Bouwfonds and ABN AMRO Announce Strategic Alliance.

AMSTERDAM, The Netherlands--(BUSINESS WIRE)--Aug. 26, 1999--

This is a joint press release by ABN AMRO Bank N.V. and

N.V. Bouwfonds Nederlandse Gemeenten

Bouwfonds and ABN AMRO announce that they intend to enter into a strategic alliance in respect of the development, financing and management of real estate. Municipal involvement in Bouwfonds will continue during a transition period.

By choosing ABN AMRO as its strategic partner, Bouwfonds is fulfilling its ambitions to expand its strong position in the Netherlands and in time become a major player in the European real estate market. The alliance will enable ABN AMRO to broaden its mortgage and other real estate activities, both domestically and within Europe.

As outlined in the letter of intent, ABN AMRO will make a bid for all shares in Bouwfonds, currently held by 479 Dutch municipalities. ABN AMRO will offer existing shareholders NLG 608.50 (EUR 276.13) for each ordinary share in Bouwfonds to be paid in cash and one Bouwfonds cumulative preference share (nominal value NLG 2.50). The preference share will entitle the holder to a dividend payment, still to be determined. ABN AMRO offers NLG 2.675 billion (EUR 1.214 billion) for all shares in Bouwfonds, including related expenses.

ABN AMRO will make a definitive offer for Bouwfonds once it has completed its due diligence. The offer will be declared unconditional if accepted by 85% of Bouwfonds' shareholders. Details of the offer, including terms and conditions, will be set out in an offering memorandum, which ABN AMRO expects to release in the autumn.

Deliverance and payment of the shares will take place during the transitional period of five years. For offered but not yet delivered and paid shares, shareholders will receive a compensatory interest payment. Any dividend payable on these shares will be distributed to ABN AMRO.

Assuming full acceptance, ABN AMRO will initially acquire full economic ownership and 49.9% of voting rights (largest possible minority shareholding). ABN AMRO will acquire all voting rights at year-end 2004.

ABN AMRO will finance the transaction from its own funds. It expects the transaction to have a positive impact on the group's earnings per share (ranging from five guilder cents in 2000 to several tens of guilder cents from 2003 onwards).

As the mortgage and real estate activities offer a high quality return on capital employed, the proposed alliance fits with ABN AMRO's Value Based Management concept.

Bouwfonds' operations and ABN AMRO's real estate activities will be merged into a real estate company, under the name ABN AMRO Bouwfonds Nederlandse Gemeenten N.V. This will also be Bouwfonds' new statutory name. The company will continue to enjoy a statutory two-tier status and a large degree of managerial autonomy within the ABN AMRO group. The majority of the Supervisory Board will be appointed by ABN AMRO. The Bouwfonds trade name will be retained and the new entity will fund itself independently.

"The decision in favour of ABN AMRO is the result of a detailed study we carried out into the desired future position of Bouwfonds in our national and international markets and the associated shareholding structure. This strategic choice best protects the interests of all Bouwfonds stakeholders, including our major lenders. The combination of ABN AMRO as a strategic partner on the one hand and the continued municipal involvement on the other will provide us with the opportunity to achieve our ambition of further growth and internationalization", said Cees Hakstege, Chairman of Bouwfonds' Managing Board.

"Our alliance will afford us access to ABN AMRO's extensive international network and enables us to bring our in-depth knowledge of and involvement in the development and funding of local authority real estate project to the fore. We will co-operate closely in areas where our activities compliment each other, for example securitisation of mortgage portfolios, the establishment of real estate investment funds and the development of infrastructure/real estate hybrid projects.

We are extremely happy with this solution, which safeguards the continued involvement of municipalities and important lenders, including Bank Nederlandse Gemeenten (BNG), over the medium term".

According to Rijkman Groenink, member of the ABN AMRO Managing Board and Chairman of its Netherlands Division, combining their activities will strengthen Bouwfonds' and ABN AMRO's joint position in two significant areas.

"The proposed transaction will increase our share of the market for residential mortgages to approximately 25%. We also expect to benefit from combining our extensive knowledge and experience of residential mortgage loans, particularly with regard to product development, portfolio management and securitisation. Depending on market developments, our aim is to expand these activities into the rest of Europe in the future. With that in mind, the initiatives being undertaken by ABN AMRO with regard to e-commerce will also offer new opportunities.

As to the development and financing of commercial real estate, the new combination will have a strong position in the Netherlands and will offer a clear alternative in the market. In addition, the new alliance will create an excellent starting point in markets outside the Netherlands, which ties in well with our Europe-strategy," Rijkman Groenink added.

The proposed strategic alliance will not result in job losses. Both parties have advised their respective staff councils of their intention to merge and discussions will start shortly, as required by law. The trade unions have also been informed and statutory procedures set in motion.

Note for the editorial staff:

Press conference

Further information on the announced alliance will be released today by Cees Hakstege (Managing Board Bouwfonds) and Rijkman Groenink (Managing Board ABN AMRO) at a press conference to be held at the Amstel Hotel, Amsterdam, at 11.00.

First half year results 1999 Bouwfonds An English version of the first half year results 1999 Bouwfonds is available from noon at the website www.bouwfonds.nl

Bouwfonds

Bouwfonds focuses on the retail and corporate sectors. As far as the retail market is concerned, its activities comprise the construction and sale of dwellings, the provision of residential mortgage loans, and the management of property on behalf of third parties.

Its corporate sector activities include the development, financing and management of offices and shopping centers.

Bouwfonds employs approximately 1,200 staff. The organization's turnover amounts to NLG 3.8 billion (EUR 1.76 billion), while total assets exceed NLG 29 billion (EUR 13 billion).

ABN AMRO

ABN AMRO is a universal bank with a strong international character. ABN AMRO is one of a limited number of banks to have a branch network spanning all European countries. This network enables ABN AMRO to offer integrated banking services to all client segments using a diversity of distribution channels. The bank operates 1139 branches in 27 European countries. ABN AMRO recently announced the formation of its European Division, which will encompass all activities undertaken within the European Union. The present Netherlands Division will also become part of the European Division.

With more than 3,500 branches in 76 countries and regions throughout the world, a workforce of approximately 105,000, total assets of NLG 1,023.6 billion (EUR 464.5 billion) and a mortgage portfolio of NLG 90 billion (EUR 40.8 billion), ABN AMRO is the number one bank in the Netherlands. In terms of tier 1 capital it ranks fourth in Europe and eighth in the world.