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BNP Paribas Shows Interest in Buying ABN Amro

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(Bloomberg) -- BNP Paribas SA has expressed interest in a potential acquisition of ABN Amro Bank NV, the Dutch consumer lender that’s been government-owned since the financial crisis, according to people with knowledge of the matter.

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France’s biggest bank recently reached out for a meeting with the Dutch government and discussed its interest in a transaction, the people said, asking not to be identified because the information is private. BNP is drawn to ABN Amro’s retail and corporate franchise and the opportunity to expand in northern Europe, the people said.

ABN Amro soared, gaining as much as 18.4%. The stock was up 5.7% at the close Friday in Amsterdam, giving the bank a market value of 10.2 billion euros ($10.7 billion).

The Dutch government isn’t seriously examining the interest for the time being, and BNP’s preliminary contact hasn’t progressed to any detailed negotiations, the people said. The state may prefer to sell down further shares on the market, which would allow it to raise money while retaining some control, one of the people said.

Cross-border European bank mergers have been rare in the last decade as negative interest rates weighed on results and executives waited for progress on a banking union in the bloc. A recent push to revive long-stalled negotiations over a single market for banks and rising rates are boosting prospects for dealmaking, though other obstacles have emerged, including the possibility of a recession across Europe.

Other banks have also approached the Dutch government to express interest in ABN Amro, one person said.

Deliberations are ongoing, and there’s no certainty they will result in any formal bids, the people said. Representatives for BNP and ABN Amro declined to comment.

US Divestment

The Dutch government earlier this year asked NLFI, which holds the ABN Amro stake on behalf of the state, to advise on the potential further sale of shares in the bank. A spokesperson for the Dutch finance ministry said it can’t comment on specific considerations about a sale.

“For as long as the ministry has been holding a stake in ABN Amro, it has talks with various stakeholders on a regular basis about a broad arrange of topics,” the spokesperson said in an emailed statement. “The decision on possible further sell-down transactions is determined based on several factors.”

BNP, which is the biggest and most valuable bank in the euro area, is set to have additional capital for a deal after agreeing to sell its Bank of the West unit to Bank of Montreal for $16 billion in cash. That sale of its US retail business is expected to close this year. BNP executives have pledged a 4 billion-euro stock buyback for shareholders while putting the excess funds toward growth.

The Dutch state stepped in to rescue ABN Amro in the throes of the financial crisis, spending almost 22 billion euros in the process. It took the bank public in 2015 and sold down some its stake, but still owns a majority of the shares. Under government ownership, ABN Amro transformed itself from one of the world’s largest banks to a consumer lender focused on the Netherlands.

BNP has long been seen as likely acquirer in any European banking consolidation, but the firm has largely stuck to smaller bolt-on deals. Its ability to do a larger purchase got a boost last month when global regulators agreed that cross-border exposures within the bloc can be viewed as domestic ones, which are considered less risky. That move could free up funds for BNP as its prospective capital requirement would fall based on confidential calculations by the European Central Bank seen by Bloomberg.

Political Sensitivities

Any plans by the French bank to acquire ABN Amro could face political resistance in the Netherlands, especially after the turbulent marriage between Air France and KLM. France, the Netherlands and management of the two carriers have often been at odds since the 2004 merger of their respective national airlines.

The Dutch government could also be sensitive to any headquarter moves especially after Shell Plc dropped “Royal Dutch” from its name last year, relocated its tax residence to the UK and moved its top executives from The Hague to London. That came on the heels of consumer-goods maker Unilever Plc also ending its dual structure in 2020 and moving to a single British headquarters.

This isn’t the first time that ABN Amro has attracted interest from foreign lenders. In 2016, Nordea Bank approached Dutch authorities about a possible merger with ABN Amro but was rebuffed.

Commerzbank AG is also seen as a potential target in the European banking space. The German finance ministry is open to the sale of its Commerzbank stake once the lender’s share price has rebounded further and the fallout from the war in Ukraine subsides, Bloomberg News reported this month.

Officials at the finance ministry touched on the Commerzbank stake in broader discussions with top executives at potential European acquirers this year, according to people with knowledge of the matter. Over the past decade, lenders including BNP, ING Groep NV and UniCredit SpA have studied the possibility of buying Commerzbank, Bloomberg has reported.

(Updates with context on other potential deals in last two paragraphs.)

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