ABN Shares Recover, Banks Move to Calm Financing Fears
Royal Bank of Scotland shareholders overwhelmingly approved the proposed 71 billion euro ($97.24 billion) takeover of ABN Amroon Friday, the third and final leg of backing from investors in the RBS-led consortium.
The deal was approved against a backdrop of steep falls in the share price of banks around the world as worries about exposure to U.S. subprime housing market troubles and a turbulent credit market deepened.
ABN shares fell more than 10 percent at one stage, partly on speculation that Fortis, the Belgian-Dutch member of the RBS-led consortium, may find it difficult to finance its part of the deal.
Fortis dismissed the talk, however, helping ABN shares pare losses.
"We are very comfortable about our financing. We have always been comfortable about the financing, and there's no reason why we should not be today," Fortis Chief Executive Jean-Paul Votron told a news conference after the vote.
"We are used to rumours about Fortis in all kinds of categories, so I would add this into the category of new rumour," he said. "The markets are a little shaky and a little volatile."
The consortium also said it was confident ABN did not have any major exposure to the current credit market or subprime problems.
"We believe ABN is a very responsibly run bank and we have no reason to believe they have any undue exposure," RBS Chairman Tom McKillop said in answer to a shareholder question about whether ABN was exposed to troubled corners of the credit market.
ABN shares ended down 3.5 percent at 33.85 euros, still well below the consortium's offer price. Shares in RBS, Fortis and Spain's Santander, the other consortium member, were each down by 2 to 3 percent.
Shares in rival bidder Barclays tumbled more than 6 percent, cutting the value of its offer to below 63 billion euros.
The bid for ABN was approved by 94.5 percent of RBS shareholders who voted, well above the 50 percent needed. The consortium has made a mostly cash offer to buy ABN, trumping a rival offer from Barclays.
Either deal would be the biggest-ever bank takeover.
RBS shareholders follow their counterparts at Santander and Fortis in approving the deal.
The vote by Fortis investors was regarded as most likely to fail as it needs to raise 13 billion euros ($17.8 billion) in a rights issue, but over 90 percent of them voted for the deal.
The consortium is considered favourite to win what has been an acrimonious takeover battle.
Barclays is pinning its hopes on a recovery in its stock price in the next two months, as its offer is mostly in shares. But the value of its offer has been hit by weakness in bank share prices in recent weeks amid the subprime and credit market turbulence.