Dutch Government Seeks $20 Billion in ABN Amro Share Sale
ABN Amro Group NV, the Dutch bank formed after the collapse of Fortis in 2008, will be sold to the public for as much as 15 billion euros ($20 billion), said Finance Minister Jeroen Dijsselbloem.
The bank will get about a year to prepare for the sale, Dijsselbloem said in a statement on the government’s website today. The Netherlands will then evaluate whether conditions are met and may sell the shares in three tranches, he said.
The government created ABN Amro Group, the country’s third-biggest bank, after seizing the Dutch banking and insurance units of Fortis, which had joined a 71.9 billion-euro ($96 billion) purchase of ABN with Royal Bank of Scotland Group Plc and Banco Santander SA (SAN) in 2007. The state spent 21.7 billion euros so far, Dijsselbloem said in today’s statement, meaning he may have to explain a loss to taxpayers already subject to tax increases and budget cuts.
“If Parliament agrees, the first opportunity for an IPO would be the first half of 2015,” Chairman Gerrit Zalm said in an e-mailed statement. “The Minister’s plans are the first step towards entering the private market.”
Governments across Europe are considering how to exit banks they bailed out during the financial crisis and subsequent European debt crisis. The U.K. is preparing to reduce its share in Lloyds Banking Group Plc (LLOY), while saying privatizing RBS is still some way off.
“High quality banks in countries perceived as less risky have performed very well in the last 12 months, showing investor interest in the industry has returned,” Cor Kluis, an Utrecht, Netherlands-based analyst at Rabobank International, said by telephone yesterday. “Earnings multiples have recovered and the markets look at through-the-cycle profits, so there’s no reason to wait much longer if you’ve made a decision in principle for an IPO.”
ING Groep NV (INGA), the biggest Dutch financial-services company, climbed 51 percent in the last 12 months, and closed at 8.78 euros in Amsterdam. BNP Paribas SA (BNP), France’s largest bank, rose 45 percent in the period, while Barclays Plc (BARC) advanced 50 percent.
“We need to take into consideration that the investment in 2008 won’t be recovered in full,” Dijsselbloem told reporters today. “The investment at that time wasn’t under the best circumstances, it had to happen.”
The finance industry in the Netherlands measures more than four times the economy, even after the splintering of ABN and the global credit crisis reduced it in size and importance. The government initially spent 16.8 billion euros buying Fortis’s Dutch banking and insurance units, including parts of the former ABN Amro Holding NV, after Fortis ran out of funding. Subsequent aid added to the costs of the bailout.
The country provided more than 95 billion euros for rescues of financial companies since 2008, including guarantees and capital injections. In February, it spent 3.7 billion euros to nationalize SNS Reaal NV, the fourth-biggest bank, after real estate losses brought it to the brink of collapse. The price paid for the financial stability created by the Fortis bailout was high and bore no relation to the economic value, a parliamentary commission probing the rescue said last year.
ASR Nederland NV, the Dutch insurance assets of Fortis, will be divested in an IPO or in a private sale, Dijsselbloem said today. The company, based in the Dutch city of Utrecht, has an estimated value of as much as 2.3 billion euros, the government said. As the Dutch insurance market is shrinking, ASR could “play a role in consolidation” in the industry, Dijsselbloem said.
For SNS, the government will await a European Union decision on the firm’s restructuring, Dijsselbloem said. In a plan submitted on Aug. 19, the Netherlands has proposed to split the company’s banking and insurance arms. The latter could, similar to ASR, be sold to a competitor.
“With the sale of ABN and ASR we will make a step toward a normalization of the financial sector,” Dijsselbloem said.
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