The Royal Bank of Scotland-led consortium clinched a record EUR 60-billion takeover of ABN Amro last week, after a six-month takeover battle which is set to reshuffle the European bank league tables and ruffle the feathers of competitors for regional supremacy.
The consortium secured its victory by winning backing from shareholders with a cumulative 86 percent of the bank's shares. The outcome was somewhat predictable, as the RBS-led bid was higher and mainly in cash, while Barclays' offer was mostly in shares.
The takeover will end in the break-up of ABN Amro assets among RBS and the two other members of the consortium, the Belgian-Dutch group Fortis and the Spanish Banco Santander.
It will propel the three banks up the regional and world banking rankings: Fortis will become market leader in Holland and one of the biggest private banking players in Europe, comparable to the likes of UBS and Credit Suisse. Santander will acquire ABN's Business Unit Latin America and become one of the strongest banks on the Brazilian market, while RBS will take over ABN's Business Unit North America, Business Unit Global Clients and wholesale clients in the Netherlands and in Latin America, Business Unit Asia and Business Unit Europe.
Aside from rearranging the world banking scene as people knew it, RBS's purchase signals a consolidation trend that has been around for some years, but never seen at this scale. “International banks will continue to play a significant role in CEE, targeting the region as a market for growth. Some start to gradually expand towards new, developing regions,” said Fabio Mucci, economist with UniCredit Group CEE Economic Research division.
“Concentration in the CEE market could be ‘imported.' It could be a consequence of wider scope for cross-border M&As at the West European level, as only three among the leading international groups in the CEE market are significant players in the European arena, UniCredit, SocGen and IntesaSanPaolo,” said Mucci.
Aside from its global impact on the market, the deal will also affect the Romanian banking system, as ABN Amro Romania and its 20 branches will come under the RBS umbrella after the acquisition.
“In the short term we expect the effects to be limited because the bank does not have any operations in Romania. The issues that you would face in other markets where both parties operate in terms of integration activities are something that is not relevant here,” said ABN Amro Romania CEO Peter Weiss in an interview with Business Review prior to the completion of the acquisition.
ABN Amro Romania has been active locally since 1995, and started off by catering predominantly to corporates. Since 2005, it decided to widen its range of services and products in order to draw in more retail clients, at first, and then small and medium enterprises as well. The development was designed to help the bank tap into the market's most money-making segments, but the bank still did not manage to outdo the growth of the market.
Its net profits at the end of 2006 totaled EUR 10 million, while assets were worth EUR 1.56 billion, corresponding to a receding market share that went down from 3.7 to 3.1 percent in 2006.
In the past few months, the bank has taken the middle road between striving to grow and pushing the standby key until the takeover is completed. More precisely, asset management activities are on hold, but others will be developed in the coming year.
“ABN Amro is now subject to a change in ownership. New activities like asset management will very much depend on the strategy that our new shareholders may have. One thing we are looking at and which is probably no surprise because other banks have it already is to enter leasing activities. It is something that is on the agenda for the next 12 months,” said Weiss.
“While something like leasing very much fits the corporate and individual portfolio that we have, asset management is something that we will consider within the new frame,” he said.