Abn Amro Division Plans Transport Arm

ABN Amro Lease Holding, a division of the Dutch banking major ABN Amro NV, has approached the government for setting up a fully owned subsidiary in the surface transport sector.

The proposed venture is for undertaking management of large and medium fleets, besides offering consultancy services to domestic fleet owners.

ABN Amro Leasing has a joint venture with Travel House in India, which is also into similar businesses. Under the foreign direct investment guidelines, overseas entities are not allowed to set up wholly owned subsidiaries if they have joint ventures operating in the same sector.

In the ABN Amro Leasing-Travel House joint venture, the Dutch partner has the majority stake (about 76 per cent).

 

According to company sources, the Dutch banking major wanted to step up its activities in the auto service sector and the proposed venture is a step in this direction.

The wholly owned subsidiary may also enter car financing and leasing in a big way. The financing and leasing activities may, however, be undertaken only some time after commencement of operations.

Meanwhile, ABN Amro Bank, which has got government approval for setting up a non-bank finance company, is yet to finalise the local partners for the venture. The Dutch banking major will hold 74 per cent equity in the proposed NBFC and the rest will be offered to the domestic partner.

It is learnt that ABN Amro has shortlisted three partners for its NBFC venture. This means the bank plans to split the 26 per cent equity among three local partners.

Such a move would ensure that the minority stake holders remain just passive investors in the venture, while ABN can manage the NBFC in its own way.

According to ABN Amro's proposal, the main area of operation of its proposed NBFC will be debt market financing.

Once the NBFC comes into existence, the bank will transfer some of its debt financing portfolios to the new arm.