm Fortis clients and investor's by saying the government guarantees deposits. The government will also direct the Belgian financial regulator to conduct an inquiry on the false information or rumor about Fortis going under.

Its troubles began in June, when the company said it needed to raise more capital and that it would stop paying out dividends and depositors had withdrawn less than 3 per cent of their total assets of more than € 300 billion.

Fortis joined with Royal Bank of Scotland and Banco Santander to take over the Dutch bank ABN AMRO's core Dutch banking business last year, just before the credit crunch began. Fortis paid €24 billion for the ABN AMRO assets it acquired in the deal. (See: Royal Bank of Scotland- Fortis- Santander consortium acquires ABN Amro in world's biggest banking takeover) 

That acquisition is still sitting as a separate operation in a holding company and Fortis will not have power over the business until the third quarter of 2009, once the regulatory process is over.

Fortis had sold in March half of its asset-management unit to China's second-biggest insurer - Ping An Insurance for €2.15 billion.

Herman Verwilst, the group's interim chief executive, called a press conference to smooth investors nerve and reassure the markets that the bank was not following Lehman Brothers since it has a funding base of more than €300 billion.

He also said that the bank's solvency was "well above the regulatory minimum," and it could tap funds from institutional investors, retail and private deposits, central banks and corporations, as well as a collateral buffer if necessary.

Despite Fortis's assurances Friday, some banking analysts said the group was looking increasingly vulnerable to a takeover.