Press
Conference
Results
H1
2007
We
switch
to English just now. The results of managing our capital discipline
result in a
court tier one ratio 612 and of course also result have resulted
in a share buy
back for the maintain capital discipline.
Growth,
we
can see very solid growth in the bio-Latin America. Our retail loans
which
consist of household loans en SME-loans have gone up considerably;
operating
income is up by 20.6% at constant ....... expenses are up by only
9.6%. We see
similar growth in the P&L in Asia. We therefore are confident to see that
continue.
We
did see
some disappointment in Antonveneta but we do expect that to improve
over the
course of the second half.
On
the
efficiency and I’m nearly coming to the end of my story, the BU Netherland an BU
North-America as we shared with you are on track to improve their
efficiency
ratio. We saw the operating income in the Netherlands go up, we saw
good volume
growth and strong cost control in the Netherlands in the first half.
In LaSalle
we saw also good growth operating income and good management of
expenses.
The
BU
Europe has reach profitability in the course of 2007. That is very
important as
you might recall that we made that one of our key deliverables and
we can see
that shifting to significant profitability in the course of 2007.
Strong
improvement in BU global markets; moving down from the efficiency
ratio op 19.6
to 68.3. Strong improvement, based on revenue growth as well as strength
in the
cost control and the profit for the period, therefore increased to
730 million
for the first half of 2007, which is a remarkable result.
BU
global
clients. We promised to manage our global clients BU more effectively
for
capital returns and get a return on a sign with capital in excess
of 20%. We are
delivering that at this moment in time. We are doing that in much
more efficient
way than in the past.
The
focus,
therefore has significantly improved. We have seen the benefits of
that.
We
have over the many years since 2001 sold a significant number of
businesses,
including LeasePlan, Bouwfonds and US Morgans. We have sold a few
businesses in
the course of 2007. We have of course made … disposal of LaSalle and focused our
footprint around 15 countries. We are making only limited acquisitions.
Our
ongoing commitment is to continue to manage for value and manage
our portfolio
for value.
We
don’t
have any intention of disposing major assets as this part in time.
Finally,
a
look at the capital ratio’s. As you can see we have managed them tightly to stay
around the 6 and 8 which are …. targets, de 6 core tier 1 and 8% tier 1 ratio,
we've also managed our risk.…… carefully down to 2% from the end of June
2006.
We
are on
our way to deliver the EPS target of at least € 2.30 share. You can see that
when we look at this slide structurally improved operating performance
on it
will deliver EPS on adjusted basis.
I
would
like to hand over back to Rijkman to talk through the strategic options
with
you.
De
heer
Groenink: I'll guide you through the process which we have come
through.
Recap.
Our
vision and our view.
We
have
for many years had the ambition to be a leading European based bank
with strong
sustainable market positions in Brasil, Asia and Italy.
We
focused
our strategy on the needs of our clients. We are e very client focused
bank.
We're focusing on the mid-market clients, mid-market segments in
commercial and
consumer.
The
business value and business ….. value creation. This is the strategy which we
have been developing over the years. It crystallized into a form,
….. we spend
thinking about how tot execute that strategy which resulted in a
new
organizational construction on 1.1.2006. With that structure we have
been
executing our strategy and to success as Huib Boumeester has just
shown to
you.
Same
time where we were revaluing our strategy the stand-alone basis,
we also
continued to think about wether or alternative based to execute our
strategy for
a merger or transformational deal. As we have recorded also publicly
we have
been in talks with many, many parties over the years.
This
cumulated in a very focused set of sessions reviewing our stand-alone
options,
reviewing and comparing with …………. ……. we did it in February 2007. We based
ourselves of course on the interest of the company and all its stakeholders,
but
certainly also the interest of our shareholders.
We
concluded that it would not be as an …. alternative frost to break up the bank
of to continue our stand-alone situation, that would result in the
highest value
creation for our
shareholders.
This process ended in discussions with Barclays as you all know,
the proposed
merger, which was announced on April 23.
To
recap
the opportunities.
It
is a
significant opportunity to celebrate our strategy. Remember our strategy
is to
be a global universal bank with strong market positions in Europe,
Asia and
Latin-America.
Our
focus
is on our customers, in local franchises, to be served also by global
product
capabilities, which of course Barclays is adding to with his asset
management
and capital markets capabilities and its core business. Of course
it is value
creating for our shareholders, it's for sure. We can say that compared
to the
historical performance of ABN AMRO share price also the offer of
Barclays
creates superior value for shareholders.
Due
to the
characteristics of our two business we are very complementary. Next
to the fact
that we are able create substantial cost synergies, there is a lot
of revenue
benefit and revenue synergies to be expected by the combination of
the two and
the combining strength and values of both businesses.
The
transaction which we announced op 23 April 2007 was Barclays merger
at the same
time of the sale of LaSalle. As I said we left the stand-alone and
break-up
scenario for what they were. Particularly not the cost of break-up
ABN AMRO
would not generate value for shareholders but it would certainly
take a
substentional al period of time and would have high execution risk
for our
shareholders. In valuating the bid of Barclays we set against the
stand-alone
scenario of the bank and against the break-up scenario. We concluded
that the
merger with Barclays was absolutely superior.
You
know
all in the mean time we received also an offer from the Consortium.
We have now
reached the stage, as of last Monday, 23 July, that Barclays has
announced a
revised offer, which is in see through value, at that point was € 35,73 per
share, and 37% in cash. The offer of Barclays has been strengthened
by the
entering of Barclays in a strategic partnership with the China Development
Bank
and a strong investment as financial investment by Tamasek of
Singapore.
At
the
same day the Consortium launched their offer for ABN AMRO which is
maintained at
the original € 38,40 per share of which proximately 93% in cash.
Interesting
of course to note in this respect is that the bid of Barclays at
the 23th April
was based on the actual sales price of LaSalle. Not of a imputed
sales price
which was substantial less. All analists put the value of LaSalle
at a maximal
of 15, 16 billion dollars, we managed to realize 21. On that basis
Barclays
raised its bid on the 23th April with roughly 2 euros.
Don’t
forget that the Consortium came afterwards with 38.40. They would
never have
given us 38.40 if that price of 21 billion had not been on the
table.
Now
of
course, the 23 July, the Consortium moving from over 50% cash to
93% of cash.
That of course is only because we sold LaSalle and we´re bringing cash to the
table to front this transaction. I can say that management actions
by ABN AMRO
let to a very high offer of both banks, of both parties, that certainly
the
38.40 / 93% cash can be attributed to the value of the bank in the
first place
and the actions that the management of ABN AMBO has taken to actually
make that
value visible.
We
have
used the week of 23 July, till this weekend, to carefully review
both offers.
The revised offer of Barclays requests us to under the merger protocol
to renew
our recommendation. There is no such a request from the Consortium
for a
recommendation outside some noises in the press. We have never until
now
received a request for a recommendation. Never the less we reviewed
both offers
next to each other. They are both bidding for exactly the same. So
in that sense
we have created the level playing field for the bidders, there are
not bidding
for different assets. They are bidding for exactly the same. The
offers can be
also compared by the shareholders and by the market, because there
are exactly
on the same basis.
So
that
level playing field is very important. We have started the process
which is
required from us by the Dutch rules, the take-over rules, which says
that the
board of ABN AMRO have to give a recent opinion of the merits of
both offers. It
is not as in the UK-situation, Anglo-Saxon situation, that we are
required to
make a recommendation to shareholders. The Dutch law tells us that
we have to
give a recent opinion on the overall merits of the offer. So in that
sense we
have reviewed the offers.
The
conclusions are simple. The revised offer of Barclays continues to
attract the
attention of the board, the merits is attractiveness based on the
strategic
growth of ABN AMRO. We continue to support the Barclays offer because
we feel
that overall the Barclays merger plan with ABN AMRO is to the benefit
of the
bank and all it´s stakeholders.
But,
of
course, we have to recognize and we do, that the value to shareholders
of this
Barclays bid is inferior to what the Consortium is offering. Therefore
at this
point we can not recommend the Barclays offer to shareholders.
We
have
negotiated the necessary amendments to the merger protocol. The merger
protocol
will stay in place, which means that is an agreed deal between ABN
AMRO and
Barclays, but not recommended at this point.
And
amendments will be … with the SAC today, the market due and the market will be
able to see what exact changes have been agreed upon.
The
Consortium offer: the same amount of scrutiny by the two boards and
their
financial and legal advisors. It’s a simple metric: the offer of the Consortium
is financially superior to the Barclays offer. So we don’t have to debate that
very long. It offers a substantial premium …… Barclays revised proposal. But, of
course there are a number of uncertainties and unknowns in the offer
of the
Consortium. First of all they need shareholders approval.
Start
with
Fortis, a week from now. The Royal Bank of Scotland shareholders
meeting.
Santander shareholders meeting has already approved.
If
they do
receive the approval by their shareholders they still have the place,
a very
very considerable amount of shares in the market, has been ….
extensively.
The
next
hurdle we see – I better call it unknown – is the decision of the Dutch Central
Bank. What is the Central Bank going to advise? The ministry on the
so called
“verklaring van geen bezwaar”. As this point we have no idea what the Dutch
Central Bank will do. That creates uncertainly for the Consortium
offer and
therefore for our shareholders.
The
last
point is – and that is a very general point – in which we have not had a chance
to discuss in detail with the Consortium, but we certainly will,
and that is
that the Consortium offer contains a very general and too wide material
adverse
change clause
which
for
our shareholders should be unacceptable.
On
that
basis we cannot recommend as long as that situation exists and persists,
the
offer to our shareholders.
Of
course
the quality of the two bids on the underline …….. I already made some remarks on
the Barclays offer. Of course those have been extensively debated
and argued and
we made the announcement on 23th April. Those arguments and that
reasonings
still stands. Nothing is changed at that respect. We have separately
reviewed
the quality of the proposal by the Consortium and of course the one
thing which
stands out and makes it very difficult for us to whole heartedly
underwrite the
idea behind the proposal that is the break-up of the bank in two/three
pieces
and the following and inherent risks related to the breaking-up scenario.
The
execution risks of that scenario are perceived ……. by us and therefore …..
threat to the stability of the bank to customers and employees and
those of
course, as you know as stakeholders who´s interest we have to take into account.
That remains a difficult point. It doesn't take away as I have said
earlier that
the banks united in the Consortium of course all three are first
class banks,
there is no doubt about that, their intentions are in it self very
businesslike
and professional. So we want to engage with the Consortium to see
whether we can
eliminate a number of our concerns in the interest of the bank stakeholders
and
also in the interest of shareholders, to see that this bid gets the
attention
its deserves. Also that the negatives, which are there, can eliminated
of
mitigated substantially.
To
review
the position: we are not going to recommend either of the two offers.
But we do
continue to support the Barclays bid. It fits with our strategic
vision, which
we developed in the past. We were engaged with both parties, to continue
to
ensure a …………..playing field we have created now. We want to remove
uncertainties associated with the offer and to make sure that both
offers
continue to be available to ABN AMRO’s shareholders.
This
is a
start in presentational form. I would suggest that we open the floor
now for
questions.
This
document shall not constitute an offer to sell or the solicitation
of an offer
to buy any securities, nor shall there be any sale of securities,
in any
jurisdiction in which such offer, solicitation or sale would
be unlawful prior
to registration or qualification under the securities laws
of any such
jurisdiction.
Cautionary
statement regarding forward-looking statements
This
announcement contains forward-looking statements. Forward-looking
statements are
statements that are not historical facts, including statements
about our beliefs
and expectations. Any statement in this announcement that expresses
or implies
our intentions, beliefs, expectations or predictions (and the
assumptions
underlying them) is a forward-looking statement. These statements
are based on
plans, estimates and projections, as they are currently available
to the
management of ABN AMRO Holding N.V. (“ABN AMRO”). Forward-looking statements
therefore speak only as of the date they are made, and we take
no obligation to
update publicly any of them in light of new information or
future
events.
Forward-looking
statements involve inherent risks and uncertainties. A number
of important
factors could therefore cause actual future results to differ
materially from
those expressed or implied in any forward looking statement.
Such factors
include, without limitation, the outcome of the offers for
our business by
Barclays PLC (“Barclays”) and the consortium of Fortis, RBS and Santander
(the “Consortium”); the completion of our proposed disposition of LaSalle; the
conditions in the financial markets in Europe, the United States,
Brazil and
elsewhere from which we derive a substantial portion of our
trading revenues;
potential defaults of borrowers or trading counterparties;
the implementation of
our restructuring including the envisaged reduction in headcount;
the
reliability of our risk management policies, procedures and
methods; the outcome
of ongoing criminal investigations and other regulatory initiatives
related to
compliance matters in the United States and the nature and
severity of any
sanctions imposed; and other risks referenced in our filings
with the US
Securities and Exchange Commission. For more information on
these and other
factors, please refer to Part I: Item 3.D “Risk Factors” in our Annual Report on
Form 20-F filed with the US Securities and Exchange Commission
and to any
subsequent reports furnished or filed by us with the US Securities
and Exchange
Commission. The forward-looking statements contained in this
announcement are
made as of the date hereof, and the companies assume no obligation
to update any
of the forward-looking statements contained in this announcement.
Additional
Information
On
July
30, 2007, ABN AMRO filed a Solicitation/Recommendation Statement on
Schedule 14D-9 with the US Securities and Exchange Commission in which
it advised the ABN AMRO shareholders that the ABN AMRO Managing
Board and the ABN AMRO Supervisory Board are not currently in a position to
recommend either the offer launched by the Consortium or the potential
offer by Barclays and that ABN AMRO will further engage with
both parties with
the aim of continuing to ensure a level playing field and minimizing
any of the
uncertainties currently associated with the offers and with
a view to optimizing
the attractive alternatives available to ABN AMRO's shareholders.
Barclays has
filed with the US Securities and Exchange Commission a Registration
Statement on Form F-4 (as amended) which contains a
prospectus. Barclays expects to file with the US Securities and
Exchange Commission additional amendments to such Registration Statement as
well as a Tender Offer Statement on Schedule TO and other relevant
materials. In addition, ABN AMRO expects that it will file with the
US Securities and Exchange Commission a
Solicitation/Recommendation
Statement on Schedule 14D-9 in respect of the potential offer by
Barclays and other relevant materials. Such documents, however, are
not
currently available.
INVESTORS
ARE URGED TO READ ANY DOCUMENTS REGARDING THE POTENTIAL TRANSACTIONS
IF AND WHEN
THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
Investors
will be able to obtain a free copy of such filings without
charge, at the SEC's
website (http://www.sec.gov) once such documents are filed
with the SEC. Copies
of such documents may also be obtained from Barclays and ABN
AMRO, without
charge, once they are filed with the SEC.
The
publication and distribution of this document and any separate
documentation
regarding the intended offer, the making of the intended offer
and the issuance
and offering of Barclays ordinary shares may, in some jurisdictions,
be
restricted by law. This document is not being published and
the intended offer
is not being made, directly or indirectly, in or into any jurisdiction
in which
the publication of this announcement and the making of the
intended offer would
not be in compliance with the laws of that jurisdiction. Persons
who come into
possession of this announcement should inform themselves of
and observe any of
these restrictions. Any failure to comply with these restrictions
may constitute
a violation of the securities laws of that jurisdiction.