ABN AMRO Seeks to Reenter US Bank Mergers with Potential Dime Bancorp Acquisition

Strategic Insights -

A four-year hiatus is set to end as ABN AMRO North America Inc. positions itself to make a return to the US bank merger market. The subsidiary of Dutch-owned ABN AMRO Bank N.V. is reportedly considering a bid for Dime Bancorp Inc., New York's largest thrift, which is resisting a hostile takeover from North Fork Bancorp. This acquisition would nearly double ABN AMRO's New York-area holdings through its $14.6-billion-asset subsidiary, European American Bank, and could be achieved at a bargain rate of $22 per share, or 10 times Dime's 1999 earnings.

Key Takeaways:

  • ABN AMRO is considering a bid for Dime Bancorp Inc., New York's largest thrift, after a four-year hiatus from US bank mergers.
  • The acquisition would nearly double ABN AMRO's New York-area holdings through its $14.6-billion-asset subsidiary, European American Bank.
  • The price of the acquisition would be approximately $22 per share, or 10 times Dime's 1999 earnings.
  • ABN AMRO has traditionally been acquisitive, particularly in its recent acquisitions, which have been of large thrifts with solid franchises.
  • Dime is a large thrift with 127 branches and $14.3 billion in deposits, providing cheap funds for commercial lending at other ABN subsidiaries.
  • ABN AMRO has always desired a sizable New York presence and originally sought to base its North American banking empire in New York City.
  • The potential acquisition of Dime faces competition from other suitors, including Citigroup Inc., HSBC USA Inc., and FleetBoston Financial Corp.

Statistics:

  • ABN AMRO has $167.4 billion in assets and is reportedly considering a bid for Dime Bancorp Inc.
  • The potential acquisition price for Dime is $22 per share, or 10 times Dime's 1999 earnings.
  • Dime Bancorp Inc. has 127 branches and $14.3 billion in deposits.
  • ABN AMRO's subsidiary, European American Bank, has $14.6 billion in assets.
  • The proposed merger between Dime and Hudson United Bancorp was valued at $1.37 billion, or $12.43 per share.

Sources:

  • "ABN AMRO may 'ride back into the bank merger arena': bankers say" by Rachel Emma Silverman, Wall Street Journal, May 6, 2000
  • "Dime investors a bit blasé about bid battle" by Michael White, Wall Street Journal, May 8, 2000