Deutsche Bank has reached preliminary terms with the Dutch government to buy commercial banking assets from ABN Amro, removing a potential obstacle imposed by Brussels on plans to restructure the nationalised Dutch bank.
The German bank first struck a deal last year to buy the units from Fortis, the Belgo-Dutch banking group that was part of the consortium that had bought ABN Amro, for €709m in cash.
The price, seen as very low, was forced down because Fortis had been told to sell the assets by the European Commission on competition grounds. The Dutch government first tried to cancel the deal and then insisted that the terms be renegotiated after Fortis had to be rescued during the financial crisis and was itself broken up.
The revamped deal for the same package of assets will see Germany’s biggest bank become the fourth largest provider of corporate and investment banking in the Netherlands, according to Deutsche Bank. The bank has agreed on a so-called “heads of agreement” with the Dutch finance ministry for the deal, although detailed terms have still to be negotiated and no price has been revealed.
The deal is crucial for the Dutch government’s plan to merge ABN Amro and Fortis Bank Nederland, both of which became nationalised during the collapse of Fortis last year. This week the European Commission gave another deadline extension for the Dutch government to reach a preliminary deal.
Deutsche Bank spent months trying to renegotiate the deal with the Dutch government before walking away in September, only for the parties to come back to the table. In the absence of other interested buyers, there was pressure on the Dutch finance ministry to reach agreement.
The businesses to be acquired by Deutsche Bank include two corporate client units that provide financial services to large corporate clients; 13 commercial advisory branches that serve medium-sized clients; parts of HBU, a Rotterdam-based bank; and a factoring company.
Deutsche said last year that the businesses had 35,000 commercial business clients and 8,000 private clients.
The Dutch government plans to privatise a merged ABN-FBN under the ABN Amro brand name in or after 2011, effectively resurrecting the country’s most recognised bank as a Dutch institution.
The Deutsche deal removes one point of contention between the government and Neelie Kroes, EU competition commissioner, who coincidentally happens to be Dutch. The Commission is still investigating state guarantees given to ING at the height of the financial crisis on a portfolio of risky assets.