DBRS Confirms ABN AMRO Holding at AA (low)p & R-1 (middle)p

Dominion Bond Rating Service (“DBRS”) has today confirmed the ratings of ABN AMRO Holdings N.V. (“ABN AMRO” or the “Company”) at the above rating levels.

ABN AMRO has announced its intention to make an all cash offer for the 87.3% of the outstanding shares of Banca Antonveneta, which it does not currently own, at a 6% premium to the market price at the time of the announcement. The cost to ABN AMRO will be approximately €6.3 billion if all of the outstanding shares are tendered, though the transaction will proceed even if ABN AMRO manages to attract just 50% plus one of the outstanding shares. ABN AMRO plans to finance €3 billion of the cost with a 135 million share issue representing 8% of the Company’s outstanding share capital, in addition to other hybrid capital and debt issues as required.

This transaction is consistent with ABN AMRO’s announced strategy to diversify its European base of operations in order to access more favourable growth opportunities. Banca Antonveneta represents an attractive addition to ABN AMRO’s portfolio of businesses. It is the ninth largest banking group in Italy, and, therefore, enjoys a concentration of mid-sized businesses, which remains the strategic client focus of ABN AMRO, as well as having relatively low penetration of traditional banking products. With 1.5 million commercial and personal customers concentrated in the prosperous northeastern quadrant of Italy, €45.4 billion in assets, and recurring return on equity of just 6.5% in 2004, Banca Antonveneta and, therefore, ABN AMRO has the potential to benefit from the imposition of a more cost-efficient operating style. Following a €200 million one-time integration expense, it is anticipated that Banca Antonveneta will be able to realize continuing annual expense savings in the order of €160 million. The acquisition is expected to be accretive to ABN AMRO’s earnings per share within a year of the transaction.

While the acquisition is likely to result in a temporary deterioration of ABN AMRO’s Tier 1 capital ratios, higher retained earnings over time, including the decision not to immunize the dilutive impact of the existing stock dividend, should allow core equity Tier 1 and Tier 1 ratios to return to the targeted levels of 6% and 8%, respectively, by the end of 2006. To put this transaction into perspective, ABN AMRO ended 2004 with risk-weighted assets of €239 billion and a market capitalization of €33.3 billion. By contrast, Banca Antonveneta had risk-weighted assets of €39.9 billion and an implied market capitalization of €7.2 billion following this offer.

Whether the transaction proceeds or not is subject to the ultimate approval of the Bank of Italy, which so far has staunchly resisted foreign takeovers of Italian financial institutions. Cross-border acquisitions are, nevertheless, regarded as being desirable by the European Commission, which also must approve the transaction.

Note:
p - This rating is based on public information.
Issuer ratings apply to all general senior unsecured obligations of the issuer in question.

DBRS's rating definitions and the terms of use of such ratings are available at www.dbrs.com.

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