ABN Amro helped by lower provisions

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ABN Amro on Monday confirmed its interest in buying Italy’s Banca Antonveneta as it posted an 11 per cent rise in second-quarter net profit largely due to sharply lower provisions for loan losses.

Rijkman Groenink, chief executive, said: “We still have as warm an interest as before, and we still fully hope to make Antonveneta part of ABN Amro.”

But he added: “All we can do is wait patiently while the Italian authorities untangle this complicated situation. It is not up to us to impose deadlines.”

ABN Amro’s offer valuing the Italian bank at €7.6bn ($9.2bn) expired unsuccessfully 10 days ago, since when rival bidder Banca Popolare Italiana has been embroiled in an escalating controversy about how it amassed a blocking stake in Antonveneta.

Antonio Fazio, governor of the Bank of Italy, has been dragged into the affair after transcripts emerged allegedly of phone conversations taped by prosecutors between him and Gianpiero Fiorani, BPI’s chief executive, which suggested he might have favoured the domestic bidder. The Bank of Italy has denied any wrong-doing.

Mr Groenink’s comments confirmed a report in the Financial Times last week and came as the Dutch bank warned second-half profits would be below the €1.88bn reported for the first six months. One reason for that is the economic slump that has hit consumer finances and small businesses in the Netherlands, one of three home markets with Brazil and the US Midwest. 

Noting there would be no repeat of the 40 per cent decline in provisions witnessed in the second-quarter, Mr Groenink said: “We had very low levels of provisioning, particularly in North America and wholesale banking and we must expect this situation to change.”

However, he said that overall “the underlying trend remains very healthy” and committed the bank to an average return on equity of 20 per cent.

Second-quarter net profit was €987m, while analysts had expected €822m. Operating profits rose 17 per cent to a fraction more than €1bn.

Star performer was the consumer and commercial clients’ division, especially Brazil and the Netherlands. However, while its investment and corporate banking unit improved in the second quarter, as expected, Mr Groenink conceded more needed to be done.

A new management team, installed earlier in the year, was “working flat out” to lift the operational result, and had delivered improvements evident in a doubling of second-quarter net profit to €192m.

Mr Groenink said additional actions would be disclosed by the end of the year.

The bank is also studying overhauling payment systems to make further savings on top of a minimum €600m promised by 2007.

Its strategy of growth in affluent mid-market segments will include small or medium size acquisitions. But Mr Groenink would not be drawn on rumoured interest in Turkey's Garanti Bank, although he noted that the region matched ABN Amro’s acquisition criteria.

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