Legal opinion on ABN Amro is far-reaching

Vino Timmerman is not used to the spotlight. The 57-year-old university professor has devoted much of his distinguished career to studying the development of company law in the Netherlands.

But Mr Timmerman’s opinions could prove pivotal to the battle for control of ABN Amro, the largest Dutch bank.

As attorney-general to the Dutch Supreme Court, Mr Timmerman has to prepare an opinion on the battle over ABN Amro’s decision in April to sell its US subsidiary, LaSalle, to Bank of America for $21bn. The opinion, which could be published as early as today, will provide an indication of how the Supreme Court will rule when it decides on the case in July.

Though Mr Timmerman’s opinion is not binding, lawyers say the Supreme Court follows his lead in about three out of four cases.

The Supreme Court ruling will mark the culmination of the three-month battle for ABN Amro between Barclays, the British bank, and a consortium led by Royal Bank of Scotland.

Barclays has agreed a takeover bid for ABN Amro that is dependent on the Dutch bank selling LaSalle for no less than $21bn. But the consortium has proposed a higher €71bn ($96bn) bid for the whole of ABN Amro, including LaSalle.

When ABN Amro agreed to sell LaSalle to BofA, it concluded the deal did not require the approval of shareholders, prompting a furious response from shareholders, who believed ABN Amro was trying to undermine the RBS consortium’s break-up bid.

VEB, the Dutch shareholder group, challenged the decision, winning a ruling in the Dutch Enterprise Chamber that ABN Amro could not sell LaSalle without holding a shareholder vote. That decision, which was unprecedented in Dutch history, left the future of one of Europe’s largest banks in uncharted legal waters.

The Enterprise Chamber accepted that, under Dutch law, ABN Amro is allowed to sell a subsidiary the size of LaSalle without shareholder approval.

But it concluded the sale was inextricably linked with ABN Amro’s broader deal with Barclays.

Shareholder groups applauded the move. But some lawyers argue that the Enterprise Chamber effectively rewrote the law.

Meanwhile, BofA has argued that the court’s decision was “shocking” because it disregarded the fact that the US bank had negotiated a contract in good faith. “The argument is not about whether the traffic light was red or not, but whether there was a traffic light at all,” said one person familiar with the matter.

The Supreme Court has three options: it can uphold the ruling, overturn it, or refer the case back to the Enterprise Chamber to be heard again on different legal grounds.

Legal experts say the outcome is almost impossible to predict: of the 20 appeals it has heard from the Enterprise Chamber in the past decade, the Supreme Court has overturned 11.

However, the decision has far-reaching implications.

If the Supreme Court upholds the ruling, the consortium will be able to press ahead with its offer but ABN Amro will face a potentially damaging lawsuit from BofA in the New York courts.

If the Supreme Court overturns the lower court’s decision, the consortium is expected to withdraw its offer for ABN Amro, though it could revise its bid for the Dutch bank to exclude LaSalle.

Mr Timmerman’s opinion will give some indication of how top legal minds in the Netherlands are thinking.

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