How Botín got what he wanted out of ABN

And for his next trick... Botín weaves his magic at Santander

Botín: "The deal could not have happened without Fred’s [Goodwin] strong leadership"

Then, in January 2007, Fred Goodwin, the chief executive of Royal Bank of Scotland, approached Santander and told Botín that he was looking to make a bid for ABN.

Goodwin asked Botín if he would be interested. Botín stuck to his guns: yes, he said – but only in Brazil and Italy. In that discussion, Botín – who had already consulted key in-house dealmaker Juan Rodríguez Inciarte about the offer – told Goodwin the price he would be prepared to pay for the banking operations of ABN in those two countries. He said it would be in the region of €17 billion.

In subsequent discussions, Goodwin, Botín and their advisers at Merrill Lynch discussed what to do with the Benelux operations of ABN. They both agreed that the businesses would be a difficult fit for their respective banks. So they approached Jean-Paul Votron, the recently ousted chief executive of Fortis. The Dutch/Belgian bank had already been approached by another investment bank with the idea of making an offer for ABN’s Benelux bank. It had declined that previous approach but after further discussions with Goodwin decided to make a bid as part of a consortium with RBS and Santander.

"It is important to note that throughout the discussions and the bid Fred and RBS were very much the leaders who went out and made the deal happen. The deal could not have happened without Fred’s strong leadership," says Botín.

Not long after Fortis came on board, Barclays made its stock-based bid for ABN. The board of the Dutch bank gave Barclays exclusivity. Most investment bankers thought it was a done deal.

But the consortium would not give up that easily. Botín was now determined to get his hands on the prized asset of Banco Real in Brazil, as well as establish a strong foothold in Italy with Banco Antonveneta. Botín told Goodwin that he was prepared to increase his share of the bid to €19 billion.

Even then, Botín – who is used to getting what he wants – was not convinced that the consortium bid would succeed.

"The bid in itself – the largest ever M&A transaction on a hostile basis – was tough. But we had a number of other elements against us: the regulators; the large group of investment banks advising ABN and Barclays; the unions; and initially the shareholders of ABN."

Botín admits that the credit crunch came to the rescue of the bid. As financial markets turned sour, bank share prices were hit. Barclays’ stock-based offer plummeted in value. The consortium’s cash offer was unassailable – and some would say far too high given the changed financial climate.

Seven months later, RBS, Santander and Fortis had won the battle for ABN. But at what cost?

Botín is convinced that each of the three consortium members has a good long-term deal. "I estimate that the future increase in profitability for all three of us is in the region of €10 billion each," he says. "Of course we already have some of that profit in our pocket because of the sale of Antonveneta."