The court ruling means the company would post a third quarter profit of euro152 million (S$303 million) instead of the euro135 million loss it reported in November.

Until September, Fortis was the largest bank in Belgium and the Netherlands but was forced to repeatedly seek government help during tight credit conditions and was eventually carved up, selling off most of its business in Belgium, Netherlands and Luxembourg.

Angry shareholders holding near-worthless stakes in Fortis, as a stripped-down insurer carrying some toxic assets, won a Belgian appeals court challenge to the government takeovers and sell-offs last week that ruled that they should have been consulted on any major deals.

That effectively blocked BNP Paribas' purchase of 75 per cent of Fortis' Belgian banking operations and all of its Belgian insurance operations for euro14.5 billion.

The Belgian government says it plans to appeal the court ruling, which would allow the original sale to proceed.

In the meantime, Fortis said it will now 'fully reconsolidate Fortis Insurance Belgium, at least temporarily.'

It won't immediately take on a two-thirds share in a structured credit portfolio holding high-risk repackaged debt valued in October at euro10.4 billion . The rest of the liabilities are shared between the Belgian government and BNP Paribas.

Fortis said those moves add euro500 million to its net cash position, which was euro1.6 billion after pledging to cover losses at the structured credit portfolio.

Failing to sell the insurance unit sees Fortis' net equity drop from euro7.7 billion to euro6.7 billion, it said.

Fortis ran into trouble with last year's ambitious euro24 billion8 takeover of the Dutch banking arm of ABN Amro. It could not raise money when credit markets froze in September as investors queried its debt burden and mounting losses on complex investments.

The Belgian, Dutch and Luxembourg governments and Fortis executives claim they had no option but to rapidly rescue and sell off the bank, to prevent its total collapse and triggering a breakdown in the region's financial system.

Fortis' Dutch bank - which is run separately - said Monday it also lost euro1 billion as a result of the allegedly fraudulent investment scheme allegedly orchestrated by Wall Street money manager Bernard Madoff. -- AP