BEST BANK CAPITAL RAISING: ABN Amro’s European record
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BANKING

BEST BANK CAPITAL RAISING: ABN Amro’s European record

Deals of the Year


Issuer: ABN Amro
Date: August 1998
Amount: $1.25 billion
Global coordinators: ABN Amro, Merrill Lynch, Salomon Smith Barney


When ABN Amro raised tier-one capital in August to finance its $2.1 billion acquisition of Brazil’s Banco Real it was the first time any European bank had marketed a tier-one instrument to retail investors. Guidelines for synthetic tier-one capital from the Basle committee on banking supervision would not be released until late October, but not only did ABN Amro execute a successful deal, but it was increased to $1.25 billion from $750 million. Though SEC-registered, the bond attracted a truly global range of investor.

Offerings of preferred securities—products that look like equity to satisfy regulators but generate non-dilutive capital for the issuer—have been common practice in the US for quite some time. In Europe however, because of tighter regulatory laws, only $3.5 billion has been raised targeted at Europe’s private client investors.ABN Amro’s offering was one of the largest preferred securities transactions by a European bank to date.

“There have been larger institutional deals but they have had step-up rates where it is called in 10 years,” says Harish Raghavan, head of global new product group at Merrill Lynch, joint bookrunner for the deal.


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