Dithering in Amsterdam, Closing in Chicago

While ABN Amro and its shareholders agonize over competing takeover offers from two other European banking heavyweights, Bank of America today got the nod to proceed with the purchase of one ABN Amro's crown jewels.

The U.S. Federal Reserve said Friday that it had approved Bank of America's purchase of ABN Amro North America Holding Co. for $21 billion. That would give BofA control of LaSalle Bank Corporation of Chicago.

The Royal Bank of Scotland, one of the European bidders for the whole of ABN Amro, had been seen as chiefly interested in the Dutch bank because of LaSalle and the opportunity the Chicago-based bank represented to RBS to increase its presence in the United States.

The problem is, ABN Amro had agreed to sell LaSalle to Bank of America before RBS stepped up to buy ABN Amro. The other European bidder for all of the Dutch bank is Barclays.

A sale of LaSalle to BofA, which could close as early as next month, would probably let Barclays secure the rest of ABN Amro even though its bid is nominally lower than RBS's offer.

The bidding war for ABN Amro has been even more complicated than this side deal suggests. For one thing, the $83.3 billion Barclays bid is largely in stock, which fell in value after the offer was made. Meanwhile, a $98.7 billion all-cash offer from the RBS-led group (which includes the big Belgian bank Fortis and large Spanish bank Santander) has been hampered by those banks' trouble in arranging the financing.

LaSalle, which operates in Chicago and Michigan, is such a prize because it has more than 400 branches, 1,500 automated teller machines and 1.4 million customers. Bank of America would have more than 6,000 branches and about 10 percent of all deposits in the U.S. if it can close the deal.

by Mark Stein