ABN Q3 profits fall on bad Greek corporate loans

AP News
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Posted: Nov 18, 2011 6:36 AM
ABN Q3 profits fall on bad Greek corporate loans

ABN Amro, which is owned by the Dutch state, saw its profits fell sharply in the third quarter as it wrote down the value of Greek bonds.

Profit slid to only euro9 million ($12 million) from euro443 million a year ago after it wrote euro500 million off the value of its euro1.4 billion portfolio of Greek corporate bonds guaranteed by Athens.

The company didn't discuss other exposures to bad debt in detail, but noted it holds euro26.4 billion in European government or government-backed bonds _ more than half of it in the Netherlands and Germany.

"The macro environment became progressively challenging during the year," said ABN's chief executive Gerrit Zalm, in a statement Friday accompanying the results. Zalm is a former finance minister and was one of the architects of the euro.

He said ABN was being prudent by writing down the Greek corporate debt, albeit by a lesser amount than the 50 percent writedown on Greek government bonds under discussion as part of that country's latest bailout package.

"Even though all obligations have been met to date, the deterioration of the situation in Greece may diminish the quality of the guarantee," Zalm said.

The company's interest income and trading income also declined, which ABN said was due to worsening market conditions.

Last month, ABN Amro said it was eager to buy assets from distressed European competitors, though it is banned from major acquisitions until 2014 as part of an EU punishment for having received at least euro4.2 billion in state aid it won't repay.

The total cost so far to taxpayers of saving ABN is euro33 billion. At quarter's end, the company's net worth was a little less than euro12 billion.

The company has cut 5 percent of staff since the start of the year and now employs around 24,950.