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National Australia Bank (NAB), owner of the Bank of New Zealand, said it was in discussions to acquire investment bank ABN Amro Holding in a potential A$1 billion ($1.3 billion)-plus deal.
Buying the local arm of Dutch bank ABN Amro, acquired last October by a consortium including Royal
Bank of Scotland for about A$100 billion, would give NAB an equities dealing capability for the first time since the early 90s.
News of the talks came just weeks after NAB was understood to have pulled out of an acquisition of Citigroup's local broking operations.
ABN Amro and US-based Citigroup have been hurt by the global credit crunch and are considering selling non-core assets to strengthen their balance sheets.
NAB said yesterday that there was no certainty that a deal with ABN Amro would be sealed.
"Any potential transaction would be subject to due diligence and, ultimately, the receipt of all relevant regulatory approvals," it said.
ABN Amro would complement NAB's corporate and institutional banking business, NAB Capital, and allow it provide retail broking and corporate advisory services.
It would also give NAB's wealth management arm MLC another 200 highly sought after financial planners amid a superannuation boom and a shortage of skilled talent.
MLC boss Steve Tucker said last June that NAB would hire an extra 200 to 300 planners immediately if it could find them.
The global credit crunch is shaking up the local broking industry, with a related plunge in the stock market claiming margin loan specialists Opes Prime and Lift Capital.
Local financial institutions are faring better than their US and European peers, but Australia's big banks aren't coming through the credit crunch unscathed.
NAB, which is Australia's second biggest bank by market value, also announced yesterday that there was a continued risk that a further provisioning could be required related to its exposure to US$1.1 billion ($1.45 billion) of risky collateralised debt obligations.
NAB revealed in May that it had established a collective provision of A$181 million at March 31 related to the CDOs.
Both of yesterday's announcements had to be made by NAB as part of the underwriting agreement for its dividend reinvestment plan.
In respect to the fiscal 2008 interim dividend of A97c cents a share, NAB said it had issued 34,847,745 shares on Thursday to the underwriter at A$27.26 a share, equating to A$950 million.
- AAP