Dutch support for ABN Amro cleared

Dutch government wins European Commission’s approval to provide bank with €6.9bn in restructuring aid.

The European Commission today approved a multi-billion euro package of aid provided by the Dutch government to ABN Amro in the process of breaking up the bank.

The €6.9 billion provided by the Dutch government will be used to separate Dutch assets belonging to ABN Amro from the remainder of the bank.

These assets will then be integrated into Fortis Bank Nederland, which is owned by the Dutch state.

“This recapitalisation package is a further step towards the restructuring of Fortis Bank Nederland and ABM Amro,” Neelie Kroes, the European commissioner for competition, said.

Fortis Bank Nederland contains part of the old Fortis banking group, which was rescued and broken up by the Dutch, Belgian and Luxembourg governments in October 2008, at the height of the financial crisis.

The Fortis banking group had been part of a consortium, with Santander and Royal Bank of Scotland, that had bought ABN Amro in 2007. Fortis Bank Nederland inherited Fortis’s share of the takeover.

The Commission said it would take this new aid into account in an ongoing investigation into whether the Dutch government paid too much when it took over the Dutch parts of Fortis into state ownership in 2008.

The Dutch government’s aid includes a guarantee on a €34.5bn portfolio of Dutch mortgage loans, a counter-guarantee on a €950 million liability, a cash payment of €740m, a subscription to a mandatory convertible security worth €3.1m and the conversion into capital of loans granted to FBN.