RBS Consortium Now Dealing with BofA on ABN Buyout

Late in April, it appeared that Barclays Bank was set to acquire ABN AMRO for $91 billion.  The deal would have been one of the biggest cross-border deals in European history.

As part of that deal, ABN AMRO would sell its U.S. bank presence, LaSalle, to Bank of America.

That deal never happened.  A consortium, led by the Royal Bank of Scotland, entered the fray with a $100+ billion offer.  ABN appeared to be, even in the face of angry shareholders, pursuing the Barclays bid.  "Price isn’t the only thing that counts," ABN AMRO’s Chief Executive Rijkman Groenink told the shareholders. "As human being and responsible citizens…we have the obligation to look farther than the last quarter."

The Barclays bid, though lower, was seen to be a better choice for growth and longevity.

In early May, a Dutch judge ordered ABN AMRO to halt the sale of LaSalle Bank to Bank of America.  This was the first in a series of setbacks to Barclays’s initial bid.  The judge said that the sale of LaSalle would need to be voted on by ABN’s shareholders.  ABN Amro had hoped to skip this step, and thought they were in their rights to do so, since LaSalle represented less than a third of ABN Amro’s assets.

If ABN AMRO could not sell LaSalle to Bank of America, it would put Barclays’s bid on ABN in jeopardy.  Barclays’s bid was contingent on LaSalle’s sale, for $21 billion, to Bank of America.

The Royal Bank of Scotland bid $24.5 billion for LaSalle in the hopes that they would be the winners of the entire package.  ABN rejected the offer because it carried a condition that the sale be part of a $99 billion bid for ABN.

Now, of course, everything is different.  Barclays’s bid appears to no longer be the winning one.  The consortium, led by RBS, held talks with Bank of America over splitting LaSalle between the two to end costly legal disputes in Dutch and U.S. courts.  According to the Wall Street Journal, the consortium was pressed into making a firm bid for Netherlands-based ABN on Tuesday under Dutch regulations. The talks are expected to resume, with RBS Chief Executive Fred Goodwin saying he "hopes and expects" to reach an agreement with Bank of America over Chicago-based LaSalle. The RBS group bid €71.1 billion ($95.6 billion) earlier this week.

Under the outline the banks discussed, the RBS team, which includes Fortis NV and Banco Santander Central Hispano SA, would cut up LaSalle roughly half and half by value with Bank of America. The RBS consortium would acquire LaSalle’s commercial business and Michigan branches, the headquarters building and the LaSalle brand name. Bank of America would acquire the 141 retail branches based in Chicago. Income streams from LaSalle would be divided.