ABN hit with loss ahead of full break-up

ABN AMRO, the Dutch lender now controlled by the state, sank to a first-quarter net loss of &euro;886m (&pound;780m), largely on the back of losses at units now owned by Royal Bank of Scotland, it revealed yesterday.<br /><br />The Dutch bank is in the process of breaking itself up after it was bought last year in a three-way consortium by RBS, Santander and Fortis, which has since been nationalised.<br /><br />The group said it was still on course to achieve a final separation of its operations by the end of the year, but still counted losses of &euro;928m on RBS-owned businesses in its quarterly results.<br /><br />Businesses owned by the Dutch state, primarily retail banking units in the Netherlands, saw earnings of &euro;87m, down from &euro;226m in the same period last year.<br /><br />The break-up will see the creation of two entities, ABN Amro Bank, serving Dutch retail and commercial clients &ndash; as well as international private clients and the international diamond and jewellery trade &ndash; and RBS NV, which will be a part of RBS&rsquo; international lending and transactions services.<br /><br />The Dutch government has promised to combine and then privatise the operations of Fortis and ABN Amro in 2011 or later.<br /><br />Last week, chairman Gerrit Zalm said ABN would cut up to 6,500 jobs and &euro;1.3bn in costs as part of its integration with the nationalised Fortis Bank Nederland.<br /><br />The remainder of the business bought by the consortium is mostly comprised of Latin American banking operations snapped up by Santander.<br /><br />RBS, Santander and Fortis came together to take over ABN Amro in a &euro;70bn deal in 2007, a transaction which has since been acknowledged as an albatross around the neck of RBS, which posted a &pound;24bn loss for 2008. After a crisis of confidence, the Dutch government took over Fortis&rsquo;s local operations, including its interests in ABN Amrp, last October for &euro;16.8bn.<br /><br />The complexity of the two series of transactions is such that the process of separating the ABN Amro businesses acquired by the Dutch state from the businesses acquired by RBS is still ongoing.