APPENDIX III - to the ABN AMRO Press Release on 2008 financial results

Group results

To comply with its filing obligations in the Netherlands and the United States of America, ABN AMRO Holding N.V. has prepared and publishes today its Annual Report including consolidated financial statements for the year ended 31 December 2008.

Following the acquisition of ABN AMRO by the Consortium of Royal Bank of Scotland, Fortis and Santander in October 2007, the Royal Bank of Scotland Group plc (‘RBS’) has assumed the lead responsibility for managing ABN AMRO with respect to all regulatory requirements. Accordingly, ABN AMRO’s financial results are fully consolidated in the RBS Group financial results.

Set out below is a summary of the ABN AMRO Group results and financial position. In addition further information has been provided on the Dutch State acquired businesses in Appendix IV. Details on the RBS acquired businesses are provided in the 2008 RBS Group Annual Report and Accounts.

ABN AMRO Group

 

EUR in Millions		Group IFRS								Group non-GAAP
		2008				2007				2008				2007
Profit and Loss
Net interest income			5,783				4,595				5,828				4,815
Net fee and commissions income			2,629				3,852				2,629				3,852
Net trading income			-9,324				1,119				-9,324				1,116
Results from financial transactions			-1,684				1,134				-1,648				1,088
Share of result in equity accounted investments			106				223				106				222
Other operating income			306				1,239				306				1,239
Income from consolidated private equity holdings			1,726				3,836				0				0
Operating income			-458				15,998				-2,103				12,332
Operating expenses			11,629				14,785				9,994				11,151
Operating result			-12,087				1,213				-12,097				1,181
Loan impairment and other credit risk provisions			3,387				717				3,387				717
Operating profit/(loss) before taxes			-15,474				496				-15,484				464
Tax			-2,580				-458				-2,590				-490
Profit/(loss) from continuing operations			-12,894				954				-12,894				954
Profit from discontinued operations net of tax			16,489				9,021				16,489				9,021
Profit for the year			3,595				9,975				3,595				9,975
RWA			176,028				232,312				176,028				232,312
BIS ratios percentages
Core tier 1			10.10				10.59				10.10				10.59
Tier 1			10.88				12.42				10.88				12.42
Total BIS ratio			14.43				14.61				14.43				14.61
AuM (EUR in billions)			102				140				102				140

 

In line with the performance review in the Annual Report we present our results under IFRS but also provide and discuss ‘non-GAAP’ results which exclude the consolidation effect of controlled private equity investments. For further explanations please refer to our 2008 Annual Report (www.abnamro.com).

The result from continuing operations of the Group in 2008 amounts to a loss of EUR 12.9 billion. The result was severely impacted by the financial turmoil, in particular the trading and financial transaction results of the RBS acquired businesses (represented in the 2008 Annual Report by business units: Europe, Asia and Americas). The performance was also impacted by the transfer of some businesses to RBS. The transfer of these business activities, along with their related assets and liabilities, has resulted in substantial disposal losses for ABN AMRO. In addition, new business is increasingly originated directly in RBS rather than in the RBS acquired businesses within ABN AMRO and consequently, the RBS acquired businesses cannot be evaluated on a stand-alone basis. Reference should be made to the RBS Group’s Annual Report and Accounts 2008 for a discussion of these results.

 

 

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The net operating profit in the Dutch State acquired businesses, comprising Netherlands and Private Clients, was EUR 471 million. The businesses remained profitable, in spite of an increase in loan impairment charges, pressure on interest rate margins as well as a decline in assets under management.

The net operating loss in Central Items, the residual part of the Group including Group Functions and some investments shared by the Consortium Members, amounts to EUR 816 million which is amongst others due to negative fair market value adjustments and disposal losses on private equity investments and increased shareholders costs not allocated out to the business units. Operating expenses decreased significantly compared to 2007 because 2007 figures included a number of expenses related to the corporate situation of ABN AMRO, including corporate transaction-related fees.

The gain on discontinued operations of EUR 16.5 billion comprises the a profit on the sales of Asset Management to Fortis Belgium, Banca Antonveneta to Banca Monte dei Paschi, Banco Real to Santander, and the net operating result of the above businesses prior to the sales.

The capital adequacy ratios have slightly decreased predominantly due to the negative RBS acquired businesses results partly offset by decreasing RWA levels following transfers to RBS.

 

 

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APPENDIX IV - to the ABN AMRO Press Release on 2008 financial results

Results of the Dutch State acquired businesses

 

 

		Netherlands								Private Clients								Total
EUR in Millions		2008				2007				2008				2007				2008				2007
Profit and Loss
Net interest income			2,822				2,981				401				459				3,223				3,440
Net fee and commissions income			750				781				572				760				1,322				1,541
Net trading income			112				83				78				72				190				155
Results from financial transactions			194				29				-13				8				181				37
Share of result in equity accounted investments			30				54				1				0				31				54
Other operating income			170				244				72				91				242				335
Operating income			4,078				4,172				1,111				1,390				5,189				5,562
Operating expenses			2,923				2,641				863				969				3,786				3,610
Operating result			1,155				1,531				248				421				1,403				1,952
Loan impairment and other credit risk provisions			761				378				15				0				776				378
Operating profit/(loss) before taxes			394				1,153				233				421				627				1,574
Tax			88				271				68				123				156				394
Net operating profit			306				882				165				298				471				1,180
AuM (EUR in billions)											102				140				102				140

 

Netherlands

The Netherlands operations include the network of branches offering a variety of retail and commercial products with a focus on retail clients and small to mid-market enterprises. Presented results include the International Diamonds and Jewelry Group operations together with the Group Assets and Liabilities Management (ALM) investment and funding portfolios economically allocated to Dutch State acquired businesses as of 1 April 2008.

Net operating profit in 2008 of EUR 306 million is EUR 576 million below 2007. The current year performance has been affected by rising funding costs resulting from changes in the funding composition and increasing interest margin pressure and higher levels of loan impairments.

Apart from the allocated ALM results as of 1 April 2008, interest income remained flat in comparison with 2007 as volume growth in mortgages and commercial loans was offset by lower interest margins. Result from financial transactions increased by EUR 165 million, reflecting a positive result on the unwinding of some capital management related guarantee transactions. The offsetting effect in other operating income reflects gains on sale of offices recognised in 2007.

The total operating income from ALM activities amounted to EUR 232 million negative, which was heavily impacted by increasing funding costs in 2008.

The results of the International Diamonds and Jewelry Group are stable over the 2007 and 2008 period with a net operating profit of EUR 28 million compared to EUR 26 million in the prior year.

Operating expenses increased by EUR 282 million, mainly due to the fact that the 2008 expense level included a restructuring charge of EUR 175 million, whilst in 2007 benefited from restructuring provision releases of EUR 46 million. The restructuring charge relates to integration and restructuring costs as well as costs of the preparation for the planned sale of certain activities as required under the EC Remedy. In addition, 2008 includes a deposit guarantee provision of EUR 40 million.

Loan impairments include specific provisions mainly against commercial loan portfolios as well as increased provisioning following credit cycle adjustments, leading to a loan impairment level for the full year being approximately twice the prior year level.

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Private Clients

Private Clients offers private banking services to individuals with net invested assets above EUR 1 million. Private Clients has developed significant market presence in Europe through organic growth as well as acquisitions.

The 2008 net operating profit falls below the 2007 level by EUR 133 million driven by the reductions in the operating income, as Private Clients experienced the financial markets deterioration.

The main contributor to the lower 2008 results is the reduced level of assets under management. Compared to 2007, assets under management reduced from EUR 140 billion to EUR 102 billion, with a EUR 2 billion reduction attributable to the sale of Private Clients Brazil to Santander early 2008. Adjusted for other divestitures, such as the UK, India, Indonesia and Gibraltar, assets under management levels have declined by a quarter primarily driven by the significant decrease in the value of the financial assets following the severe dislocation of capital markets and also some client attrition particularly in the third quarter of the year. The latter has abated following the acquisition of Fortis Bank Nederland by the Dutch State.

The reduced level of assets under management is directly reflected in the lower interest and commission income. In addition, the results also include an impairment loss on equity investments held in support of client related investment products of EUR 24 million.

Operating expenses reduced by 11% despite transition costs of EUR 33 million and a deposit guarantee provision of EUR 13 million. The reduction reflects lower bonuses and general administration costs.

 

 

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APPENDIX V - to the ABN AMRO Press Release on 2008 financial results

Balance Sheet information

EUR in Billions		Group								Dutch State Acquired Businesses
Assets		2008				2007				2008			2007
Cash and balances with central banks			5.9				16.8				0.6		0.7
Financial assets held for trading			212.7				242.3				1.0		0.5
Financial investments			67.1				96.4				14.7		4.2
Loans and receivables - banks			75.6				175.7				1.0		2.2
Loans and receivables - customers			270.5				398.3				150.4		143.9
Other			35.0				95.7				9.4		9.9
Total assets			666.8				1,025.2				177.1		161.4
Liabilities
Financial liabilities held for trading			192.1				155.5				0.3		0.2
Due to banks			94.6				239.3				-5.7		2.0
Due to customers			209.0				330.4				122.0		131.9
Issued debt securities			111.3				175.0				31.2		16.5
Other			29.1				78.7				16.4		7.2
Subordinated liabilities			13.5				15.6				5.9		0.0
Total liabilities			649.7				994.5				170.1		157.8
Equity attributable to shareholders of the parent company			17.1				29.6				7.0		3.6
Equity attributable to minority interests			0.0				1.1				0.0		0.0
Total equity			17.1				30.7				7.0		3.6
Total equity and liabilities			666.8				1,025.2				177.1		161.4

 

 

Group Balance sheet

The Group’s total assets were EUR 667 billion at 31 December 2008, a decrease of EUR 358 billion, or 35%, when compared with EUR 1,025 billion at 31 December 2007. This decrease is primarily related to the transfer of businesses from the Group to the acquiring Consortium Members and sales to third parties in relation to the transition and the impact on transaction volumes and values due to effects of the dislocation of financial markets during 2008.

Balance sheet of the Dutch State acquired businesses

The Dutch State acquired businesses’ year on year balance sheet movements are mainly due to the economic allocation of the Group’s ALM balances to the Consortium Members, while the change in equity includes the allocated gain on the sale of the business unit Asset Management to Fortis Belgium.

Note for editor:

For further information, please contact

ABN AMRO Press Office

pressrelations@nl.abnamro.com

+31 20  628 8900

RBS Group Investor Relations

investor.relations@rbs.com

 

 

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Item 2

 

Disclaimer:

No person should place any reliance on the allocations for any purpose and should be aware that changes may be required to the allocation of debt instruments as well as to the eventual manner in which they will be legally transferred. No part of the allocations or the fact of its release should form the basis of, or be relied on in connection with, any contract or commitment or investment decisions whatsoever. In respect of any debt instruments not published on the website, the allocation is still to be finalised between the Consortium Members and therefore no information on the future allocation of such instruments can be given at this time.

The following table lists the debt instruments issued by ABN AMRO/ABN AMRO Bank N.V. and economically allocated to RBS acquired businesses as at 31 December 2008: 

 

	ISIN ID
EUR182 million 6.00% subordinated notes 2009	NL0000121564
EUR182 million 6.13% subordinated notes 2009	NL0000121614
EUR800 million 6.25% subordinated notes 2010	NL0000118024
EUR1,500 million floating rate Bermudan callable subordinated lower tier 2 notes 2015 (callable June 2010)	XS0221082125
EUR5 million floating rate Bermudan callable subordinated lower tier 2 notes 2015 (callable October 2010)	XS0233906808
EUR7 million 7.38% subordinated notes 2016	XS0067976364
EUR26 million 7.42% subordinated notes 2016	XS0067935253
EUR100 million 5.125% flip flop Bermudan callable subordinated notes 2017 (callable December 2012)	XS0159771327
EUR250 million 4.70% CMS linked subordinated notes 2019	NL0000122505
EUR15 million CMS linked floating rate subordinated lower tier 2 notes 2020	XS0214553348
EUR13 million zero coupon subordinated notes 2029 (callable June 2009)	XS0098392755
EUR170 million floating rate sinkable subordinated notes 2041	XS0123050956
GBP42 million amortising MTN subordinated lower tier 2 notes 2010	XS0072183204
GBP25 million amortising MTN subordinated lower tier 2 notes 2011	XS0073571761
AUD175 million floating rate Bermudan callable subordinated lower tier 2 notes 2018 (callable May 2013)	AU0000ABOHH0
AUD575 million 6.50% Bermudan callable subordinated lower tier 2 notes 2018 (callable May 2013)	AU0000ABOHG2
USD1,500 million floating rate Bermudan callable subordinated notes 2015 (callable March 2010)	XS0213858243
USD500 million 4.65% subordinated notes 2018	USN02627AR30
USD165 million 6.14% subordinated notes 2019	XS0088804504
USD72 million 5.98% subordinated notes 2019	XS0093450608
USD1,285 million 5.9% Trust Preferred V	US00372P2039
USD200 million 6.25% Trust Preferred VI	US00080V2034
USD1,800 million 6.08% Trust Preferred VII	US00372Q2012

All senior unsecured debt has been economically allocated to RBS acquired businesses of ABN AMRO.

 

 

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The following table lists the debt instruments issued by ABN AMRO/ABN AMRO Bank N.V. and economically allocated to Dutch State acquired businesses as at 31 December 2008:

 

	ISIN ID
EUR1,150 million 4.625% subordinated lower tier 2 notes 2009	NL0000122463
EUR500 million floating rate Bermudan callable subordinated lower tier 2 notes 2018 (callable May 2013)	XS0256778464
EUR1,000 million floating rate Bermudan callable subordinated lower tier 2 notes 2016 (callable September 2011)	XS0267063435
EUR82 million floating rate subordinated notes 2017	XS0113243470
EUR103,4 million floating rate subordinated lower tier 2 notes 2020	XS0114072423
EUR65 million floating rate Bermudan callable subordinated lower tier 2 notes 2015 (callable October 2010)	PP550NBC4
USD100 million floating rate Bermudan callable subordinated lower tier 2 notes 2015 (callable October 2010)	PP550NBB6
USD36 million floating rate Bermudan callable subordinated lower tier 2 notes 2015 (callable October 2010)	PP550NB42
USD1,000 million floating rate Bermudan callable subordinated lower tier 2 notes 2017 (callable January 2012)	XS0282833184
USD250 million 7.75% subordinated lower tier 2 notes 2023	US00077TAA25
GBP750 million 5% Bermudan callable perpetual subordinated upper tier 2 notes issued for an indefinite period (callable February 2016)	XS0244754254
EUR1,000 million 4.310% perpetual Bermudan callable subordinated tier 1 notes (callable March 2016)	XS0246487457
EUR 11,2 million 4.0% bank bonds 2009	NL0000071942
EUR 73,3 million 5.0% bank bonds 2009	NL0000071983
EUR 124,0 million 5.5% bank bonds 2010	NL0000065423
EUR 148,3 million 5.75% bank bonds 2010	NL0000071991
EUR 64,7 million 5.0% bank bonds 2012	NL0000065456
EUR 122,4 million 4.5% bank bonds 2013	NL0000066231
EUR 154,1 million 4.5% bank bonds 2014	NL0000066249
NLG 372,7 million 6.5% bank bonds 2011	NL0000065936
NLG 105,7 million 6.5% bank bonds 2017	NL0000066025

 

All current debt outstandings under the Covered Bond Programme and the Bouwfonds Secured Debt programme of ABN AMRO Bank N.V. have been economically allocated to the Dutch State acquired businesses of ABN AMRO.

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