ABN-AMRO’s Diamond Division Now 100% Owned by Dutch Government

As last week’s bailout of Fortis by the Benelux government failed to restore confidence in the troubled bank, the Dutch government pulled out of the previous deal and has now purchased 100% of all the activities in the Netherlands of the Fortis Bank, the ABN-AMRO Bank and the Fortis insurance business. The acquisition carries a price tag of $23.2 billion (or €16.8 billion).

According to Dutch Finance Minister Wouter Bos, the deal effectively splits Fortis in two along national lines. It not only protects the Dutch consumers and the 45,000 employees of the banking and insurance entities, but it also would give the Belgian-controlled part of the company the cash it badly needs to survive.

The minister confirmed that clients had been withdrawing money and other banks were refusing to lend to Fortis because troubles "hidden" in its Belgian operations were becoming apparent. Bos considered the Dutch parts as being robust, something implied in his statement that “the deal safeguards the Dutch operations from the danger of infection from the part that's less healthy.”

The rest of the bailout arrangement remains unchanged for now, with the governments of Belgium and Luxembourg each taking 49 percent stakes in Fortis' banking operations in their respective countries. Dutch Prime Minister Jan-Peter Balkenende said that the two banks would be integrated into one operational entity that, ultimately, would again be sold to the public.

ABN-AMRO’s International Diamond and Jewelry Group belongs to the Dutch ABN-AMRO and Fortis entities and therefore the diamond industry has the comfort knowing that the diamond financing business is now 100 percent in the hands of the Dutch government.