AMSTERDAM/LONDON: The Netherlands”biggest bank ABN AMRO said yesterday it had signed an agreement to sell its professional brokerage business in the US to Merrill Lynch for an undisclosed amount.
ABN AMRO said on December 31 it was in talks to sell the business to Merrill because the unit, which brokers options and securities for institutional clients and traders, was no longer considered part of the core business within the wholesale clients division. Like many other European investment banks, ABN AMRO has scaled back certain areas on Wall Street in the last three years after suffering from the bear market and struggling to compete with the US bulge- bracket banks in some areas of business.
Last December the bank sold its US prime brokerage arm, which is geared to hedge funds, to UBS.
ABN said the sales are not part of a US pull-back. “This is not about us withdrawing from the US in wholesale banking. It is about refocusing product line to a client-led model,”said Steven Blaney, a spokesman for the bank.
Three years ago the bank restructured its investment and corporate banking business into a wholesale franchise. Rather than targeting specific financial markets and then looking for people that use them, the bank said it now targets the clients and then finds them the markets that suit them.
These particular prime brokerage and equities and options execution and clearing units did not fit into this model, said Blaney.
Blaney said the bank has actually been adding staff in the US for financial markets such as securitization and high-yield debt.
The US still represents the highest fee pool for investment banks, and European banks such as Deutsche Bank, Barclays Capital and UBS, have been looking at expanding in specific areas in recent months.
Merrill Lynch said in a statement that the acquisition would accelerate efforts to build its options clearing business and so expand its institutional client base.
ABN said the sale of the business would involve restructuring costs and asset write-downs. “These costs will be offset by the gains from the sale… therefore the sale is expected to have no impact on the group for 2003,”it said. It expects the transaction to be finalized in three months.
The professional brokerage business provides securities clearing, trade execution and operational support services to participants in the US options and securities markets.
