Consolidation of the Banking System in Europe: The Acquisition of ABN AMRO

Abstract

The widely publicized banking takeover battle sustained by the British Barclays and a consortium led by the Royal Bank of Scotland that included the Dutch Fortis and the Spanish Santander, for the Dutch ABN AMRO, took place during six months, from March through October of 2007. The myriad legal and economic complexities involved and the mammoth size of the transaction (more than $100 billion) that made of it the largest banking industry M&A ever, illustrates the kind of operations that are likely to reconfigure the European banking scene during the coming years. After an intense period of M&As of EU banks at a domestic level, that was, arguably, detonated by technological, political and economic factors, it is only during most recent times that cross-border transactions have represented a significant participation in the consolidation process. ABN’s acquisition and later carve out represented a cap to the series of transactions that took place in recent years and will likely keep the top place for years to come. In the following sections, this paper discusses the recent trends towards increasing concentration in the EU, the most important cross-border M&As of banks and finally the acquisition of ABN AMRO. The paper closes with conclusions on what this mega-transaction represented and how will it likely influence the future evolution of that region’s banking industry.