Fortis manages its capital base at group level based on the following targets:

• a capital target for Fortis Bank equal to a ratio of 7% extended core equity to risk-weighted commitments, including 1% hybrid capital. This implies a target of 6% core equity to risk-weighted commitments
• a capital target for Fortis Insurance equal to 225% of the regulatory minimum, which includes 50% of hybrid capital. This implies a core equity target of 175% of the regulatory minimum
• a Group leverage target (at General) equal to 15% of the target core equity of Banking plus the target core equity of Insurance, implying that 15% of Banking and Insurance’s combined target core equity could be financed by group debt

Given the moderate risk profile of the businesses acquired from ABN AMRO, Fortis Group will maintain the current capital targets after the acquisition (expressed under the Basel I framework for the Bank) in line with rating expectations.

During the first nine months of 2007, Fortis’s core equity increased by EUR 1.9 billion to EUR 21.4 billion. This was EUR 1.4 billion above target at the end of the first nine months of 2007, compared with EUR 1.8 billion at the end 2006. During the fourth quarter of 2007, the solvency was strongly affected by the acquisition of certain activities of ABN AMRO and related financing transactions. The amounts presented are based on the consolidation of the businesses acquired from ABN AMRO under the equity method, whereby 50% of Fortis’s EUR 24.2 billion stake in RFS Holdings is deducted from core equity. The remaining 50% is deducted from total capital, which does not affect the measurement of core equity.

Every time an ABN AMRO activity is transferred to Fortis, the goodwill and intangibles related to that activity will be deducted from core equity and the related risk-weighted commitments will be consolidated. On the other hand, the amount of the participating interest previously deducted will be reduced accordingly. The asset management activities are expected to be transferred in the second quarter of 2008, and the remaining activities should be transferred between the fourth quarter of 2008 and the last quarter of 2009. In the course of this period the surplus of core equity will decrease, but Fortis will manage its capital in such a way that core equity ratio and leverage are close to target once the ABN AMRO activities have been fully transferred.

In the fourth quarter of 2007, the amount of Fortis’s core equity above target increased by EUR 4.7 billion from EUR 1.4 billion to EUR 6.2 billion. The EUR 12.1 billion deduction of Fortis’s stake in RFS Holdings from core equity was more than offset by the EUR 18.4 billion raised through financing transactions related to the acquisition of ABN AMRO activities.

Fortis Bank and Fortis Insurance have strong solvency ratios. The Tier 1 ratio strengthened from 7.1% to 9.5%, and the core equity ratio improved from 6.0% to 8.6%. The total capital ratio decreased to 10.1% from 11.1% at year-end 2006. These ratios reflect the equity method consolidation of businesses acquired from ABN AMRO, whereby Fortis’s stake in RFS Holdings is fully deducted from capital: 50% from core equity and 50% from total capital.

Credit risk-weighted commitments amounted to EUR 249.3 billion, up 12% over 2007. This increase was driven by strong volume growth, particularly at Merchant & Private Banking. Credit risk-weighted commitments were strictly controlled during the second half of 2007, which resulted in a 3% decrease compared with their level at the end of the first half, despite robust growth of commercial activity. Market risk-weighted commitments went up 13% to EUR 20.9 billion. Total risk-weighted commitments amounted to EUR 270.2 billion, up 13% in 2007.

In the course of the year, Fortis Insurance’s core equity ratio and total solvency ratio declined from 233.5% to 209.2% and from 269.3% to 235.1% respectively. Both ratios are still well above the respective targets of 175% and 225% of the required minimum.