DNB critical about competing bid for ABN

19th April 2007, Comments 0 comments

19 April 2007, AMSTERDAM - De Nederlandsche Bank (DNB) has warned that a bid on ABN Amro from a banking consortium of Fortis, Royal Bank of Scotland (RBS) and Santander could be risky.

19 April 2007

AMSTERDAM - De Nederlandsche Bank (DNB) has warned that a bid on ABN Amro from a banking consortium of Fortis, Royal Bank of Scotland (RBS) and Santander could be risky.

The regulator said this in a press release on Wednesday. "From a prudential point of view, an offer by a consortium would constitute a strong risk-increasing and complicating factor, both in the preparation of the transaction and in its execution and implementation," the DNB wrote. The central bank added it "would assess a concrete proposal, should one be made, with meticulous care."

The press release followed on an earlier discussion of these concerns between the DNB and Fortis. "The consortium recognises these issues and is convinced it is able to address them," Fortis said in its own press release.

DNB president Nout Wellink said previously that there were no objections on principle to the takeover of ABN Amro by a "solid" foreign bank. At a first glance it would seem that Fortis, RBS and Santander satisfy this criteria.

The problem seems to be that the three parties, who are competitors in addition to being partners, would have to divide up all of ABN Amro's assets in such a way that the continuity of the orderly operations of the bank is not endangered.

It could be difficult to ascribe future tax liability to specific business divisions and reflect this properly in the valuations, for instance.

In a separate, unpublished, letter to Fortis the DNB warns that the complicated transaction "puts serious demands on the solidity of the cooperation."

Assets manager Alex Otto of Delta Lloyd, which holds almost 1 percent of ABN Amro's ordinary shares, said yesterday that a takeover by Barclays would be the best option for "creating value in the long term."

[Copyright Expatica News + ANP 2007]

Subject: Dutch news

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