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November 20, 2009

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ABN gets new US$6.5b bailout

THE Dutch government yesterday announced a new 4.4-billion-euro (US$6.5 billion) bailout package for nationalized bank ABN Amro, intended to help the bank restructure and return to a strong financial position ahead of an eventual sale or return to the stock market.

Finance Minister Wouter Bos said the money is needed to pay for combining the banking operations of the old ABN Amro and Fortis Bank in the Netherlands, and to replenish a shortfall in capital caused by selling off a portion of ABN Amro's operations to Deutsche Bank.

The bailout comes on top of a 2.4-billion-euro cash injection in June and the 16.8 billion euros the state paid to buy the banks' Dutch businesses to save them from an impending bankruptcy in October 2008.

The package announced yesterday consists of a 3-billion-euro capital injection and paying off 1.4 billion euros of debt.

"This capitalization is necessary, desirable and prudent," Bos said in a letter to parliament, urging lawmakers to endorse the move.

"Barring unforeseen consequences, this capital injection will be the last that the state grants," he said.


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