Page 22 - RBS – ABN takeover

When asked in October 2007 ‘did RBS pay too much for ABN Amro?’

Sir Fred Goodwin’s response was:

"Yes, the people who win do pay more than the people who don't win. That

is certainly the case here. I think it's a very attractive financial case for our

shareholders.”

He added:

"The gap between our offer and Barclays was almost exactly the same as
the day we launched the bid all those months ago."

The deal was initially seen as a triumph for Goodwin, who had persisted in spite

of the emerging turmoil in the credit markets, which had begun to batter the

share prices of both RBS and Fortis. Goodwin further defended the ABN AMRO

acquisition by arguing that he

“saw few opportunities for acquisitions that offered a 16 per cent return on

investment.”

But that calculation did not include the additional capital RBS was forced into

raising as a result of the deal.

ABN AMRO had invested heavily in the property sector and this market was fast

declining. This meant more losses following the deal. RBS finally announced a

loss of £28 billion for 2008, of which £20 billion was a write down from its

acquisition of ABN AMRO in 2007.