Financial Regulatory Forum

Dutch get two weeks to finish ABN asset sale

By Reuters Staff
October 2, 2009

European Commissioner for Competition Neelie Kroes speaks at a news conference at the European Commission headquarters in Brussels July 8, 2009. (file photo) By Ben Berkowitz and Gilbert Kreijger
AMSTERDAM, Oct 2 (Reuters) – The European Commission on Friday gave the Dutch government a surprise extension of time to sell portions of nationalised bank ABN AMRO, about two weeks after a sale fell apart and just three hours before what had been regarded as a firm deadline.

The Netherlands needs to sell some ABN AMRO or Fortis Bank Nederland assets to comply with a 2007 EC remedy order on competition in the banking market for small and medium-sized enterprises. The state had been given until 2200 GMT Friday to file an acceptable plan of some kind with the EU.

It had previously gotten four extensions on an asset sale deadline, and sources familiar with the talks said this week that Friday’s deadline was regarded as firm, final and not extendable.

But the EU said in a statement it decided to grant an extension to Oct. 19, at the state’s request, with European Competition Commissioner Neelie Kroes citing “good prospects for the imminent divestment” of some assets to a “large international bank.”

The Dutch Finance Ministry said in a statement it could not discuss the terms of the sale, but Finance Minister Wouter Bos said, “We are working very hard and we expect to conclude the case as soon as possible.”

If Kroes and the EU do not approve the asset sale, the Dutch government will not be allowed to merge ABN AMRO and Fortis Bank Nederland. It took control of the two in October 2008 when it nationalised Fortis’s local operations for 16.8 billion euros.

Merging the two banks and taking the new entity public in 2011 had been a linchpin of the government’s plan to recover its now 23 billion euro ($33.4 billion) investment.

SAME ASSETS, NEW DEAL?
The assets in question include commercial bank HBU, 13 advisory offices and two corporate client units, as well as a factoring business.

Dutch Finance Minister Wouter Bos told ANP-Reuters on Friday the government had had “very good” talks with potential buyers.

ABN AMRO’s former owner, Belgian-Dutch conglomerate Fortis, struck a deal in July 2008 to sell the assets to Deutsche Bank <DBKGn.DE> following the EU’s late-2007 competition order.

After the Dutch state nationalised Fortis’s local operations in October 2008 it tried to renegotiate the deal on the grounds that the agreed terms would cause a loss of more than 300 million euros.

Those talks collapsed Sept. 17. Subsequently, the Dutch finance ministry said it was considering all options to satisfy the EU remedy, including different assets than contemplated in the original sale.

Sources close to the banks told Reuters the state was considering a sale of Fortis Bank Nederland’s commercial banking arm instead, possibly to BNP Paribas. <BNPP.PA>

But at the same time, those same sources also indicated
the Deutsche Bank deal was not dead, and people familiar with Deutsche Bank’s thinking indicated it was still open to a deal.

“Given that there are good prospects for the imminent divestment of HBU to the most active bidder we have decided to grant an extension of the deadline until 19th October so as to allow negotiations to conclude on the essential terms of the sale,” the EU’s Kroes said.

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