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Commonwealth Bank of Australia has dropped plans to buy the Australasian arm of Dutch investment bank ABN Amro, saying its chances of raising cash for the acquisition had been hurt by its rivals' writedowns.
CBA had been in "exclusive" negotiations with ABN Amro's owner, Royal Bank of Scotland, over the purchase of ABN Amro Australia, which includes ABN Amro's New Zealand business and a half share in Tauranga retail brokerage ABN Amro Craigs.
However CBA said its board had assessed the economic climate and the uncertainty in world markets.
"The bank believes that given these factors it would not be in the best interests of shareholders to proceed with the acquisition in this environment."
CBA's chief executive, Ralph Norris, the former head of ASB Bank, yesterday said the billions of dollars in writedowns announced by National Australia Bank and ANZ recently had damaged the reputation of Australian banks internationally, affecting their ability to access funding.
Norris said CBA would have had to raise significant funds to buy ABN Amro.
"We came to the conclusion yesterday that, given where markets are, it would not be prudent to go ahead with the due diligence."
CBA's withdrawal comes three weeks after NAB quit the race to buy ABN Amro Australia, which analysts value at about A$800 million.
Japan's Nomura Holdings has also been tipped as a potential bidder.
Royal Bank of Scotland led a consortium which last year bought ABN Amro's global operations in deal worth A$100 billion.
- Additional reporting agencies
