Deutsche Strikes ABN Deal As Ex-CEO Feels The Handcuffs

Author:
Updated:
Original:

Deutsche Bank moved a step closer towards buying parts of ABN Amro, while the Dutch government moved a step closer (albeit an expensive one) to ridding itself of the state-owned bank and a former Deutsche Bank CEO moved a step closer to jail on a busy Thursday for west European banking.
The Germans have agreed to pay €700 million to buy what it wants from its ill-fated western neighbor, as well as assume €950 million in financial guarantees. ABN Amro, which the Dutch government plans to merge with Fortis Bank, gets stuck with potential credit losses of €1.6 billion.
The deal--which Dutch finance minister Wouter Bos says is a foregone conclusion, despite the need for parliamentary approval--is expected to close next year. And while Deutsche Bank apparently didn't need any help to make it happen, the same cannot be said of ABN Amro.

The Dutch government said today that it would inject another €4.4 billion into its headache, in part to cover a shortfall from the Deutsche Bank sale. The Netherlands has already dumped more than €19 billion into the bank over the past year, including a €2.4 billion cash infusion over the summer. But don't worry, Bos says: "This capital injection will be the last that the state grants."
"Barring unforeseen circumstance," of course.
They may have gotten a great deal on the ABN assets, but all is not sunny in Frankfurt, either. Deutsche Bank's former chairman and CEO, Rolf Breuer, has been charged with attempted fraud.
Munich prosecutors say Breuer lied on the stand during a civil case brought against him and the bank by German media tycoon Leo Kirch. Breuer testified in 2003, when he was still chairman of Deutsche Bank (he left that post in 2006), that he had no special information about Kirch's credit relationship with Deutsche Bank when he made some unflattering comments the year before. Turns out, maybe he did. Oops.
Deutsche Bank To Pay EUR700M For ABN Amro Ops [WSJ]
Dutch bank ABN gets new euro4.4 billion bailout [AP via BW]
Former Chief of Deutsche Bank Faces Fraud Case [WSJ]

Related

The Less-Colorful Eliot Spitzer Strikes Again

[caption id="attachment_99794" align="alignleft" width="260"] No jurisdiction can hold me.[/caption] Hedge fund manager Phil Goldstein once said that when Massachusetts Secretary of the Commonwealth Bill Galvin looks in the mirror in the morning, he sees Eliot Spitzer. Granted, he said this before certain aspects of Client Number Nine's private life hit the front pages, but the point was made. And while Spitzer moves from one failed media venture to another—undoubtedly paying very close attention to a certain South Carolina House race—Galvin still carries the torch and a copy of the Bay State's securities law. That law must be unusually broad, because he's used it to fine a German bank $17.5 million for naughtiness related to a CDO created with an Illinois-based hedge fund.