THE Dutch government plans to sell more shares in ABN Amro Bank, joining states across Europe in speeding up the exit from banks that were bailed out after the financial crisis.
The Netherlands plans to pare its stake to about 30 per cent, from 40.5 per cent currently, using market sales that will start in the coming days, according to a statement from its investment vehicle on Tuesday (Oct 15). The stake is worth about 1.4 billion euros (S$2 billion) at current prices, according to Bloomberg calculations.
The government also agreed that once its holding falls below one third, its right to be informed of decisions regarding investments or divestments worth 50 million euros or more will end.
Governments across Europe have been taking advantage of higher valuations to lower their stakes in bailed out banks. So far this year, they sold about 13 billion euros of shares in bailed out banks, the most since the end of the financial crisis, according to filings for 10 firms reviewed by Bloomberg. While governments are unlikely to fully recoup the money spent on the bailouts, the window for disposals hasn’t been this open since the crisis.
ABN Amro’s shares slipped 0.5 per cent at 10.10 am in Amsterdam, paring gains this year to 16 per cent.
The state has been ABN Amro’s largest holder since it rescued the lender at the height of the crisis through a 22 billion euros bailout. Last month, it said it sold shares worth about 1.17 billion euros.
BT in your inbox
Start and end each day with the latest news stories and analyses delivered straight to your inbox.
With ABN Amro’s market value of 13.2 billion euros at Monday’s close, the state’s current stake in the bank is worth about 5.3 billion euros. Starting with its initial public offering in 2015, the Netherlands has already raised more than 10.9 billion euros from successive sales of ABN Amro stock, according to filings from the state’s investment vehicle NLFI.
The state has also received almost 6.3 billion euros in dividends from ABN Amro since 2011, according to NLFI. Still, the Netherlands also faced billions of euros of interest costs for the bailout and is likely to lose money overall, the Finance Ministry said last year.
Former Finance Minister Sigrid Kaag said in a letter to parliament last year that it was “not realistic” to wait for ABN Amro’s share price to hit the level which would enable the government to sell the stock without incurring a loss. Her successor Eelco Heinen has take a similar stance.
“Here sits a liberal minister of finance who doesn’t think that banks should be in the hands of a government,” he told reporters last month.
ABN Amro has over the years been transformed into a lender focused on consumers and companies in the Netherlands and northwestern Europe. It hasn’t been able to pay bonuses to top management under a local regulation, which has emerged as a stumbling block in the current search for a new chief executive officer, Bloomberg has reported.
NLFI said that trading plan does not preclude it from exercising other options to reduce its stake, including accelerated bookbuilds or directed buybacks, should an opportunity arise.
“It was clear that the 40.5 per cent level was not the end-goal,” KBC analyst Thomas Couvreur said in a note to clients. BLOOMBERG
