Page 4 - RBS – ABN takeover

The Sequence of Events

ABN AMRO was in the period from 1991 to 2007 one of

the largest banks in Europe and had operations in about

53 countries around the world. Originated in the Netherlands, its history dated

back to 1824. ABN ranked eighth in Europe and 13th in the world based on total

assets, with a staff of over 110,000 full-time equivalents and total assets of €999

billion (as of September 30, 2006).

In an open letter in February, 2007 The Children’s Investment (TCI) hedge fund,

(an investor with a 1% stake in ABN), asked the Chairman of the ABN

Supervisory Board to actively investigate a merger, acquisition or break up of

ABN, stating that the current stock price didn't reflect the true value of the

underlying assets. TCI asked the chairman to put their request on the agenda of

the annual shareholders meeting of April 2007.

Efficiency ratios across ABN’s business units had continued to lag behind peer

banks. ABN’s outsourcing and other efficiency/productivity initiatives of the

previous years weren't enough to accelerate earnings growth or produce a higher

share price. In fact between 2000 and 2006, the ABN stock price had remained

stagnant. The financial results for the financial year 2006 added to concerns

about the bank's future. Operating expenses increased at a greater rate than

operating revenue reflecting greater operating results difficulties. The efficiency