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ABN AMRO Holding N.V. (or ABN) is an international banking group headquartered in Amsterdam, The Netherlands, with total assets of 987 billion (US$1.3 trillion) at December 31, 2006. As one of the leading banks in The Netherlands, ABN is the result of the 1991 merger between Algemene Bank Nederland N.V. and Amsterdam-Rotterdam Bank. Through a network of over 3,500 branches, the bank provides a diverse array of financial products and services to individuals, corporations, and institutions in about 57 countries across the globe, though its primary focus is in The Netherlands, the U.S. Midwestern market, and Brazil. Since January 1, 2006, the bank divides its operations into seven client business units (BUs), serving approximately 20 million consumer clients and small to larger businesses worldwide.
This consists of five regional client BUs in the Netherlands (including Bouwfonds mortgages), Europe (including Banca Antonveneta from first quarter 2006), North America, Latin America, and Asia, and the two global client BUs of private clients (offering private banking services to wealthy individuals) and global clients (which serves approximately 550 multinational clients). In addition, there are three other external reporting units--BU asset management, BU private equity, and group functions. BU asset management manages 193 billion in specialist mandates and mutual funds in more than 20 countries across Europe, the Americas, Asia, and Australia. BU private equity manages a 2.3 billion investment portfolio, of which 2.1 billion is for ABN and the remainder for third parties. ABN enjoys long-term ratings of Aa2 from Moody's and AA- from both Standard & Poor's and Fitch. The 2006 revenue contribution by business unit is shown below.
In September 2005, ABN finally won its bidding war with Banca Popolare di Lodi (BPI) over Banca Antonveneta (BA), the ninth largest bank in Italy with 45 billion in assets. ABN AMRO purchased BPI's 31% stake in Banca Antonveneta for 26.50 per share for a total price of 3.2 billion. Combined with ABN's 30% interest in BA, ABN AMRO owned 61% after the completion of this transaction. In accordance with Italian regulations, ABN AMRO launched a mandatory cash offer of 26.50 per share for the remaining outstanding shares of Banca Antonveneta that ended on March 31, 2006. ABN AMRO expects the acquisition to contribute to earnings per share 12 months after the finalization of the bid for the remaining shares. By the end of 2007, ABN expects to generate approximately 430 million in annual cost and funding synergies. ABN will fund the acquisition so as to maintain its current credit ratings. ABN is committed to maintaining its BIS ratio above 10% at all times, as well as a Tier 1 ratio of 8% by the end of 2007.
The struggle for control of ABN AMRO between Barclays PLC (Barclays) and the RBS consortium, including Royal Bank of Scotland PLC (RBS), Spain's Banco Santander Central Hispano S.A. (Santander), and the Dutch-Belgian bank Fortis, N.V.(Fortis), has concluded. On October 5, 2007, the RBS consortium announced it had acquired 86% of outstanding ABN shares, and on October 10, announced the offer was unconditional, with the settlement of offers to occur on October 17. Following this, ABN CEO Rijkman Groenink tendered his resignation, and Mark Fisher, a member of the RBS Group Board and Group Executive Management Committee, was nominated as his replacement. On October 1, 2007, ABN AMRO completed the $21 billion sale of LaSalle to Bank of America. The allocation of the ABN AMRO businesses between RBS, Santander, and Fortis is expected to occur in the first half of 2008.
History of ABN Takeover Battle
In April 2007, ABN became the subject of a bidding war between Barclays PLC (Barclays), and a consortium of banks (the RBS consortium), which includes Royal Bank of Scotland PLC (RBS), Spain's Banco Santander Central Hispano SA (Santander), and Dutch-Belgian bank Fortis NV (Fortis). Under the terms of the original Barclays' offer, ABN AMRO shareholders would have received 3.225 shares in Barclays for each existing ABN AMRO share, or 28.75 (about US$40.50) per share. This came to a total value of roughly 53 billion (US$75 billion), and was concurrent with the sale of ABN AMRO North America Holding Company, which principally consists of the retail and commercial banking activities of LaSalle Bank Corporation (LaSalle), to Bank of America for US$21 billion in cash.
The RBS consortium originally said it would offer 30.40 cash plus 0.844 RBS share, or 36.85 (US$51.90) per share, with a total value of 68 billion (US$96 billion). While Fortis wanted ABN's operations in the Netherlands and Santander sought ABN's fast-growing Brazilian and Italian operations, RBS was interested in acquiring LaSalle, as well as the wholesale operations and international retail businesses of ABN AMRO.
In connection with the disposition of LaSalle, a lawsuit arose challenging ABN's deal with Bank of America. On May 3, 2006, the Dutch courts ruled that ABN AMRO would need to get shareholder approval to sell LaSalle. However, this ruling was appealed to the Dutch Supreme court, which issued an opinion on July 13, 2007, stating that ABN AMRO did not need shareholder approval to sell LaSalle to Bank of America.
Following this ruling, both Barclays and the RBS consortium increased their purchase offers for ABN AMRO. Barclays' new offer consisted of 2.13 Barclays' shares and 13.15 in cash for every ABN AMRO ordinary share, or roughly 32.15 (US$45.30) per share, with a total value of 60 billion (US$84 billion). The RBS consortium's new offer consisted of 0.296 RBS share plus 35.60 in cash or roughly 37.85 (US$53.30) per share, with a total value of 70 billion (US$99 billion). While the board of directors at ABN AMRO originally favored the Barclays' bid, the board dropped its support on July 30, 2007, though it did not endorse the RBS consortium bid either.
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