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ABN Faces Job Turmoil as Takeover Drama Drags On

Reuters
Thursday, 14 Jun 2007 | 11:11 AM ET

Three months of takeover turmoil surrounding ABN Amro are taking a toll on the Dutch bank as employees become increasingly frustrated and rivals try to lure away talent.

ABN employs more than 100,000 people worldwide, including 23,000 in the Netherlands.

If a consortium of Royal Bank of Scotland, Santander and Fortis wins a 71 billion euro ($94.5 billion) bid for ABN Amro , it could eliminate 19,000 jobs, including a third of the Dutch jobs.

Rival bidder Barclays , which made an all-share offer for ABN in April currently worth about 65 billion euros, has said it plans to axe 23,600 jobs worldwide after a deal but has not specified how many Dutch jobs may be cut.

"We are all worried about the future," said one ABN employee, who declined to be named. "I prefer a merger with Barclays, but either way things will remain uncertain."

With heavy press coverage of the twists and turns in the takeover battle, ABN has sent letters to assure clients that its business remains sound, while rival banks have seen an opportunity to win over clients worried about services.

Rob Charlier, head of human resources for ABN in the Netherlands, said the bank has guaranteed bonuses for a small percentage of top talent to prevent bankers from being poached by competitors and that he was listening closely to staff and communicating regularly to address any concerns.

"We see that the organization is stable ... it brings us good focus and unity," Charlier said. "But of course people are thinking: What's in it for me?"

Union Clout

Barclays has said it would put the combined bank's headquarters in Amsterdam and preserve the brand, while cutting costs partly by moving positions to low-cost locations.

The RBS-led consortium wants to split up ABN, with Belgian-Dutch banking and insurance group Fortis taking over ABN's Benelux operations. After adding ABN's 540 bank branches to Fortis's 160 locations in the Netherlands, Fortis says it expects 111 overlapping branches.

Fortis Chief Executive Jean-Paul Votron told Dutch television on Thursday he did not anticipate any forced layoffs if his bank were to acquire ABN.

The consortium is indicating that the 7,500 job cuts in the Netherlands could come from attrition, but the unions say that large a number would be unlikely.

A purchase of ABN would be the biggest-ever bank takeover.

There won't be much more clarity on ABN's fate until July, when the Dutch Supreme Court rules on an appeal that could determine whether the frozen sale of ABN's U.S. subsidiary, LaSalle Bank, can go forward with or without a shareholder vote.

In early May, a Dutch court froze ABN's $21 billion agreement to sell LaSalle to Bank of America, announced as a side deal to the merger agreement between Barclays and ABN, after some shareholders demanded a vote, arguing that the sale would prevent other offers for all of ABN.

The Barclays offer is conditional on the successful sale of LaSalle to Bank of America , while the rival consortium set as a condition of the offer that the Chicago-based bank remain part of ABN.

Unions representing ABN employees, both at home and abroad, have been busy seeking information and assurances from government officials, management and the bidders.

In many Dutch merger deals, employees are considered stakeholders with a say in whether a deal goes smoothly or not.

Initially the unions were leaning toward lending their support to Barclays, but Dutch union CNV said this week that the lack of clarity from Barclays on job cuts was "cowardly and showed contempt" for employees, adding that it now favored the consortium based on available information.

Ton Gietman, an analyst at Petercam, said there may be some financial impact on ABN in the form of higher costs as it tries to retain top talent.

"Increasingly you should see that they have to pay guaranteed bonuses," said Gietman, "You don't have to be a genius to know that people in such a situation look around."

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