ABN Amro Shares Surge on Breakup Proposal

AMSTERDAM ~ Shares in Dutch investment bank ABN Amro surged on the Amsterdam stock exchange on Wednesday as investors reacted to a proposal to break up the group.

ABN Amro confirmed on Wednesday that it had received a letter from British hedge fund TCI, which owns 1 percent of the company, asking the board to sell, spin off or merge parts of its business.

Shares showed a gain of 6.29 percent at 27.55 euros in mid afternoon trading.

TCI also claimed in its letter that the acquisition by ABN Amro of Italian bank Antonveneta in 2006 had been too costly and that the bank did not manage its costs effectively, Dutch news agency ANP reported.

TCI also demanded that the issue of breaking up the group be placed on the agenda for discussion at the next general shareholders’ meeting.

Reactions to the TCI letter varied among analysts, with some unsure of how to view the demands and others laughing off the audacity of the activist investor.

“It is difficult to see at this moment how seriously the market should take this news,” said one analyst.

“At this moment it is too early to say whether TCI will succeed in convincing other shareholders to join its cause.”

Another Amsterdam-based dealer commented: “I think the market is overreacting to this news.

“If the market from today on reacts like this to every shareholder in a company owning 1 percent of shares, like TCI does in ABN Amro, then we had better prepare ourselves for a storm of surging shares.”

Another said: “TCI is being laughed at a bit among traders here today.

“Every shareholder should write a letter like the one TCI has.”

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