ABN Amro house-cleaning may push up costs to highest level since 2016

ABN AMRO Bank NV is likely headed toward its highest annual costs in five years as the Dutch lender attempts to draw a line under the past and aims for a more streamlined future.

Costs this year could hit €5.8 billion, based on the average of 13 analyst forecasts compiled by the bank. The estimate is above the lender's own forecast of €5.3 billion.

Management expects about €3 billion of impairments this year from writing down failed bets, in addition to a settlement in a money-laundering probe and, most recently, planned provisions for overcharging consumer borrowers. It is also paying to shed unprofitable parts of its investment banking operations, with the aim of cutting costs to €4.7 billion in 2024.

The lender is also a suspect in an investigation by the Netherlands Public Prosecution Service, or NPPS, over transactions involving a counterparty that allegedly participated in withholding dividend tax credits against corporate tax liabilities from 2009 to 2013.

An ABN Amro spokesperson said the NPPS investigation is a legacy case and therefore no remedial measures should be required.

A spokesperson for the NPPS confirmed the criminal investigation without providing further details.

The bank has not yet set aside any provisions over the dividend case, and analysts agree that any fine would be recognized as a one-off expense. As such, they expect ABN Amro's 2024 cost target to be largely unaffected, but Letizia Conversano, an S&P Global Ratings analyst, warned that this could change if authorities order remediation actions.