ABN and Fortis to merge as planned before 2011 sale

By Reed Stevenson and Harro ten Wolde

THE HAGUE/AMSTERDAM (Reuters) - The Dutch government mapped out the future of state-owned retail banks Fortis and ABN AMRO on Friday, keeping intact plans to merge them while spinning off Fortis's insurers, and selling or listing the combined bank as early as 2011.

The Dutch state decided to buy Fortis's Dutch businesses 50 days ago for 16.8 billion euros ($21 billion) after the now-dismantled Belgian financial group lost the confidence of investors and depositors, falling victim to the financial crisis while trying to complete its year-ago acquisition of ABN.

"We could have split up the bank and sold it to the highest bidder, but this did not seem the best solution for the taxpayer nor for the financial sector," Dutch Finance Minister Wouter Bos told reporters.

"We want the Netherlands to be attractive as a financial center. We must do our utmost to create a strong Dutch player."

Bos's predecessor Gerrit Zalm will head the bank and steer it toward privatization in 2011 at the earliest, while directing the sale of Fortis's Dutch insurance units.

A plan to cut up to roughly 8,000 jobs will go ahead, as this was already agreed with unions when Fortis bought ABN.

Fortis joined up with the Royal Bank of Scotland (RBS.L) and Santander (SAN.MC) in a consortium last year to buy and break up the Netherlands' biggest bank for 70 billion euros. Fortis wanted to combine ABN's Dutch bank branches with its own.

"It seems as though Bos and Dutch central bank president Nout Wellink want to correct an "error" -- so to speak -- from last year. At the time they approved the ABN takeover, and they have come to regret it," said Theodoor Gilissen analyst Paul Beijsens.  Continued...