ABN Amro seeks new life as a global banking force

ITS name is inextricably linked with not just one but two major European bank failures, including that of the Royal Bank of Scotland – yet the Dutch financial firm ABN Amro is now claiming to be one of the best capitalised lenders in Europe.

In what has become a major U-turn in its fortunes, the Dutch-government owned bank has re-emerged as a force to be reckoned with and is expanding, despite being barred by the European Commission from making large acquisitions.

Nevertheless, Gerrit Zalm, a former Dutch finance minister who is now chief executive of ABN Amro, has said he aims to be a buyer of eurozone financial assets that other lenders, who are being forced to boost their capital ratios, are set to sell. Zalm said: “We are very well-capitalised and not in a position to have to shrink our balance sheet. We are certainly interested in taking over portfolios.”

ABN was the last straw for RBS after the Scottish bank carved up the Netherland’s largest bank in a top-of-the-market-priced deal along with Belgium’s Fortis and Spain’s Santander in 2007. RBS nearly sank under the weight of ABN’s imploding investment bank business, which was weighted heavily with toxic assets, leading to RBS requiring a multi-billion pound rescue by the British taxpayer. Fortis also had to be bailed out with part of it being sold off to BNP Paribas.

The ABN name was supposed to disappear as a result of the deal, but the rump of the bank that was nationalised three years ago kept the name and is poised to open an office in Dallas, Texas, and plans to open more offices in Moscow and Shanghai.

The Dutch government hopes to take the bank public again in 2014, when the EC limitation on acquisitions will also come to an end.

ABN booked a €974 million net profit in the first half of 2011 and is hiring 100 more staff for its growing energy, commodities and transportation (ECT) division.

The bank is still the world’s top financier in diamond and cocoa trading, while Zalm has set his sights on growing its private banking business, mainly by expanding its offices in Hong Kong and Singapore.

Zalm has, however, distanced himself from the risky activities of the bank’s recent past to focus on low-risk growth that are in “the interests of the taxpayer and the Dutch public,” Zalm said.

“This time we only want to do international activities in areas where we think we can beat the top banks in the world,” he said.

ABN’s rapid growth before the banking crisis sparked a furious competition between RBS and Barclays to buy it, which then blew up ignominiously in the faces of Goodwin, investment banking head Johnny Cameron, chairman Sir Tom McKillop and the rest of the Scottish bank’s board.