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.