| Type | Temporary public ownership |
|---|---|
| Industry | Financial services |
| Founded | 1991 |
| Headquarters | Amsterdam, Netherlands |
| Key people | Gerrit Zalm (CEO) |
| Products | Asset management Commercial banking Investment banking Private banking Retail banking |
| Operating income | €2.6 billion (2009)[1] |
| Profit | €2.7 billion (2009)[2] |
| Total assets | €912 billion (June 2008)[3] |
| Owner(s) | Kingdom of the Netherlands |
| Employees | 31,000(2010)[4] |
| Website | www.abnamro.com |
ABN AMRO Bank N.V. is a Dutch state-owned bank with headquarters in Amsterdam. It was re-established, in its current form, in 2009 following the acquisition and break up of ABN AMRO Group by a banking consortium consisting of Royal Bank of Scotland Group, Santander and Fortis. Following the collapse of Fortis, the acquirer of the Dutch business, it was nationalized by the Dutch government along with Fortis Bank Nederland.
The bank is a product of a long history of mergers and acquisitions that date back to 1765. In 1991 Algemene Bank Nederland (ABN) and Amsterdam and Rotterdam Bank (AMRO) agreed to merge to create the original ABN AMRO. By 2007 ABN AMRO was the second largest bank in the Netherlands and eighth largest banks in Europe by assets. At that time the magazine The Banker and Fortune Global 500 placed the bank at number 15th[5] in the list of world’s biggest banks and it had operations in 63 countries, with over 110,000 employees.
In 2007 the bank was acquired, in what was at that time the biggest bank takeover in history, by a consortium made up of the Royal Bank of Scotland Group, Fortis bank and Banco Santander, of which the first two got into serious trouble as a result of the takeover. The large amount of debt that had been created to fund the takeover had depleted the banks' reserves just at the time the Financial crisis of 2007–2010 started. As a result the Dutch government took over and nationalized the Dutch parts of the operations which had primarily been allocated to Fortis to stop it failing. The UK government took effective control over the divisions allocated to RBS due to its financial bail-out of the Scottish bank. The remaining parts of ABN AMRO held by the consortiums RFS Holdings B.V., notably the overseas businesses, were merged with RBS, Santander, sold off or shut down.
The Dutch government appointed former Dutch finance minister Gerrit Zalm as CEO to restructure and stabilise the bank and in February 2010 the bank was split into two separate organizations. One owned by the Dutch government called ABN AMRO Bank N.V. and the other owned by The Royal Bank of Scotland Group named The Royal Bank of Scotland N.V.[6][7] On this date the Dutch owned businesses legally demerged from those owned by RBS.[8] The Dutch government owned the ABN AMRO name and used it for the parts of the bank they purchased while other companies within the Group were renamed or closed down.[9]
In 2010 ABN AMRO Group the owner of ABN AMRO Bank was created by merging the former sections of ABN AMRO Nederland, ABN AMRO Private Banking, together with Fortis Bank Nederland as well as formerly Fortis owned private bank MeesPierson and International Diamond and Jewelry Group. This started operating under the name ABN AMRO on 1 July 2010 at which time Fortis bank name officially ended. The Dutch government has said it would remain state owned at least until 2014 after which it would consider a public stock market listing for the new bank.
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In 1824 King William I established the Nederlandsche Handel-Maatschappij (NHM) a trading company to revive trade and financing of the Dutch East Indies and it would become one of the primary ancestors of ABN AMRO. The NHM merged with the Twentsche Bank in 1964 to form Algemene Bank Nederland (ABN). In the same year the Amsterdamsche Bank which was established in 1871 merged with the Rotterdamsche Bank which was established in 1873 (as part of merger that included Determeijer Weslingh & Zn. from 1765) to form AMRO Bank. In 1991 ABN and AMRO Bank agreed to merge to create ABN AMRO.
Through these mergers and acquisitions, ABN AMRO gained a large number of overseas companies and branches. From the NHM organisation it had a significant branch network in Asia and the middle east. One of these the Saudi Hollandi Bank which was the old NHM Jeddah branch and in which ABN AMRO still had a 40% stake, caused questions in the Dutch parliament from the political Party for Freedom. Another the Hollandsche Bank-Unie (HBU), which was created from the merger of the Hollandsche Bank voor de Middellandsche Zee (HBMZ) and the Hollandsche Zuid-Amerika Bank in 1933, gave ABN AMRO an extensive network of branches in South and Central America. In 1979 ABN expanded into North America with the acquisition of Chicago based LaSalle National Bank.
After the merger of ABN and AMRO Bank in 1991, ABN AMRO continued to grow through a number of further acquisitions, including in 1996 the purchase of suburban Detroit based Standard Federal Bank and in 2001 the Michigan National Bank both of which were rebranded as LaSalle National bank.
ABN Amro purchased The Chicago Corporation, an American securities and commodities trading and clearing corporation in fall 1995.[10]
Other major acquisitions included the Brazilian bank Banco Real in 1998 and the Italian bank Antonveneta in 2006. It was also involved in the controversial acquisition of the Dutch local government mortgage and building development organisation, the Bouwfonds[11] in 2000. ABN AMRO sold the Bouwfonds as a going concern in 2006.
ABN AMRO had come to a crossroads in the beginning of 2005. The bank had still not come close to its own target of having an ROE that would put it among the top 5 of its peer group, a target that the CEO, Rijkman Groenink had set upon his appointment in 2000. From 2000 until 2005, ABN AMRO's stock price stagnated.
Financial results in 2006 added to concerns about the bank's future. Operating expenses increased at a greater rate than operating revenue, and 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 prior couple of years, for ABN AMRO to break up, to merge, or to be acquired. On February 21, 2007, the call came from the TCI hedge fund which asked the Chairman of the Supervisory Board to actively investigate a merger, acquisition or breakup 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 the British bank Barclays and ABN AMRO both confirmed they were in exclusive talks about a possible merger.
On March 28, ABN AMRO published the agenda for the shareholders' meeting of 2007. It included all items requested by TCI, but with the recommendation not to follow the request for a breakup of the company.[12]
However, on April 18, 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 between them. According to the proposed deal, RBS would take over 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 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 LaSalle Bank to Bank of America for €21 billion.[13]
Two days later 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 breakup as requested by TCI.[14]
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, in order to expand on the success of the group's existing American brands, Citizens Bank and Charter One. On May 3, 2007, the Dutch Investors' Association (Vereniging van Effectenbezitters), 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 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. Bank of America absorbed LaSalle effective October 1, 2007.
On July 23 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's offer. Barclay's revised bid was worth €35.73 a share — 4.3% more than its previous offer. The offer, which included 37% cash, remained below the €38.40-a-share offer made the week before by the RFS consortium. 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 ABN AMRO withdrew its support for Barclays’ offer which was lower than the offer from the group led by RBS. While the Barclays offer matched ABN AMRO’s “strategic vision,” the board couldn’t recommend it from “a financial point of view.” The US$98.3bn bid from RBS, Fortis and Banco Santander was 9.8% higher than Barclays’ offer.
Barclays Bank withdrew its bid for ABN AMRO on 5 October, clearing the way for the RBS-led consortium's bid to go through, along 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 Asia.
On October 9, the RFS consortium led by Royal Bank of Scotland, bidding for control of ABN AMRO, formally declared victory after shareholders, representing 86 percent of the Dutch bank’s shares, accepted the RFS group’s €70bn offer. This level of acceptance cleared the way for the consortium to take formal control. The group declared its offer unconditional on October 10, when Fortis completed its €13bn rights issue. Thus the financing required for the group’s €38-a-share offer, which included €35.60 in cash, was realised. Rijkman Groenink, Chairman of the Managing Board of ABN AMRO, who heavily backed the Barclays offer, decided that he would step down.[15]
On 22 April 2008 RBS announced the largest rights issue in British corporate history, which aimed to raise £12billion in new capital to offset a writedown of £5.9billion resulting from the bad investments and to shore up its reserves following the purchase of ABN AMRO.
On 13 October 2008, British Prime Minister Gordon Brown announced a UK government bailout of the financial system. The Treasury would infuse £37 billion ($64 billion, €47 billion) of new capital into Royal Bank of Scotland Group Plc, Lloyds TSB and HBOS Plc, to avert financial sector collapse. This resulted in a total government ownership in RBS of 58%.
As a consequence of this rescue the chief executive of the group Sir Fred Goodwin offered his resignation, which was duly accepted.
In January 2009 it was announced that RBS had made a loss of £28bn of which £20bn was due to ABN AMRO.[16] At the same time the government converted their preference shares to ordinary shares resulting in a 70% ownership of RBS.[17]
On July 11, 2008, the CEO of Fortis, Jean Votron, stepped down after the ABN AMRO deal had depleted Fortis' capital.[18][19][20] The total worth of Fortis, as reflected by its stock value, was at that time a third of what it had been before the acquisition, and just under the value it had paid merely for the Benelux activities of ABN AMRO.[21]
Fortis announced in September 2008 that it intended to sell its stake in RFS Holdings, which includes all activities that have not been transferred yet to Fortis (i.e. everything except Asset Management).[22][23]
In 2008, RFS Holdings completed the sale of a portfolio of private equity interests in 32 European companies managed by AAC Capital Partners to a consortium comprising Goldman Sachs, AlpInvest Partners and CPP for $1.5 billion through a private equity secondary market transaction.[24][25]
In September 2009, RBS rebranded the Morgans sharedealing business in Australia as RBS Morgans in September 2009.[26] This followed the rebranding of the ABN AMRO Australia unit to RBS Australia in March that year.[27]
On 10 February 2010, RBS announced that branches of the businesses it owned in India[28] and the United Arab Emirates were to be rebranded under its name.[29] HSBC Holdings said it would buy the Indian retail and commercial banking businesses of Royal Bank of Scotland for $1.8b.[30][31]
Continuing problems in the Fortis operations in the 2008 financial crisis led to the Dutch state obtaining full control (for €16.8bn) of all Fortis operations in the Netherlands, including those parts of ABN-AMRO then belonging to Fortis. The Dutch government and the De Nederlandsche Bank president have announced the merger of Dutch Fortis and ABN AMRO parts will proceed while the bank is in state ownership.[32]
In January 2009, it was reported that shareholders in Belgium-based Fortis plan to file a lawsuit against the Belgian government over its handling of the carve-up of the troubled financial services group and are also considering a case against the Dutch government. The initial outcome of the lawsuit favours the Dutch state.
On 9 February 2010, the businesses of ABN AMRO acquired by the Dutch state were legally demerged from the RBS acquired businesses. This created two separate banks within ABN AMRO Holdings, The Royal Bank of Scotland and the new entity named ABN AMRO Bank, each licensed separately by the Dutch Central Bank.[33]
ABN Amro was mentioned by the SEC in court fillings when it sued Goldman Sachs and one of Goldman's CDO traders on April 16, 2010. The SEC alleges that ABN Amro was on the wrong side of the CDO instruments Goldman was creating and that Goldman defrauded both IKB (a German bank) and ABN-Amro in failing to disclose that the CDO's ABN Amro was purchasing were not assembled by a third party, but instead through the guidance of a hedge fund that was counterparty in the CDS transaction. This hedge fund, Paulson & Co., stood to reap great financial benefit in the event of default.[34]
ABN AMRO Bank has offices in 15 countries, but all but 5,000 of its 32,000 employees are in the Netherlands. Businesses include a private bank focusing on high-net-worth clients in 14 countries and a commercial and merchant banking operation, which is a player in specialist markets such as energy, commodities and transportation as well as brokerage, Clearing & Custody.[35]
| 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 | 105,000 | 105,439 | 105,918 | 98,080 | 135,378 |
Former employees of ABN AMRO:
The bank refers to itself as ABN AMRO in all capitals, based on an acronym of the two originating banks names Algemene Bank Nederland and the Amsterdam and Rotterdam Bank, in the second case the first two letters of each town make up the AMRO. The letters in 'ABN' are pronounced separately and 'AMRO' is pronounced as a word. For this reason some media spell the name as 'ABN Amro'. In written text both versions are used, although the bank itself uses only the uppercase version. In verbal conversations the bank is sometimes referred to as just ABN bank.
The green and yellow shield logo was designed by the design house Landor Associates for ABN AMRO in 1991 and has been used as a brand for the bank and all its subsidiaries.
ABN AMRO was the main sponsor of Ajax Amsterdam football club between from 1991 to 2008. The sponsor logo was the only one in the world to be printed vertically down the right hand side of the front of the shirt.
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