Dear
colleagues,
Today
we’re announcing our half-year results, and I have to say it’s refreshing to
have news to deliver on a topic other than the corporate activities surrounding
ABN AMRO. Despite the uncertainty about our strategic future throughout
the
second quarter, our results show a strong operating performance. Our
profit for
the first half of 2007 (on an adjusted basis*) was EUR 2,390 mln, up
13.4%
compared with the first half of 2006.
Impressive
results
We
have
called 2007 the year of delivery and I’m very pleased to announce we’re on track
to delivering what we promised – that is, we’re well on our way to beating our
full year EPS target of EUR 2.30 (on an adjusted basis). To read about
the results in more detail, please see today’s press
release.
Please
note that the numbers as reported in the press release are impacted by
various
incidental items, such as the provision we have taken for the US Department
of
Justice settlement, the sale of the Private Clients business in Miami
and
expenses on transaction-related advisory fees. Thus the reported headline
figures do not always reflect the underlying trends in the business.
The
important thing to take away is that on an adjusted basis, our operational
results are very strong.
Our
successful second-quarter performance can be attributed to the execution
of the
initiatives set out for 2007, centering on growth, efficiency and acceleration
of action plans. Improvement has been driven by strong, local client
relationships and our commitment to deliver – something I encouraged all of us
to do at the beginning of this year. More specifically, though, I want
to
acknowledge a few Business Units (BUs) who have seen particularly good
results
this past quarter.
With
a
focus on growth in 2007, we’ve been busy seizing opportunities in the regions of
Asia and Latin America, which are rewarding us with significant results.
Efficiency has been the driving force behind the return to profitability
of BU
Europe. In fact, BU Europe has just achieved its third consecutive quarter
of
profitability, thanks to upgraded service to Financial Institutions (a
key
client group), further growth of our successful private investor products
and
continued growth in our eastern European activities. Additionally, I
want to
mention BU Global Markets who have delivered an impressive turnaround
in terms
of both efficiency and profitability in the past two years. Their operating
profit in the first half of 2007 is almost three times that for the full
year
2005. Clearly, the measures we’ve taken to structurally improve the
profitability of BU Global Markets are paying off as their efficiency
ratio is
now in line with both that of the Group as a whole and also our peers’, and they
have contributed 25.8% to the Group’s operating result.
Latest
news on our strategic future
I
do want
to take this opportunity to provide a quick update on the current bids,
as we
have also made an announcement on this topic in a separate press release
today.
Over
the
last days, we have carefully compared the two offers on the table from
Barclays
and
the
RBS,
Santander and Fortis consortium.
When
comparing the offers, we have to take into account a number of factors,
including financial and strategic benefits of each offer, and any risks
associated with them. After careful review and consideration we, the
Managing
and Supervisory Boards, have decided that we are not in a position to
recommend
either offer.
With
regard to the Barclays offer, the Boards continue to support the strategic
benefits of the combination with Barclays, but are not currently in a
position
to recommend this offer from a financial point of view.
Although
the current value of the consortium’s offer is attractive, the Boards have
identified a number of significant risks related to the proposed break-up
of ABN
AMRO and are currently not in a position to recommend this offer.
We
will
now further engage with both parties to ensure a level playing field
and
minimise any of the uncertainties currently associated with the offers.
We have
agreed with Barclays on further amendments to the merger protocol, which
will
remain in effect (in an amended version).
Developments
related to compliance
In
other
news, I’m pleased to inform you that the Dutch Central Bank (DNB) has decided
to
lift its Directive regarding compliance deficiencies at ABN AMRO. Thanks
to the hard work of our compliance colleagues in all BUs and to the commitment
of all staff across the globe in embracing our compliance actions, we
have not
only strengthened the compliance environment within the bank but are
building
one of the strongest anti-money laundering and compliance organisations
in the
financial services industry.
Against
the backdrop of uncertainty, with developments unfolding quickly and
sometimes
unexpectedly, everyone has remained focused and committed to delivering
the very
best for our clients. Our half-year results are evidence of this hard
work,
dedication and resilience – and are something to be proud of.
Kind
regards,
Rijkman
Groenink
Chairman
of the Managing Board
*
‘Adjusted basis’ means that the figures are adjusted for major cost and revenue
items that are incidental in order to make numbers more comparable with
previous
years.
Disclaimer
This
is an
announcement pursuant to article 9b paragraph 1 of the Dutch Securities
Markets
Supervision Decree (Besluit toezicht effectenverkeer 1995).
Cautionary
statement regarding forward-looking statements
This
announcement contains forward-looking statements. Forward-looking statements
are
statements that are not historical facts, including statements about
our beliefs
and expectations. Any statement in this announcement that expresses or
implies
our intentions, beliefs, expectations or predictions (and the assumptions
underlying them) is a forward-looking statement. These statements are
based on
plans, estimates and projections, as they are currently available to
the
management of ABN AMRO. Forward looking statements therefore speak only
as of
the date they are made, and we take no obligation to update publicly
any of them
in light of new information or future events.
Forward-looking
statements involve inherent risks and uncertainties. A number of important
factors could therefore cause actual future results to differ materially
from
those expressed or implied in any forward looking statement. Such factors
include, without limitation, the consummation of our proposed merger
with
Barclays; the conditions in the financial markets in Europe, the United
States,
Brazil and elsewhere from which we derive a substantial portion of our
trading
revenues; potential defaults of borrowers or trading counterparties;
the
implementation of our restructuring including the envisaged reduction
in
headcount; the reliability of our risk management policies, procedures
and
methods; the outcome of ongoing criminal investigations and other regulatory
initiatives related to compliance matters in the United States and the
nature
and severity of any sanctions imposed; and other risks referenced in
our filings
with the US Securities and Exchange Commission. For more information
on these
and other factors, please refer to Part I: Item 3.D "Risk Factors" in
our Annual
Report on Form 20-F filed with the US Securities and Exchange Commission
and to
any subsequent reports furnished or filed by us with the US Securities
and
Exchange Commission. The forward-looking statements contained in this
announcement are made as of the date hereof, and the companies assume
no
obligation to update any of the forward-looking statements contained
in this
announcement.
Additional
Information
On
July 30, 2007, ABN AMRO filed a Solicitation/Recommendation Statement on
Schedule 14D-9 with the US Securities and Exchange Commission in which
it advised the ABN AMRO shareholders that the ABN AMRO Managing
Board and the ABN AMRO Supervisory Board are not currently in a position to
recommend either the offer launched by the consortium of Fortis, RBS
and Santander or the potential offer by Barclays and that ABN AMRO will
further engage with both parties with the aim of continuing to
ensure a level
playing field and minimizing any of the uncertainties currently
associated with
the offers and with a view to optimizing the attractive alternatives
available
to ABN AMRO's shareholders.
Barclays has
filed with the US Securities and Exchange Commission a Registration
Statement on Form F-4 (as amended) which contains a
prospectus. Barclays expects to file with the US Securities and
Exchange Commission additional amendments to such Registration Statement as
well as a Tender Offer Statement on Schedule TO and other relevant
materials. In addition, ABN AMRO expects that it will file with the
US Securities and Exchange Commission a Solicitation/Recommendation
Statement on
Schedule 14D-9 in respect of the potential offer by Barclays and other
relevant materials. Such documents, however, are not currently
available.
INVESTORS
ARE URGED TO READ ANY DOCUMENTS REGARDING THE POTENTIAL OFFER IF
AND WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
ANY SUCH
DOCUMENTS MAY BE OBTAINED FOR FREE FROM WWW.SEC.GOV
OR FROM
BARCLAYS.