Hefty Anti-Money Laundering Penalty Hits ABN AMRO Profits

Jackie Bennion Deputy Editor 13 May 2021

Hefty Anti-Money Laundering Penalty Hits ABN AMRO Profits

Settling €480 million in AML penalties has hit the Dutch bank’s bottom line.

After settling a two-year AML investigation by Dutch prosecutors, ABN AMRO reported a €54 million (£46.3 million) loss for the first quarter. Shares were trading down around 7 per cent on early reactions.

Results released on Wednesday showed that net interest income was down by 11 per cent for the year, attributed to continued pressure on deposit margins and lower corporate loan volumes as the bank continues to shed non-core areas in a bid to refocus on commercial and retail businesses. It reported a net impairment of €77 million for the quarter.

“CIB non-core impairments remain uncertain but are expected to be significantly below last year,” the bank said. "Good progress" was being made in winding down the CIB non-core business, including a recent decision to spin out part of its Trade and Commodity Finance portfolio.

Excluding the hefty AML fine logged for the quarter, net profits would have stood at €426 million, the bank said.

“Last month, we accepted a settlement offer of €480 million from the Dutch Public Prosecution Service as the outcome of the AML investigation into ABN AMRO Bank NV in the Netherlands,” CEO Robert Swaak said. "We can now turn to the future and focus on our strategic priorities and financial targets."

Back in 2019, Dutch authorities accused the state-owned bank, the country's third largest, of being too slow to report suspicious transactions or failing to report them at all over a lengthy time period. The bank finally settled last month and has thrown considerable resources into beefing up its AML practices.

For the quarter, its share of the mortgage market increased to 17 per cent, and its capital buffer Basel III CET1 ratio stood at 17.4 per cent, well within the threshold.

The lender said it remains on track to pay full-year 2019 dividends, “ECB conditions permitting,” and will “recalibrate” a share buyback in the fourth quarter, currently set at the Basel IV rate of 15 per cent.

Swaak suggested that the bank should benefit from a strong economic rebound later in the year as lockdown restrictions ease and as far as vaccination programmes stay on track. In terms of cost cutting as the bank undergoes restructuring, it reported meeting the first milestone of reducing costs by €700 million by 2024.

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