ABN AMRO

ABN AMRO Holding N.V.
	File:ABN AMRO.svg
Company type	Public (Euronext: AAB, NYSE: ABN)
Industry	Financial services
Founded	1991
Headquarters	Amsterdam, the Netherlands
Key people	Mark Fisher, (CEO)
Products	Asset management ; Commercial banking ; Investment banking ; Private banking; Retail banking
Revenue	€19.827 billion (2005)
Number of employees	105,000
Subsidiaries	ABN AMRO Bank N.V
Website	www.abnamro.com

ABN AMRO (Euronext: AAB, NYSE: ABN) was, in the period of 1991 to 2007, one of the largest banks in Europe and had operations in about 63 countries around the world. A Dutch bank, it was the result of the merger in 1990-91, of two banks, AMRO and ABN, whose history dated back to the founding of the Nederlandsche Handel-Maatschappij in 1824.

A consortium of three European banks, Royal Bank of Scotland Group (RBS), Fortis, and Banco Santander, announced on October 8, 2007, that an offer for 86% of outstanding ABN AMRO stock had been accepted, making way for the largest ever bank takeover in history.^[1] On November 1 2007, an extraordinary shareholder meeting was held to change the bank's management. Mark Fisher from RBS took over as CEO. At that meeting the consortium stated that 97% of all shares were in their hands. This means that ABN-AMRO as it stood at the beginning of 2007 has now been broken up and split between those three firms, as well as Bank of America, which now owns ABN-AMRO's American retail assets.

Fortis will use the ABN AMRO brand name for Fortis's retail banking operations in the Netherlands.

Build up to acquisition

ABN AMRO had come to a crossroads in the beginning of 2007. The bank had still not come close to its own target of having a ROE that would put it among the top 5 of its peer group, a target that the then just appointed CEO Rijkman Groenink had set in 2000. From 2000 till 2006, ABN AMRO's stock price had stagnated.

The financial results for the FY 06 added to concerns about the bank's future. Operating expenses increased at a greater rate than operating revenue reflecting greater operating results difficulties. The efficiency ratio deteriorated further to 69.9%. Non performing loans increased considerably year on year by 192%. Net profits were only boosted by sustained asset sales.

There had been some calls over the last couple of years for ABN AMRO to break up, merge or to be acquired. On February 21 2007, these calls became very concrete, when the TCI hedge fund asked the Chairman of the Supervisory Board to actively investigate a merger, acquisition or break up of ABN AMRO, stating that the current stock price didn't reflect the true value of the underlying assets. TCI asked the chairman to put their request on the agenda of the annual shareholders meeting of April 2007.

Events accelerated when on March 20 2007, the British bank Barclays and ABN AMRO both confirmed they were in exclusive talks about a possible merger. On March 28 2007, ABN AMRO published the agenda for the shareholding meeting of 2007. It included all items requested by TCI, but with the recommendation not to follow the request for a break up of the company.^[2]

However, on April 13 2007, another British bank, the Royal Bank of Scotland (RBS) contacted ABN AMRO to propose a deal in which a consortium of banks including RBS, Belgium's Fortis and Spain's Banco Santander Central Hispano (now Banco Santander) would jointly bid for ABN AMRO and thereafter, break up the different divisions of the company. According to the proposed deal, RBS would takeover ABN's Chicago operations, LaSalle, and ABN's wholesale operations while Banco Santander would take the Brazilian operations and Fortis, the Dutch operations.

On April 23 2007, ABN AMRO and Barclays announced the proposed acquisition of ABN AMRO by Barclays. The deal was valued at €67 billion. Part of the deal was the sale of the LaSalle Bank to Bank of America for €21 billion.^[3]

On April 25 2007 the RBS led consortium brought out their indicative offer worth €72 Billion, if ABN AMRO would abandon its sale of LaSalle Bank to Bank of America. During the Shareholders meeting the next day a majority of about 68% of the shareholders voted in favour of the break up as requested by TCI.^[4]

The sale of LaSalle was seen as obstructive by many as a way of blocking the RBS bid which hinged on further access to the US markets to expand on the success of the groups existing American brand, Citizens Bank. On May 3 2007 the Dutch investor group VEB, with the support of shareholders representing up to 20 percent of ABN's shares, took its case to the Dutch commercial court in Amsterdam, asking for an injunction against the LaSalle sale. The court ruled on May 3, 2007, that the sale of LaSalle could not be viewed apart from the current merger talks of Barclays with ABN AMRO, and that the ABN AMRO shareholders should be able to approve other possible merger/acquisition candidates in a general shareholder meeting. However, In July 2007, the Dutch Supreme Court ruled that Bank of America's acquisition of LaSalle Bank Corporation could proceed.[1] Bank of America absorbed LaSalle effective October 1 2007.[2]

On July 23 2007, Barclays raised its offer for ABN AMRO to €67.5bn after securing investments from the governments of China and Singapore, but it was still short of the RBS Consortium offer. The UK bank’s revised bid was worth €35.73 a share, 4.3% more than its previous offer. The offer, which includes 37% cash, remained below the €38.40-a-share offer made the week before by Royal Bank of Scotland Group Plc, Banco Santander SA, and Fortis. Their revised offer didn't include an offer for La Salle bank, since ABN AMRO could proceed with the sale of that subsidiary to Bank of America. RBS would now settle for ABN's investment banking division and its Asian Network.

On July 30 2007, ABN AMRO withdrew its support for Barclays’ offer which was lower than the offer by the group led by RBS. While the Barclays offer matches ABN AMRO’s “strategic vision”, the board can’t recommend it from “a financial point of view”, the Dutch bank said. The US$98.3bn bid from RBS, Fortis and Banco Santander was 9.8% higher than Barclays’ offer.

On October 5 2007 Barclays bank withdrew its bid for ABN AMRO, clearing the way for the RBS-led consortium's bid to go through, with its planned dismemberment of ABN AMRO. Fortis would get ABN AMRO's Dutch and Belgian operations, Banco Santander would get Banco Real in Brazil, and Banca Antonveneta in Italy, and RBS would get ABN AMRO's wholesale division and all other operations, including those in India and the Far East.

On October 9 2007, The Royal Bank of Scotland-led consortium bidding for control of ABN Amro on Monday formally declared victory after shareholders representing 86 per cent of the Dutch bank’s shares accepted the group’s €70bn (£48bn) offer. The level of acceptances clears the way for the consortium, which includes Santander of Spain and Fortis, the Belgo-Dutch group, to take formal control of ABN. The group declared its offer unconditional on 10 October 2007 when Fortis completed its €13bn rights issue. This completed the financing required for the group’s €38-a-share offer, which includes €35.60 in cash. Rijkman Groenink Chairman of the Managing Board of ABN AMRO who heavily backed the Barclays offer decided that he would step down.^[5]

**Financial Data**
Years	2002	2003	2004	2005	2006
Sales net of interest	€18 280mn	€18 793mn	€19 793mn	€23 215mn	€27 641mn
Ebitda	€4 719mn	€5 848mn	€6 104mn	€6 705mn	€6 360mn
Net Result Share of the group	€2 267mn	€3 161mn	€4 109mn	€4 443mn	€4 780mn
Staff	€105 000mn	€105 439mn	€105 918mn	€98 080mn	€135 378mn