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ABN shares fall on Fortis worries: analysts
2007-08-10
An ABN Amro building is pictured in central London. The mammoth European battle for ABN Amro stretched to Asia on July 23 2007, as Britain's Barclays won financial firepower from China and Singapore to strengthen its takeover bid for the Dutch bank. |
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Shares in Dutch bank ABN AMRO fell as much as 11 pct on Friday as analysts cited worries that Fortis may find it difficult to finance its part of the deal to buy ABN together with Royal Bank of Scotland and Santander. RBS (RBS.L), together with Belgian-Dutch Fortis (FOR.BR) and Spain's Santander (SAN.MC), has made a mostly-cash 71 billion euros ($97.83 billion) bid for ABN, the Netherlands' biggest bank, while Britain's Barclays is offering about 65 billion euros. ABN shares recovered and were down 4.2 percent by 4:54 a.m. EDT at 33.60 euros after earlier touching a low of 31.20 and compared to a 2.4 percent decline of the DJ Stoxx European bank index (.SX7P). Banks and stocks in general were down on subprime worries. The consortium's offer is currently worth about 38.08 euros per ABN share, compared with 33.81 euros for the Barclays offer. "Shares are down as (Dutch daily) Het Financieele Dagblad says Fortis has problems getting financing," Theodoor Gilissen analyst Gert-Jaap Kraan said. He said Fortis has sufficient possibilities to finance the deal. Subprime loan problems in the United States have led to market fears of a credit squeeze, making it harder for companies to find financing and prompting major central banks to pump billions of dollars into the market on Thursday. Fortis needs 24 billion euros in funds to finance its part of the deal, and Fortis's chief financial officer, Gilbert Mittler, told reporters on Thursday that it had a 10 billion euros bridge loan to allow it to sell assets at appropriate moments. Fortis wants to securitize about 2 billion euros in assets, Mittler said, and he was quoted as saying in Het Financieele Dagblad that "August 9 was not the most appropriate moment" for this securitization. France's biggest listed bank, BNP Paribas (BNPP.PA), froze 1.6 billion euros worth of funds on Thursday, citing the U.S. subprime mortgage sector and "the evaporation of liquidity in certain market segments of the U.S. securitization market." Subprime mortgages are the riskiest property loans, often extended to people with payment difficulties or a bad credit history.
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