The Takeover of ABN AMRO and Its Effects on Latin American Banking

Abstract

Throughout the 1990s and well into the first half of the new century, there was intense activity in Mergers and Acquisitions (M&As) in the commercial banking industry of Western Europe. The frequency of M&As diminished when the 2007–2009 financial crisis hit the markets. One of the last of these activities that took place before the full explosion of the 2007–2009 financial crisis was the cross‐border takeover that a consortium made up of Royal Bank of Scotland (RBS–England), Fortis (Belgium–Netherlands), and Santander (Spain) carried out of one of the largest banks in the world, ABN AMRO (Netherlands). A few months later, the write‐offs of significant amounts of subprime mortgage securities had affected the balance sheet of RBS and Fortis, with severe strategic consequences. The financial crisis forced RBS and Fortis to withdraw from Latin America but also represented a golden opportunity for Santander to further strengthen its already solid position in the region. This article offers a detailed discussion of these events and concludes with a reflection on the need to further investigate the economic consequences of the participation of foreign banks in emerging countries.