Bloomberg News

ABN Amro Studies Debt Swap After Loss From Greek Writedown

March 09, 2012

ABN Amro Group NV, the state-owned lender that includes Fortis’s former Dutch banking assets, reported a fourth-quarter loss after writedowns on Greek corporate loans and notes.

The net loss was 121 million euros ($160 million), the Amsterdam-based lender said in a statement today, compared with the 213 million-euro profit ABN reported a year earlier. That included a 380 million-euro impairment on the bank’s 1.3 billion euros of Greek government-guaranteed corporate loans.

Most of those loans appear on a list circulated by the Greek Finance Ministry on Feb. 24 and talks on a potential swap of foreign-law guaranteed debt will take place later this month. ABN Amro Chairman Gerrit Zalm said he will seek clarity on why certain loans are on the list while other debt is absent.

“It seems sloppy or there’s something behind it we do not yet grasp,” said Zalm, adding that the firm is still considering whether it should participate in the restructuring. “We are not a charitable organization.”

ABN Amro inherited the debt, including loans to state transportation companies, in 2010 as part of the separation process from its previous owners. The bank wrote down 880 million euros on the debt last year. The ABN Amro loans are governed by U.K. law.

Dutch Recession

The Greek government said today it reached its target in the biggest sovereign restructuring in history, with a 95.7 percent participation rate among investors after it received approval to activate collective action clauses. The goal of the exchange was to reduce the 206 billion euros of privately held Greek debt by 53.5 percent.

During the quarter provisions for bad loans increased due to a worsening Dutch economy, which entered its second recession in three years in the second half of 2011 as budget cuts and Europe’s sovereign debt crisis curbed consumer demand. Provisions at ABN Amro’s commercial-banking unit increased by 107 million euros from the third quarter.

ABN Amro’s underlying loss in the fourth quarter, excluding costs related to the breakup and integration of the former Fortis and ABN assets, was 23 million euros, compared with a 309 million-euro profit in the year-earlier period. Full-year underlying profit fell 11 percent to 960 million euros.

The lender’s cost-income ratio, or costs as a proportion of revenue, improved to 64 percent from 70 percent in 2010.

The Netherlands bought Fortis’s Dutch banking and insurance units and its stake in ABN Amro Holding NV in 2008 after the company ran out of short-term funding. Following a 30 billion- euro bailout, Dutch Finance Minister Jan Kees de Jager has indicated he plans to sell ABN Amro shares in 2014 at the earliest, preferably through a stock exchange listing.

Royal Bank of Scotland Group Plc, Spain’s Banco Santander SA and Fortis bought ABN Amro in 2007 for about 72 billion euros in the world’s biggest banking takeover.

To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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