Nationalised Dutch bank ABN Amro forecast more than €1 billion in second-quarter charges today, offsetting profitable results from both its units in the first quarter.
The group forecast restructuring charges this quarter of €475 million pre-tax and losses of €800 million to €900 million, net of tax, for EU-mandated asset sales. It also predicted a rise in loan loss provisions. ABN had said in March it would post a loss for this year on those charges.
The Dutch government nationalised the local operations of former Belgian concern Fortis in October 2008, including both banks, amid a liquidity crisis.
It has spent more than €26 billion on the nationalisation and subsequent support, making it one of the world's costliest rescues due to the credit crisis. Collectively the banks had a book value of €9.29 billion on the state's balance sheet at the end of 2009.
The two banks will be legally merged in the third quarter, though the group does not expect the actual operational combination to be completed until late 2011.
Once combined, the new ABN will be the country's third-largest retail savings bank, its largest private bank and a top-two commercial bank. The government is expected to privatise the group in 2013 or later.
The group said ABN Amro's first-quarter net income more than doubled to €178 million. Loan impairments and other credit provisions fell more than 80 per cent to €45 million, while savings volumes rose at higher margins than last year.
Fortis Bank Nederland swung to a profit of €73 million from a year-earlier loss, as it also saw higher margins and avoided the negative hedging results of a year earlier.
The group also broke out detailed exposures to government and government-guaranteed debt for the two banks as of April 30th. ABN Amro had €4.3 billion in exposure to the so-called "PIIGS" countries, while Fortis Bank Nederland had just €200 million exposure.
Within those figures, ABN said it had €1.5 billion of Greece exposure, most to transport companies backed by a government guarantee.
Reuters