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Wellink says ABN break-up should not be delayed: report
2007-10-13
The three banks who have won control of ABN AMRO should move quickly to implement their plans to break it up to avoid any problems, the Dutch central bank governor was quoted as saying on Saturday. In an interview with the Financieele Dagblad newspaper, Nout Wellink said that financial authorities would work with the consortium as they proceed with plans to break up ABN. "I am glad that the uncertainly concerning the bank is over now," Wellink was quoted as saying in an interview. Royal Bank of Scotland, Belgian-Dutch financial group Fortis and Spain's Santander declared their 70 billion euros ($99.2 billion) offer for ABN unconditional on Wednesday after a months-long takeover battle. "The consortium has cooperated constructively," Wellink added. Asked in the interview about the biggest risks for the takeover Wellink said: "The longer it takes the greater the risks." The carve-up of ABN is unprecedented given the scale of the deal -- the biggest ever -- and ABN's sprawling global reach, with 4,500 branches across 53 countries. Under the deal, Spain's Santander gets ABN's Italian and Brazilian operations, while Fortis will get its Dutch business, as well as its wealth and asset management operations. RBS will get the wholesale and investment banking business and ABN's Asian operations. Wellink said in the interview he would work closely with the three-bank consortium to ensure that the financial system is not disrupted by the merger between Fortis and ABN. In February, after ABN investor TCI, a hedge fund, called on the Netherlands' biggest bank to break up or sell itself and triggered the events leading up to the takeover, Wellink criticized the notion of breaking up ABN, saying that it was fraught with risks. Wellink later toned down his remarks, and then recommended to the Dutch Finance Ministry that it approve the consortium's plans. Wellink, also a European Central Bank Governing Council member, also spoke of the recent turmoil in the credit markets in the Financieele Dagblad interview. "We cannot judge too early, but up until now the (financial) system has weathered the turbulence," Wellink was quoted as saying. "The problem in the U.S. mortgage market is not yet over." Asked whether central banks could cope with any further unrest in the financial markets, Wellink said that while further injections were possible to calm the money markets, there was a limit to what central banks could do. "The essence is not that there is not enough money, but that banks were not lending to each other," Wellink said.
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