ABN reassures RSB consortium

by Gill Montia

Story link: ABN reassures RSB consortium

Royal Bank of Scotland (RBS), which is heading a consortium making a €71 billion bid for ABN Amro, the Dutch bank, will be reassured to know that ABN is on course to achieve its financial targets, despite the recent turmoil on the money markets.

ABN has reported that it expects its capital strength to be marginally below its target for the end of the third quarter of 2007, but it will not be revising its forecast for loan loss provisions.

In efforts to reassure investors about its exposure to the asset-backed commercial paper (ABCP) markets, ABN has revealed that it has €51.5 billion in outstanding ABCP.

The bank, which describes it liquidity position was strong, believes that this amount is manageable and in line with exposures faced by other European banks.

Some analysts have expected RBS and its consortium partners, Fortis and Banco Santander, to try to invoke a “material adverse change” clause in the takeover bid.

However, whilst ABN has a strong presence in the debt and credit markets, it describes its exposure to sub-prime markets as “limited”.

RBS is awaiting approval for its bid from the Dutch finance ministry and if that approval is granted, it is expected to include requirements to maintain middle management and certain parts of the bank’s structure for a period of about a year.