Case study ABN AMRO, Fortis, Royal Bank of Scotland

Although under current regulation a bail-out of a financial institution is not desirable, it is not impossible to involve taxpayer input in the resolution of a bank. When the consortium of ABN AMRO NV, Fortis and the Royal Bank of Scotland in the Netherlands required government support in 2008, the Dutch taxpayer had to contribute. NL Financial Investments, NLFI, (a special purpose vehicle incorporated by the Dutch state to manage the shares of nationalized financial institutions in the Netherlands) formulated three conditions for exit via the ‘Intention to Float’-This was achieved through strategically and incrementally selling the shares in ABN AMRO NV they received, in return for their financial support. At the time of the IPO of ABN AMRO NV, the price was set at 17,75 Euro per certificate. Over time, NLFI decreased its interest in ABN AMRO NV and sold certificates for higher prices, potentially creating a positive return of investment for the Dutch state. Indirectly the government support to a troubled bank via a bail-out could be profitable when the financial institution has stability and positive prospects (NL Financial Investments, 2017).