How long will the Dutch state remain the majority shareholder of ABN Amro? The divestment of the state interest – acquired in 2008 by nationalization of the bank during the credit crisis – is suddenly back on the agenda. Minister Sigrid Kaag (Finance, D66) let slip in the House last month that she “wants to look again at the phasing out strategy”.
The last time the state put part of its interest in ABN Amro on the market was in September 2017. The NLFI, manager of the state’s share in nationalized financial institutions, sold 65 million shares, reducing the state’s interest from 63 to 56 percent. It has been quiet ever since.
Circumstances now seem more favorable for ABN Amro. “The past quarters have shown that the impact of the corona pandemic on the European economies was relatively minor,” said analyst Thomas Couvreur of KBC Securities. And the prospects are not unfavourable. Especially now that ECB chief Lagarde alluded to a possible interest rate hike in 2022 last Thursday, to curb high inflation. For ABN Amro (2020: 7.9 billion euros turnover) and other banks that derive a lot of income from the interest margin, a higher interest rate immediately means higher earnings. Couvreur: “There are increasing voices that the current interest rate policy is no longer tenable, given the inflation figures. A stricter ECB policy would of course have a positive impact on all banks.”
freedom of movement
If the reduction of the state interest in ABN Amro is resumed, a wish of many investors will be fulfilled. The average investor would rather see the state go than come, because their interests do not always match. “If you operate in the market, you must have some form of freedom of movement,” says deputy director Errol Keyner of the VEB investor association, which has been arguing for phasing out for years. “With the state as the major shareholder, a bank board is being pulled from all sides. The state may want you to finance companies that are desirable, but not profitable. And you shouldn’t lend money to people who can’t pay it back.”
In the meantime, ABN Amro has built up a solid capital buffer. Analysts expect that the bank will buy back its own shares, in order to increase the earnings per share and its price. It is also conceivable to pay a special dividend, so that the state can still benefit before the NLFI puts a few shares on the market.
Analyst Benoît Pétrarque of Kepler Cheuvreux: „I expect ABN Amro to announce share buybacks. That would be a good time for the Dutch state to place shares. Then a part can be bought directly from the state.” Incidentally, Minister Kaag’s hint came to him faster than expected. “But the bank is doing well. So it makes sense to reduce the state interest.”
The question remains: when? The share price of ABN Amro has been rising for a while, but is still about ten euros (more than 37 percent) below the price at the sale in September 2017. Selling now therefore guarantees the state a loss, while it is plausible that it will still be sold. would like to break even.
“That’s just not going to happen in the coming years,” Keyner expects. “I say: take your loss and let ABN Amro take control of its own fate. But it is conceivable that the state will make the same mistake as many investors who decide: I never sell below the buy price. That way you always stay seated.”
On Wednesday ABN Amro will present its fourth quarter figures.
A version of this article also appeared in NRC on the morning of February 7, 2022