NETHERLANDS - ABN Amro, the Dutch bank subject to a bidding war from rivals, will transfer the management of most of its private equity business to an affiliate.

It said the move would allow the team's independent operational and commercial authority.

The move is meant to increase the attractiveness of its private equity business for funding from third party investors, it indicated in its first quarter report.

The bank's net operational profits rose by 24.6% to €1.06bn, excluding a provision of €375m because of an investigation by the US Department of Justice (DOJ) into possible irregularities.

Compared to the last quarter of 2006, assets under management rose by 8.3% to €209bn, "due to a net inflow of €2.6bn and €5.4bn market appreciation, along with negative currency effects of €1.1bn," it said.

Net profits on asset management were down by 37% to €58m, whilst the efficiency ratio was up 6.6% to 65.4%. The asset mix has been changed to 45% equity, 36% fixed income and 19% cash and other, the bank stated.

According to ABN Amro, its total assets rose by 0.8% to €1.055bn, while group capital increased by 4% to €47bn. Risk-weighted assets saw a rise of 0.9% to €283bn.

The value of the bank's private equity portfolio decreased by €97m to €2.2bn, consisting of €1.7bn of buy-out investments, €456m of corporate investments and €40m of listed shares. Its total private equity funds under management were €2.6bn.

ABN Amro has made a long-term commitment to invest €2bn in mid-market buy-out opportunities in Dutch, UK and Nordic markets, it said. This way, it has further reduced its active involvement in private equity investment management activities, particularly buy-outs, while continuing to benefit from the very good returns, it added.

India and China remain a major focus on the bank's growth efforts in Asia, it stressed. Revenues were up 48% and 63% respectively. In India, micro-finance business has been extended to almost 392,000 households, through 27 institutions across 17 states.

"Our focus on growth, efficiency and acceleration has led to a significant improved operational performance of €2bn. This reflects a strong contribution to revenues from our growth engines in Brazil, Italy and Asia, combined with the acceleration of our cost-control initiatives," chairman Rijkman Groenink commented.

"The resulting EPS of  €0.65, excluding the provision for the DOJ investigation, means that we are well on our way to beating the 2007 target of €2.30," he added.

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