ABN Amro Board Wimps Out!

ABN Amro's (ABN) board will not recommend either of the two rival takeover bids the Dutch bank has received. The Barclays (BCS) bid fits better with ABN's old corporate strategy, while the one from a consortium led by Royal Bank of Scotland PLC (LON:RBS) is worth more, but is risky, the company's managing board and supervisory board said in a statement Sunday.

However ABN Amro Holding NV Chief Executive Officer Rijkman Groenink said Barclays Plc's bid for the largest Dutch lender probably won't succeed, as its price trails an offer led by Royal Bank of Scotland Group Plc. He was being quoted by Bloomberg from a media interview.

Barclays' cash-and-stock bid comes to 59.6 billion euros ($83 billion) based on Sept. 14 valuations, while the mostly stock offer from the Royal Bank group is valued at 71.6 billion euros. The acceptance periods for both offers end the first week of October.

It is disappointing that the board of a major international money center bank cannot make a firm determination. They have been managing this enormous financial beast called an international bank but they cannot provide the investors with a recommendation.

Here is the moment of truth. The bank is to be sold and will be changed forever and the board cannot come up with a sensible comment. The board which represents the investors in case anyone has forgotten has access to everything in this deal. In addition to information flow which should be superior to anything else on the street they have access to the best advice; lawyers, accountants, investment bankers and even regulators must have shown their hand in some way. The fees they have paid are enormous and then they wimp out. Can we have our money back please.

Then the CEO goes on network TV and starts making predictions as if this is a sporting match.

The major issue for the market is a question of redeployment of capital. Both offers are majorly based on share exchanges. The first year there will be excuses of financial indigestion.

I would think twice about relying on members of the ABN board in the future. They were not strong enough to achieve clarity.