Dutch state injects extra EUR 3 bln for merged banks

20th November 2009, Comments 1 comment

Finance Minister Wouter Bos says the state aid to nationalised banks ABN Amro and Fortis must be seen as an investment to get the new bank started.

The Hague – The Dutch state said on Thursday it would inject an extra EUR 3.0 billion in cash into the merger of nationalised banks ABN Amro and Fortis.

"The state will pay EUR 3 billion in cash," Finance Minister Wouter Bos announced in a letter to the lower house of parliament.

The two banks were rescued by the state at the height of the financial crisis in October 2008.

"The integration (of the two banks) into a single bank, and the capital requirements of the supervisory body, mean that an extra injection of capital, which I expect to be the last, is needed," the minister said.

The capitalisation, he added, "must be seen as an investment to get the new bank started".

"Unless unforeseen circumstances arise, this will be the last capital injection that the government provides."

Bos also announced that state loans worth EUR 1.4 billion to ABN Amro would be converted into capital.

The government nationalised the Dutch part of Fortis at a cost of EUR 16.8 billion last October after the giant and emblematic Dutch-Belgian bank and insurance group was broken up as a result of the crisis.

In December, the Dutch state paid EUR 6.5 billion for Fortis Netherlands' holding of 33.8 percent in RFS Holdings, the grouping that had taken over Dutch bank ABN Amro.

The fusion of the two banks as envisaged by the government has yet to receive approval from parliament. It would allow for annual savings of about EUR 1.1 billion, said Bos.

The new group would continue operating under the name ABN Amro.

The minister said the ABN Amro subsidiaries HBU and IFN Finance will be sold for about EUR 700 million, less than he thinks they are worth. The European Union insists on the sale as a condition for the ABN Amro-Fortis merger.

Germany's biggest bank, Deutsche Bank, offered in October to buy the subsidiaries, but the deal has to be approved by the Dutch parliament before 31 December.

ABN Amro said in a statement the sale would result in an overall loss of EUR 800 to 900 million, which includes a provision for credit guarantees.

In May, ABN Amro announced that it would cut 4,000-5,000 jobs from a total workforce of 30,000 by 2012 as part of a merger with Fortis Netherlands.

AFP / Expatica

1 Comment To This Article

  • Patrick posted:

    on 20th November 2009, 13:21:38 - Reply

    What!?!?

    My business should be seen as an investment too! Gimme.

    Bos should be removed. It is called the free market.

    How do the people people move for no confidence in this assembly of clowns?

    No wonder the Queen wants to call them on the carpet privately, I'd like the chance also... but it'd be a lot less civilized.

    "The integration (of the two banks) into a single bank, and the capital requirements of the supervisory body, mean that an extra injection of capital, which I expect to be the last, is needed," the minister said.

    If it isn't we can expect your resignation Mr. Bos?

    I wont be holding my breath waiting.