ABN Amro IPO Values Bank at Over $16 Billion

By Prachi Makkar,
Money & Investing Writer

The financial crisis took a toll on everyone and almost every financial institution around the world.

One of the banks that was affected was ABN Amro, a Dutch state- owned bank with headquarters in Amsterdam.

In 1991, Algemene Bank Nederland (ABN) and Amro Bank merged to create ABN Amro. By 2007, ABN Amro had made its way to being the second largest bank in the Netherlands and eighth largest in Europe by assets.

It was also placed as 15 by The Banker and Fortune Global 500 Magazines in the world’s largest banks list with operations in 63 countries.

The bank had climbed up to such a great success only to come close to collapse during the financial crisis.

ABN Amro Group’s initial public offering values the bank at between €15 billion and €18.8 billion.

The Netherlands is looking to raise at least least €3 billion which equates to $3.23 billion through the first sale of its shares of ABN Amro.

The foundation that manages the bank’s shares for the Dutch government is NL Financial Investments.

They announced that they would sell 188 million shares which is a 20 percent stake.

These would be available to private and institutional investors for a price ranging between €16 to €20 a share.

It is expected that the IPO should raise approximately about €3 billion to €3.8 billion.

The expected date that shares are expected to start trading on November 20. The proceeds from the IPO could rise to 4.32 billion for 23 percent of the bank’s capital with an overallotment option.

ABN Amro’s book value is about €16 billion and the valuation is in line with this value.

This shows that the share sale will be one of the largest ever listings in Amsterdam.

During the financial crisis, the Dutch state invested a whopping €22 billion to support the bank.

The IPO is happening seven years after the peak of the financial crisis where the lender was nationalized.

The IPO shows that ABN Amro is coming back into the game. After suffering in the Financial Crisis, they are making a return with this offering.

During the crisis, three of the country’s biggest banks received support from the government.

Only one of the three banks, ING Groep NV, was able to fully repay the taxpayer money.

ABN Amro has had a difficult path back to the private sector. With the economic downturn in the Netherlands and several restructurings, it has battled through a lot.

They have been confronted with stricter capital rules and increased scrutiny from politicians. ABN Amro is finally making a true comeback with the IPO.

The Dutch government delayed a decision on the sale earlier this year due to a dispute with the bank over executive pay.

Due to increased scrutiny, ABN Amro said that they were fined more than €1 million.

This happened after regulators detected shortcomings at a private banking office in Dubai in their antimony laundering procedures.

According to the Dutch Finance Minister, Jeroen Dijsselbloem, ABN Amro may take years to fully recover and return to the private sector. Now all everyone can do is wait and see how it goes after the shares trading date.

A version of this article appeared in the Tuesday, November 17th print edition.

Contact Prachi at
prachi.makkar@student.shu.edu

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