Rijkman Groenink, chief executive of Dutch Bank ABN AMRO explained it to shareholders yesterday: “As human beings and responsible citizens,” he said, “we have the obligation to look farther than the last quarter.” Perhaps more tellingly, he added, “Price isn’t the only thing that counts.”
Mr Groenink wants to sell to Barclays, and the CEOs at the trio of banks contemplating an alternative bid - that’s RBS, Spanish bank Santander and Fortis of Belgium - don’t seem to be on Mr Groenink’s Christmas card list.
It’s possible this consortium could offer a high price - currently the offer from Barclay is £45 billion, but the RBS led consortium is mooting £49 billion. Although, at this stage it’s still just talk. The consortium have only just been given opportunity to visit ABN’s books so a lot depends on what they see.
But, RBS wants to get its claws on ABN’s US subsidiary LaSalle. In fact, its perhaps the main factor behind the banks’ interest. ABN, on the other hand, is trying to push its sale of LaSalle to Bank of America. If that went through, RBS would pull out and the consortium would collapse.
Shareholders are furious. That regular agitator, the innocently named hedge fund, The Children’s Investment Fund has led the rebellion.
But this time, the most ardent critic is Peter Paul de Vries, the director of the VEB investor group. “Aren’t you just using sleazy tricks?” he asked Rijkman Groenink at a shareholder meeting yesterday.
And with the inevitable rebuke De Vries added “I’m more than happy to withdraw the sleazy if you’re willing to put the LaSalle sale to the shareholders.”
If the Barclays bid goes through, job cuts will result. But if the consortium is successful and the Dutch bank is then split up, it seems probable that many more jobs will go. Perhaps that is why management at ABN is gunning for Barclays. Proportionally, the Barclays bid will involve less cash too, so it’s more of a long-term game for shareholders.
But another interesting slant on the whole issue is this. Yesterday, Business Week considered the merger of Barclays and ABN as the first true pan European banking merger; a direct result of closer European integration. “A monster bank merger of this scale promises to hasten the long-awaited financial integration of Europe, and with it the creation of a zone of financial power that is the logical outcome of a continent-wide trading bloc with a common currency,” said the publication in its editorial. ABN shareholders then, will be left with shares in the first great European bank.
And yet, suppose the three way consortium wins the day and ABN is split up. What does that say about European integration? Instead of two banks coming together, selling off some US assets and creating the first true European bank, we will see the break up of a once mighty banking empire. The European integration of three banks into one temporary consortium will have resulted in the aforementioned dream, remaining just that - a dream.
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