ABN AMRO Sells Italy and Belgium Bonds

ABN AMRO Group NV, the Dutch based state owned lender, said that it has cut down its exposure to Belgium and Italian sovereign bonds in July as a result of earning loses in third fiscal quarter and said it remains cautious for the remaining year as it anticipates further economy weakening.

The Dutch based lender said it slumped to losses in the quarter that ended Sept 30. After taking a pretax impairment of 500 million Euros on loans that are guaranteed by the Greek government. ABN AMRO which has a portfolio of 1.4 million Euros of such loans said that all responsibilities have been met until now however in Greece the situation of deterioration will diminish the guarantee quality making the lender incapable of recovering all outstanding loans.

Institutional investors and lenders have been selling euro zone government bonds as the debt crisis emerges increasingly intractable, affecting bond yields of core euro zone countries like Finland and Netherlands as well as peripheral countries

SNS Reaal, ABN AMRO’s Dutch rival, on Thursday said that in the past week it has considerably minimized its French sovereign debt exposure. Wietze Reehoorn, AMRO’s Chief Risk Officer, said that the Dutch lender sold its Italian and Belgium bonds to manage liquidity risks ensuing in a 30 million euro net loss on sales. In 2010, ABN sold its commercial banking business in Holland to Deutshce Bank (NYSE:DB).

ABN AMRO in Greece had around 1.4 billion Euros of outstanding debts at the state owned companies in the public transport sector and due to Europe’s debt crisis it decided to write down 500 million Euros out of the total due. This write down led to the net loss of 54 million Euros in the third quarter, compared to a 341 million Euros earnings in the same period last year.

During the 2008 financial crisis ABN AMRO was nationalized for Fortis, the former Benelux financial service giant, as a part of a rescue program. The new lender comprises of the Dutch banking activities of Fortis, which are at present being merged to create the third largest bank in Netherland by assets. The merger will result close to 6,000 layoffs and is expected to be completed by next year.

ABN AMRO in August said that it plans additional 2,350 job cuts as it attempts to bring down costs as it prepares for the process of privatization. Around 27 billion Euros were spent by the Dutch state to prop up the lender and it aims to return ABN AMRO to the market after two years, through a stock market listing preferably.

Post Written By: Ed Liston Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.