When The Children’s Investment fund in February sent a letter to ABN Amro demanding that the Dutch bank either find a buyer or break itself up, the London-based hedge fund was challenging several deeply-held beliefs in the European banking sector. The first was that large European banks could not be forced into a deal against the wishes of their management. The second was that large financial institutions are simply too complex to be broken up. Within six months, both those assumptions would have been proven to be misguided.
The tussle for control of ABN Amro was the defining banking deal of 2007. Over the course of the first half of the year rival bids by Barclays, the UK banking group that had agreed a friendly takeover of ABN Amro, and a consortium led by Royal Bank of Scotland, which proposed a hostile break-up, presented competing visions for the future consolidation of European banking and the direction of the industry. The battle involved high-stakes negotiations with other groups and epic courtroom arguments. And it posed serious questions about the balance of power between shareholders, regulators and employees in the European financial sector.
