Dutch state owned bank ABN Amro has initiated legal proceedings at the European Union's General Court regarding the European Commission's decision to ban the bank from making acquisitions following a state bailout earlier this year.
On 5th April, following an in-depth state aid investigation, the European Commission approved a support package and restructuring plan for the ABN Amro group. The package was approved subject to certain conditions, designed to consolidate the viability of the group and prevent public funds being used to finance aggressive business strategies, which may harm competitors operating without state aid. The conditions include a ban on acquisitions and measures to stimulate competition in private banking within the Netherlands. Most of the measures were implemented for a period of three years commencing on 5th April 2011, however may be extended to a maximum of five years if the Dutch state continues to hold more than 50% of the ordinary shares.
ABN Amro has filed an appeal at the General Court concerning the acquisition ban, fearing a scenario whereby the government disposes of a proportion of its stake, but the acquisition ban still applies. Under the conditions, ABN Amro may make limited acquisitions if they fall below a certain cumulative limit or are part of certain activities, such as private equity. A spokesperson for ABN Amro has stated that the bank wanted to be as flexible as possible. At present, ABN Amro does not plan on making any acquisitions however it wishes to address this potential problem which may arise after 2014. An appeal will therefore follow although it will not suspend the applicability of the Commission's original decision.
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