ABN AMRO on track for stock market flotation
Brussels, May 17, 2014
Dutch state-owned bank ABN AMRO hit its key financial targets in the first quarter, giving a boost to its plans for a stock market return six years after it was bailed out in the financial crisis.
A flotation would mark a turning point in the fortunes of the bank and of the domestic economy, as well as removing the bank from the hands of a government with no interest in owning a major bank in the long term.
Announcing first-quarter results yesterday, the lender said its cost-to-income ratio had improved to 58 per cent in the first quarter from 65 per cent in 2013, showing the impact of cost cuts, while its return on equity rose to 10.9 per cent from 5.5 per cent before one-offs in 2013, in line with its 2017 targets on both counts.
The two measures were identified by chief financial officer Kees Van Dijkhuizen as important in determining whether the bank was fit for a stock market return.
Van Dijkhuizen said that to justify a positive message to the government on a flotation, ABN AMRO would have to make serious progress toward the goals it had set for 2017, which were for a cost-to-income ratio of between 56 and 60 per cent and a return on equity of nine to 12 per cent.
ABN AMRO will offer its advice to the Dutch government about the listing in October or November. The government would then determine by the end of the year whether to proceed with a flotation in 2015.
Van Dijkhuizen also said the result of the European Central Bank's "health check" on bank finances, designed to ensure that lenders are secure enough to withstand another financial meltdown, would be important in clearing the way for a float.
"The asset quality review will have a strong influence," he said, adding a flotation would probably have to wait until the second quarter, after the release of the bank's 2014 results.
However, chief executive Gerrit Zalm, a former Dutch finance minister, said a good first quarter was not necessarily a guide for the whole year.-Reuters