The Dutch state is reducing its shareholding in ABN Amro from 20.7 percent down to 10.5 percent through a gradual trading plan managed by BofA Securities Europe, as reported by NL Financial Investments (NLFI). The divestment marks another step in unwinding the state rescue of the lender during the 2008 financial crisis, when the government intervened to prevent a systemic collapse. Investment bank Rothschild & Co advises NLFI on the divestment process.
NLFI sells remaining shares through the market
NLFI, the foundation managing government stakes in financial institutions, announced that the state’s remaining shares will be sold drop-by-drop through the market rather than in a single block sale. The structured approach mirrors previous divestment rounds, including a 10-month program that concluded last July and generated nearly 2,5 billion euros, as reported by nos.nl. The plan enters into force in the coming days and will end when the maximum number of depository receipts is sold, though NLFI has instructed BofA not to sell below a certain price while keeping that floor price private. The plan can be adjusted, interrupted, or halted in the interim, leaving the exact duration open-ended. NLFI does not rule out placing larger packages with investors all at once during the trading plan or participating if ABN Amro repurchases its own shares. The sales involve depository receipts for ABN Amro shares, and NLFI, the administrative office foundation managing financial institutions, noted that the latter organization would hold a 20.5 percent stake in the form of such depository receipts. This latest round of sales is notable because both the bank and NLFI reported last summer that the Dutch state was temporarily finished reducing its stake in ABN Amro.
Market valuations alter bailout financial outlook
For years, policymakers feared that the 16.8 billion euro bailout required during the credit crunch would leave Dutch taxpayers with steep losses. As Sjoerd Klumpenaar previously described regarding why the bank once fell into state hands, In 2008 ABN Amro had to be rescued because the bank was ’too big to fail’.
A bankruptcy would have had major consequences for the Dutch financial system by setting off a chain reaction that could cause other banks to collapse as well. However, rising market valuations have fundamentally altered the financial outlook. NRC notes that successive cabinets have steadily chipped away at the stake since the bank’s initial public offering on November 20, 2015, bringing the state close to a position where losses may be avoided entirely. The market capitalization of ABN Amro stood at approximately 34,5 billion euros on Tuesday, supported by a strong increase in the bank’s share price in Amsterdam since the beginning of the year.
State governance agreements change as stake drops
As the state’s stake drops below the 15 percent threshold, NLFI and ABN Amro have adjusted their mutual governance agreements. Under the revised terms, the state retains its information rights as long as its holding remains at or above 10 percent, but those formal oversight pacts dissolve entirely if the ownership dips below that boundary. ABN Amro Chief Executive Marguerite Bérard told Bloomberg that the bank welcomed the decision, noting that further reduction of the state holding was widely anticipated by market participants.
How many shares will the Dutch state keep?
How many shares will the Dutch state keep after this round?
The state intends to reduce its holding to 10.5 percent, down from 20.7 percent, though the ultimate long-term goal for NLFI is to bring the government’s stake down to zero.
Who is managing the share sales for the government?
BofA Securities Europe is executing the pre-agreed trading plan on the open market, while investment bank Rothschild & Co advises NLFI on the divestment process.
What happens to the government’s oversight rights once the stake falls further?
The state maintains its specific information rights as long as its ownership equals or exceeds 10 percent, but these arrangements expire if the holding drops below that level.
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