GRAND RAPIDS — Bank of America Corp. announced it will pay $21 billion in cash to buy ABN AMRO North America Holding Co., parent of LaSalle Bank Corp., and its subsidiaries, as part of a larger merger agreement between Dutch bank ABN Amro and London-based Barclays Bank.
The acquisition of LaSalle is subject to regulatory approvals and the usual closing conditions. Under the terms of Bank of America’s offer, ABN Amro has 14 days to agree on a better deal with a rival bidder, and Bank of America has the right to match any higher offer. Bank of America would receive a “termination fee” of $200 million if ABN Amro backs out of the deal, according to terms.
Bank of America has always expressed interest in LaSalle as a desirable franchise, said Dan Terpsma, president of LaSalle’s West Michigan region, but it didn’t officially come into the picture until about 10 days ago.
Bank of America is a significant, large, very successful financial institution that doesn’t currently have a presence in Michigan, so from that perspective there is no overlap, Terpsma pointed out.
“They are looking forward to the large deposit base that we bring: We’re the No. 1 deposit-share bank in Michigan,” he said. “They look forward to the market growth that we’ve experienced, and they also want to be in our Chicago marketplace where they have a presence, but a small presence.”
Terpsma said LaSalle knew that Barclays had an interest in ABN Amro, and that as the price for ABN Amro increased, it might become more challenging for Barclays to acquire all of ABN without spinning off an asset.
“We also knew all along that LaSalle was the most desirable and marketable asset, so I think we always felt there could be a possibility that Barclays would not buy all of ABN,” he added.
Until the 14-day offer period is up, it’s uncertain whether Bank of America will be the successful buyer, because other banks have the opportunity to bid on LaSalle in the interim. Is there a counter-bid in the works? Terpsma said what he understands is that there is a group of banks, probably led by Royal Bank of Scotland, that might have an interest. Royal Bank of Scotland has only a small presence in Detroit and Chicago, so LaSalle would be a great fit for it, as well, he observed.
“We’re assuming that we’re selling to Bank of America, and if that’s the case, we will go under the Bank of America name,” Terpsma said. “What I focus on every day is our customers, our employees and our community relationships, and (the realization) that we bring a value to whomever it is that buys us.”
Typically, when Bank of America acquires another bank, it reduces the size of the acquired bank to the point where the acquisition can be made accretive to earnings. Though it’s too early to tell how many jobs might be lost, Terpsma said there will naturally have to be some cuts. Those cuts customarily come in backroom operations, in non-customer-contact operations, he explained.
“Those reductions would typically come in our computer areas and our operational areas, all of which are based in Chicago,” Terpsma noted. “Typically, the backrooms get consolidated, along with finance, accounting and support areas of the bank that would all presently be in Chicago.”
LaSalle Bank Corp. is the largest bank holding company headquartered in Chicago, with more than $124 billion in assets. It has 400 commercial and retail locations across Illinois, Michigan and Indiana, as well as operations in more than 17 other states and Canada. LaSalle has been the centerpiece of ABN Amro’s U.S. operations for 30 years and has grown into one of the 20 largest bank holding companies in the country.
Bank of America, headquartered in Charlotte, N.C., has the most extensive footprint of any U.S. retail bank, with more than 5,700 retail banking offices in 33 states and Washington, D.C. It has more than $1.3 trillion in assets and serves consumers, small- and middle-market businesses and large corporations with a full array of financial products and services. With the acquisition of LaSalle, Bank of America enters the Michigan market, while increasing its presence in Illinois and Indiana. The acquisition is expected to close in late 2007 or early 2008.
Barclays will buy the remainder of ABN Amro for nearly $91.2 billion. The merger will create a $166 billion financial services company.