The restoration of ABN Amro
It is essential to ensure that the most important Dutch bank will be revived.
ABN Amro still hasn't made it. Last week the sale of a subsidiary company, the small HBU bank, to Deutsche Bank fell through at the last moment. It seems the tale of what once was the most important Dutch bank continues to drag on.
The Belgian Fortis group, Spanish Santander and the Royal Bank of Scotland
divided ABN Amro into three parts two years ago during a takeover that now
appears irresponsible. After the collapse of Fortis a year ago during the
credit crisis, the Dutch state obtained both the Dutch ABN Amro part of
Fortis and the Dutch part of Fortis itself in its bailout
action.
The blow from the credit crisis was not a calamity that could have affected every bank, as Maurice Lippens, the former director of Fortis, would have the world believe these days. Fortis had overplayed its hand and had not completed the massive financing of the takeover, a large part of which was in cash, when the crisis hit. The reckless, overconfident takeover had made the group vulnerable.
The course of the subsequent bailout by the state came down to a merger of ABN Amro and Fortis, now entirely in government hands. The process of restoring ABN Amro to its former glory, for better or worse, is now experiencing delays.
European Commissioner for Competition Neelie Kroes has given the Dutch finance ministry two weeks to propose alternatives to the sale of parts of ABN Amro Nederland or Fortis Bank Nederland. The deadline is October 2, the directorate-general for competition announced Monday.
The deadline for selling parts to reduce its market share in the Netherlands expired - for a fourth time - on September 18, a day after the sale of HBU to Deutsche Bank failed.
The Dutch government became the owner of both banks when they were nationalised in October 2008.
Kroes gives Dutch more time
The European Commission requires that the new group to be formed must reduce its market share by selling off parts. But the takeover of the ABN Amro subsidiary HBU by Deutsche Bank - a transaction initiated two years ago during the takeover of ABN Amro by Fortis - has failed at the last moment. That is very unfortunate. Brussels is impatient, and a separate investigation is already being conducted into the state support provided by the government to Dutch banks, especially ING.
It would be difficult enough to merge ABN Amro and Fortis in the Netherlands, not least because Fortis has had to exchange its dominant position from last year for the role of subsidiary partner. Mergers take time and are expensive, and they frequently fail.
The restoration of ABN Amro takes priority. Although the Dutch business community can turn to international parties in our open economy, it is important to have banks inside the country that can monitor the export activities and international expansion of their clients. ABN Amro was such a bank. It will be difficult to restore this international presence.
Therefore, it is essential to ensure that ABN Amro will be revived. The sale of HBU or the disposal of another part of the company that will make Brussels happy must take priority. The Finance ministry has enough on its plate, with the government's finances in such a deplorable state. Another good reason to round off the ABN Amro case as quickly as possible.