By Philip Blenkinsop
BRUSSELS (Reuters) - Belgium's government collapsed on Friday after a top court found signs that it had sought to sway a legal ruling on the future of stricken bank FORTIS <:FORB.BR:>(FORA.AM)
"(Belgian Prime Minister Yves) Leterme put the proposal (for a resignation of his government) to the cabinet and they have agreed to it," Leterme's spokesman Peter Poulussen said.
King Albert, who under the constitution must decide whether to accept the resignation, held talks with Leterme in the palace but deferred an immediate decision.
"The king is suspending his response and is immediately beginning consultations," the palace said in a statement of planned talks between the head of state and parties involved.
Leterme tendered his resignation a first time in July after failing to break a political deadlock among the country's linguistic groups, but the king refused it.
Observers said the likely next steps would be a reshuffled cabinet without Leterme or early elections, an option few of the ruling parties would want amid a deepening economic crisis and with the Fortis debacle on voters' minds.
"We'll have to look at how we assure stability in our country -- political stability we don't have at the moment. I hope that we'll at least find a way of managing things in 2009," Finance Minister Didier Reynders told Belgian television.
Leterme had been under pressure to quit over accusations that his office had sought to influence an appeal court ruling that last week froze the break-up of Fortis.
Earlier, an eagerly awaited report by Belgium's Supreme Court did not specifically target Leterme but concluded:
"All the above (in the report) of course does not offer ... legal proof of an attempt to interfere with the judiciary, but there are undoubtedly significant indications which point in that direction."
Leterme has denied trying to influence the appeal court, although he acknowledged that one of his officials had contacted the husband of one of the judges several times.
Fortis was carved up by the Dutch, Belgian and Luxembourg governments with France's BNP Paribas buying the Belgian operations after an 11.2 billion euro ($16.1 billion) cash injection failed to calm investor concerns over its health.
DISARRAY
Shareholders launched legal action, and the court victory has thrown the government's bailout plans into disarray.
They have seen their shares drop from almost 30 euros in April 2007, when Fortis launched its ill-fated bid for Dutch rival ABN AMRO, to just over 1 euro now.
BNP, too, has suffered, its shares dropping some 30 percent this week on increasing speculation that a collapse of the Fortis deal could weaken the bank's capital position and force it to turn to shareholders for cash.
The addition of Fortis's retail customers would make BNP the biggest bank in terms of deposits in the 15-country euro zone.
However, Fortis shareholders cheered mention of the court ruling at a meeting on Friday at which they voted to continue the company's business rather than liquidate the assets.
Leterme came to power in March after nine months of deadlock over the extent that powers should be devolved to Belgium's regions -- a key demand for Dutch-speaking Flemish parties.
The row reignited speculation the 178-year-old country could break up.
(Additional reporting by Anne Jolis and Antonia van de Velde; writing by Philip Blenkinsop and Mark John; editing by Dale Hudson and Michael Roddy)
