"Rebuilding an international network will be a challenge", stressed Dutch Finance Minister Wouter Bos when he announced the merger of ABN-Amro and Fortis. One of ABN Amro's main assets had, after all, been its foreign activity, supported by a network of offices in 60 countries. Regrettably, the bank had lost its Global Transaction Services, when it was taken over by Fortis, Banco Santander and Royal Bank of Scotland (RBS).

The booty was snapped up by RSB. Hit by the credit crunch, however, RSB is now paying dearly for the expensive take-over and is in urgent need of cash.

Taken over by the Dutch state, ABN-Amro, by contrast, seems set to make a strong come-back. The Dutch state has a pressing incentive to ensure it does in order to recoup the 16.8 billion euros of taxpayers' money it sunk in the bank's rescue. That is one of the reasons why the government does not intend to sell the bank before 2011.

So the tables have been turned completely. As RBS is mired in problems, ABN-Amro enjoys full state support. The conclusion seems obvious: ABN-Amro should be able to recover its former international network for a fair price.

Strengthening its grip
It is far from certain, however, that RBS will be willing to part with this lucrative branch. On top of that, the merger with Fortis and rebuilding ABN- Amro is a hugely complicated process, warns Jeroen
Smit, the author of a recent book on the bank's demise.

First, ABN-Amro has to be extricated from the holding controlling it. Next, it will have to implement the merger with Fortis, which includes sacking employees and overcoming differences in management styles. In addition, the Dutch state wants to recover units sold to Deutsche Bank following a directive by the European Commission, which deemed the bank too big and powerful.

Losing customers
Mr Smit fears that rebuilding an international network is only a fourth priority. Many business clients, he warns, international firms operating trough that network, could in the meantime simply walk away.

Minister Bos, in sum, is facing the tough decision to spend another five to six billion euros to recover ABN-Amro's former foreign network. The question is whether he'll be able to sell such an expense to the Dutch taxpayer. An additional problem is that such a move would force the minister even more to assume the role of banker.

"Rebuilding an international network, as Mr Bos advocates", Mr Smit concludes, "is therefore easier said than done".

 *RNW translation (cl)