The Curse of ABN Amro

Could it be only a year ago that European banks were battling furiously for the privilege of buying the Dutch bank ABN Amro?

The winner of the competition -- if "winner" is the right word -- was a British-Belgian-Dutch-Spanish consortium of Royal Bank of Scotland, Fortis, and Banco Santander.

The near-collapse of Fortis over the weekend is a pointed and timely reminder that what some critics said of the takeover at the time -- wrong bank, wrong price, wrong time -- were dead right.

Since the deal was announced last October 5, Fortis shares have declined by more than 80 percent; Royal Bank of Scotland stock is down 64 percent. Sure, banks generally have been taking a licking this year, but the Morgan Stanley World Banks Index has fallen only 36.5 percent over the same period.

One partner in the ABN deal, however, is doing relatively well. Banco Santander's stock has declined a relatively modest 24 percent. Why? Largely because it avoided the exotic debt instruments that flourished in the U.S. over the last decade, and it got parts of ABN Amro that were similarly insulated.

For that, Santander can thank Spanish regulators, which forbid banks there to use off-balance-sheet entities of the sort that many banks elsewhere used to invest in those now-poisonous instruments. Spain also requires its banks to maintain more robust reserves than many other developed countries do.

The real winner in all of this, of course, is Barclays. It fought furiously to outbid Royal Bank and its partners, to no avail. Now it, like Santander, is well positioned to pick over the remains of rivals that had rolled the dice.

by Mark Stein

• Portfolio.com's Job of the Week: DJ
• How Did We Get Into This Mess in the First Place?
• Credit Crunched: A Special Report on Wall Street Chaos
• Wealth in America: Portfolio.com and CNBC Take the Country's Economic Temperature