Nationalised Dutch bank ABN Amro posted a 2009 loss and forecast another deficit for 2010 as it completes its ill-fated 2007 break-up and begins a new multi-year restructuring.
But the company said it expects to be back to profitability by 2011 and to begin showing the synergies of its coming integration with Fortis Bank Nederland by 2012.
ABN said it expects to fully separate from businesses legally owned by the Royal Bank of Scotland by April 1st, at which point the bank's nearly three-year dismantling will be essentially complete.
At the time the Dutch government nationalised ABN AMRO in October 2008, the parts RBS bought with consortium partners in October 2007 had not yet been fully split off.
Between the initial acquisition and subsequent capital injections, the Dutch government has spent an estimated €26 billion to nationalise ABN Amro, making it one of the world's most costly bailouts following the credit crisis.
ABN Amro also said today it will close an asset sale to Deutsche Bank shortly after April 1st. ABN Amro is selling Deutsche a package of assets to address European Commission competition concerns, which date from the 2007 sale.
ABN Amro estimated it would record a loss of €800 million to €900 million euros on the deal.
With the RBS separation and Deutsche Bank sales completed ABN Amro can then begin its Fortis merger.
ABN Amro said the legal integration of the two would be complete late this year but the full integration of the two businesses would run through the end of 2011.
"The synergy impact will start to emerge in 2012," chief financial officer David Cole said, adding it made sense for the bank to demonstrate the effect of those synergies before it was privatised.
Chief executive Gerrit Zalm reiterated today that ABN Amro prefers to remain independent and privatisation is likely in 2013 or 2014.
Mr Zalm said the integration and reorganisation would cost "many hundreds of million" euros this year and that, combined with the Deutsche losses, the bank would post a loss for 2010.
The core ABN AMRO operations owned by the Dutch state lost €117 million from continuing operations in 2009 on higher loan provisions and pressure on interest margins.
On the same basis it made €471 million a year earlier.
ABN Amro said if separation and integration costs were excluded, as well as charges for the Dutch bank deposit guarantee scheme, it would have earned 114 million euros for the year.
Loan impairments and credit risk provisions rose around 50 per cent in the year, ABN Amro said. Margin pressure in the savings market weighed on interest income and declining assets under management in the private bank hurt non-interest income.
The new ABN will be the Netherlands' third-largest retail savings bank, its largest private bank, a top-two commercial bank and also the world's largest diamond finance business.
Reuters