Green light for the sale of ABN AMRO

On the proposal of the Minister of Finance, Jeroen Dijsselbloem, the government has decided to start preparations for the sale of ABN AMRO. The bank can be floated on the stock exchange from the fourth quarter of 2015. The financial sector has been strengthened and is stable enough for a sale. There is sufficient market interest and the bank is ready. The conditions the minister had previously set on the timing of the sale have therefore been fulfilled.

The government nationalised ABN AMRO at a cost of €21.66 billion in 2008,’ explained Mr Dijsselbloem. ‘It did so to stabilise the financial sector, and to save the bank and keep it in Dutch hands. It was always intended as a temporary emergency measure and that ABN AMRO would be reprivatised. The results for the first quarter of 2015 show how good the bank’s commercial performance is.’

Method of sale

The bank will be sold in phases. Between 20% and 30% of the shares will be floated in the first phase. The state holding will then be gradually reduced. The state will therefore remain a shareholder in ABN AMRO through NL Financial Investments (NLFI) for several years. The Minister of Finance must grant permission for each transaction.

Several methods of sale have been studied. A flotation is the most viable option. The total proceeds will not be known for several years. It is up to ABN AMRO and NLFI to market the bank as effectively as possible and to earn the highest possible price for the shares. The cost of the sale will be determined in part by the ultimate value of ABN AMRO. Earlier calculations by external specialists put the market value at about €15 billion. In combination with a first tranche of 30% of the shares, this would make the total cost of the sale about €90 million.

Governance

Mr Dijsselbloem is confident that ABN AMRO will continue to provide a good service to its customers and distribute an appropriate dividend to its shareholders while maintaining its strong capital position. The Dutch central bank (DNB) shares the view that a flotation is possible at the end of the year. Before the flotation, it will check whether ABN AMRO satisfies the applicable finance, risk, compliance and other conditions. ABN AMRO believes it will satisfy DNB’s conditions in good time.

In view of ABN AMRO’s history and the lessons learned from the financial crisis, the government attaches importance to an effective governance structure for the bank that protects both the financial interests of the state and the health of the company as an important member of the financial sector. The bank’s new Articles of Association will lay down that as long as the state holds more than a third of the shares, it can veto decisions to change the identity or character of ABN AMRO.

Anti-takeover mechanism

A trust office will be set up to protect the public interest and the company’s continuity. It will issue depositary receipts for ordinary ABN AMRO shares. Under normal conditions, the holders of the depositary receipts will exercise all beneficial rights and powers. In the event of a hostile takeover bid, the trust fund will be able to withdraw the voting rights on the depositary receipts for a period of up to two years. The desired anti-takeover mechanism is currently being discussed with the supervisory body. By involving the supervisory body at an early stage, the government intends to gain the required assurance on the admissibility of the anti-takeover mechanism before the flotation.