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Monday, 30 April 2007, 08:58 GMT 09:58 UK

'Legal threat' over ABN bank sale

LaSalle Bank Bank of America is reported to be threatening one of the biggest lawsuits in history if its deal to buy LaSalle Bank from ABN Amro falls through.

A Dutch court will rule on Thursday on whether ABN Amro was allowed to sell LaSalle without shareholder approval.

Several papers report that Bank of America will sue for $220bn (£110bn) of damages if the deal is blocked.

Some ABN investors say LaSalle was only sold to deter rival bids for ABN, which had agreed a merger with Barclays.

The sale of LaSalle to Bank of America was announced at the same time as ABN Amro's agreed tie-up with Barclays.

But a consortium of Royal Bank of Scotland, Belgium's Fortis and Santander of Spain says it can pay significantly more than Barclays' £45bn offer.

'Interference'

ABN Amro shareholders led by a group called VEB are pushing for the board to sell to the highest bidder.


John Varley and Rijkman Groenink

The $220bn figure, which is more than 10 times the amount Bank of America agreed to pay for LaSalle, would be a hefty claim even by the standards of US corporate litigation.

It is equivalent to the gross domestic product of Greece.

In addition to the breach of contract claims against ABN Amro, it is also being reported that a claim for "interference" could be made against the RBS-led consortium.

Executives 'worried'

There are signs that the ABN Amro sale and potential break-up are having far-reaching effects in the banking sector.

The Financial Times reports that senior executives at Citigroup are worried that they will become the next targets for activist hedge funds calling for a break-up.

The sale of ABN Amro was sparked by a campaign by the Children's Investment Fund, which wanted the Dutch bank to break itself up to maximise shareholder value.

Some analysts say that Citigroup, which is currently valued at about $260bn (£130bn), would perform better and be more valuable if it split into four separately traded groups.




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Related to this story:
Dutch bank sale decision deferred (29 Apr 07 |  Business )
RBS confirms ABN Amro bid plans (27 Apr 07 |  Business )
ABN Amro investors in bid revolt (26 Apr 07 |  Business )
RBS woos ABN with £49bn bid plan (25 Apr 07 |  Business )
Barclays agrees £45bn Dutch deal (23 Apr 07 |  Business )
ABN bid battle 'could go hostile' (15 Apr 07 |  Business )

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Bank of America
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