Sir Tom McKillop, recently retired chairman of the Royal Bank of Scotland, has admitted that the €70bn purchase of ABN AMRO was “a bad mistake”.
Giving evident to the House of Commons Treasury Committee, Sir Tom said “In retrospect we overpaid. We are sorry we bought ABN AMRO.”
He added that the £20bn writedown that RBS took in January was not broken down but most of it related to the purchase of ABN AMRO.
“The bulk of our share of the ABN AMRO purchase price will be written off,” added Sir Tom.
However, he refuted suggestions that the deal was solely a project of former chief executive Sir Fred Goodwin.
“The ABN deal was not driven by Sir Fred. After Barclays made its offer in March we had a strategic committee who made an analysis of ABN AMRO’s business. We had 18 board meetings before the decision to make an offer for ABN was made in May.”
He concluded: “We made a bad mistake in purchasing ABN AMRO but it’s easy to say that in retrospect.”
Sir Fred, also giving evidence to the same committee, said: “At the time it did not seem like a bad mistake. Barclays were fighting to buy ABN AMRO until the end. They upped their offer three times. 94% of our shareholders approved the deal and our funding was seven times oversubscribed.”
Sir Tom said due diligence was carried by teams in May 2007 on 15 different streams of ABN AMRO’s business, all of which reported back to the board. A statement by ABN AMRO in Septmber that the business remained resilient despite deteriorating credit conditions reassured RBS’s board before completing the deal in October that year.
Source: Thomson Merger News