Dutch state-owned bank ABN Amro reports $1.23B loss in H1, blames EU and restructuring costs

Dutch state bank ABN Amro reports H1 loss

AMSTERDAM — ABN Amro, the state-owned Dutch bank, reported a €968 million ($1.23 billion) loss for the first half of 2010 on Thursday, blaming costs arising from decisions by European Union competition authorities, as well as its own merger, legal and restructuring expenses.

A year ago, the bank had a profit of €420 million. Both figures are pro-forma, combining the Dutch operations of the former ABN Amro with the Dutch operations of now defunct Fortis of Belgium.

“Although these results are impacted by several significant items… the underlying profitability of the bank has improved compared to last year,” Chairman Gerrit Zalm said in a statement.

ABN said that excluding one-time charges and costs, ABN Amro would have had a first half profit of €325 million, up from a profit of €207 million on the same basis in the same period a year ago.

The bank said interest income rose as margins widened, meaning ABN paid depositors little for their savings but was itself able to lend at higher rates. Meanwhile, provisions for bad loans fell and ABN said it has cut the number of its employees by 8 percent from a year ago to 27,870.

Among other one-time items, ABN booked a charge of €812 million on the sale of some commercial banking activities to Deutsche Bank, as required by the EU in exchange for ABN Amro having received state aid.

ABN’s integration costs were €646 million, up from €78 million a year ago.

The unwieldy numbers reflect the difficult recent history of ABN and Fortis.

Fortis was a member of a 3-way consortium led by Royal Bank of Scotland PLC that bought the former ABN Amro in late 2007 as part of the largest takeover in banking history. The deal was finalized and Fortis was slowly incorporating the Dutch parts of ABN when the financial crisis struck.

ABN’s buyers had overpaid, and Fortis hurtled toward insolvency as depositors yanked savings from the bank en masse. The Dutch government stepped in and nationalized the banking operations of both companies in the Netherlands, paying Fortis €16.8 billion. It injected an additional €2.6 billion into ABN in April 2010.

ABN said Thursday it has a Tier 1 capital ratio — a common measure of bank solvency — of 12.3 percent.

The state has said it will eventually return ABN Amro to private ownership via a sale or initial public offering, but has not yet set a date. It remains under a state aid investigation by the EU, and cannot pay dividends or offer “aggressive” deals on retail mortgages or deposits.