<B>Howard Davies</B> ABN - more to come

The ABN Amro saga is providing great public entertainment, and will continue to do so until the fat mevrau sings. So far, there are three clear winners: city journalists furnished with a headline a day, investment banks salivating at the fees in prospect, and law firms. I am not sure these were the beneficiaries The Children's Investment Fund had in mind when they put the bank in play, but there it is.

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Last Updated: 31 Aug 2010

Whatever the eventual outcome, it is clear that the episode will create interesting precedents. Shareholder rights have been strengthened: boards in Europe will think twice in future before disposing of major corporate assets without shareholder approval during a bidding war. And the conventional wisdom (almost universally held by central banks) that hostile bank takeovers are inconceivable given the financial stability risks, has been overturned. If the saga goes on too long the ABN franchise may suffer, but there is no sign of a bank run, or of emerging systemic risk.

The longer term consequences will be far-reaching. The long-forecast process of banking consolidation in Europe has now started in earnest. There will be many more deals like this one in the next couple of years, which will be good for banking customers, especially in Germany and Italy, who have lived with costly underperforming banks for too long.

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