Bank's $67b loss proves windfall for Kiwi broker

Royal Bank of Scotland's disastrous 24 billion (NZ$67b) loss holds a windfall for New Zealand broking house ABN Amro Craigs, but at a cost of up to 40 jobs.

The bank was bailed out by the British Government yesterday after posting the biggest loss in Britain's history.

The bank said it was pulling out of New Zealand where it operates under the ABN Amro brand.

ABN Amro Craigs' management have bought back the bank's 50 per cent stake in the company for a bargain.

Fellow top-end investment and broking firm ABN Amro will disappear in the deal, with only one third of the 60-strong work force being offered new jobs.

ABN Amro Craigs chairman Neil Craig said the company's relationship with the bank-owned ABN Amro had been "symbiotic" since it bought half of his Tauranga-based sharebroking house Craig and Co in 2001.

A buyback was the logical solution to the situation and Mr Craig said the shares would be cancelled.

The price was confidential but because the bank was under extreme financial pressure, Mr Craig confirmed that ABN Amro Craigs had received a good discount. "We were the only logical buyer."

Mr Craig said about 20 employees from the separate corporate and institutional investment arm ABN Amro would probably be offered a shareholding as part of the deal.

The rest, about 40 jobs nationwide, would be made redundant.

The Scottish bank's loss of 24.1b was reported as comprising 7.8b of trading losses and 16.8b of writedowns caused by paying too much for acquisitions, notably ABN Amro.

NZX chief executive Mark Weldon, chairing the jobs summit in Auckland, said the bank's withdrawal from New Zealand was a stark reminder that New Zealand could no longer rely on stimulus and funding from overseas.

"They are now largely owned by the Queen and are less willing to provide credit to Tauranga instead of Bristol it's that simple."

The fact that New Zealand investment markets had one less firm operating showed how vulnerable the country was to the global downturn, he said.

Meanwhile, Mr Craig said his team had worked "feverishly" over the past few days to put the deal together, which effectively doubled the stake of the current 130 shareholders, all staff members.

"They will have to raise capital internally for that."

The absorption of ABN Amro's corporate finance business made ABN Amro Craigs able to offer the biggest market research team of any broking house in New Zealand.

- © Fairfax NZ News