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Bank of America sues ABN over LaSalle

Bank of America sued ABN AMRO on Friday, seeking damages and a court injunction to block the sale of ABN’s U.S. unit LaSalle to a rival bidder, further complicating the battle for control of the Dutch bank.
/ Source: Reuters

Bank of America sued ABN AMRO on Friday, seeking damages and a court injunction to block the sale of ABN’s U.S. unit LaSalle to a rival bidder, further complicating the battle for control of the Dutch bank.

ABN, which has agreed to be taken over by Britain’s Barclays , was due to meet a group of rival suitors led by Royal Bank of Scotland on Friday.

The RBS-led consortium appeared to have gained ground in the takeover tussle on Thursday after a Dutch court froze ABN’s $21 billion sale of LaSalle, but Bank of America cast further doubt on the outcome of the world’s biggest ever bank takeover with its Friday lawsuit, claiming ABN had been “unjustly enriched” with the LaSalle deal.

Bank of America, the world’s second biggest bank, said it had agreed to buy LaSalle — key to boosting its position in Chicago — on the understanding the transaction did not need a shareholder vote and the board had the authority to sell it.

“Far from the speed and certainty it bargained for, Bank of America’s acquisition of LaSalle now faces delay and uncertainty,” the bank said in its lawsuit filed in Manhattan. A court decision on an injunction could come as early as Friday.

It said ABN had been “unjustly enriched” by billions of dollars because of the premium that Bank of America agreed to pay in its offer for LaSalle, and sought unspecified financial damages.

An ABN spokeswoman said the bank would study the BoA lawsuit but declined to comment further.

ABN’s top management had been due to meet with the heads of RBS, Santander and Fortis on Friday to flesh out details of the consortium’s proposed 72 billion euro ($98 billion) offer for ABN, sources familiar with the matter said.

Thursday’s Dutch ruling freezing the sale of LaSalle — a key asset for suitor RBS — should make it easier for RBS and its partners to bid for the whole of the Netherlands’ biggest bank, but the threat of a long legal dispute could delay a deal.

The RBS-led consortium, wary of the implications of a legal battle, plans to counterbid for LaSalle under a “go shop” provision — allowing counterbidders to trump Bank of America’s $21 billion offer — that runs until midnight on Sunday in New York, sources familiar with the matter said.

“That’s presumably to give them options depending on how the legal processes work out,” said Antony Broadbent, analyst at Sanford Bernstein.

RBS is also expected to make the LaSalle bid conditional on them also buying the rest of ABN.

On Friday, ABN asked the Dutch court for clarity on whether its ruling to freeze the LaSalle sale affected the “go shop” deadline. A source said clarification is expected on Friday, or possibly Saturday, although a Dutch lawyer said an objection from Bank of America could delay the response.

Barclays is still the only bidder for ABN and has the board’s blessing for its 66 billion-euro offer, which would not involve a break-up of the group. It has said it would push ahead with its plans despite the court ruling.

“In the meantime, we are working with the consortium in a constructive and collaborative manner,” an ABN spokesman said.

With growing pressure on ABN chief executive Rijkman Groenink from some investors to resign after the court decision, he said a change in management has not been considered.

The court’s ruling that shareholders should vote on the LaSalle sale means a delay of at least 15 days because that is the minimum notice period for an ABN shareholders’ meeting.

ABN shares closed up 0.3 percent at 36.7 euros — above the 35.3 euro current value of Barclays’ all-share offer but below the 39 euro indicated proposal from the consortium.

RBS and Fortis shares dipped just under 1 percent, but Santander rose 2 percent. Barclays lost 1.6 percent.

Barclays, which analysts said could look for partners if it needs to raise its offer at a later date, wants to increase its exposure to fast growing markets in Brazil and Asia. The consortium wants to break up ABN to beef up their operations in Europe, the United States, Brazil, Asia and in investment banking and wealth management.