Koos Jansen
BullionStar Blogs
Koos Jansen
Posted on 2 Jul 2014 by

Did ABN AMRO Default On Its Gold Obligations?

On April 1, 2013 ABN AMRO sent a letter to its gold account clients that stated ABN AMRO would no longer offer physical delivery of precious metals.

ABN AMRO gold obligations custodian default

Because I’m Dutch (the letter is also in Dutch), this looked like a default. The translation:

Changes in the handling of orders in precious metals

From April 1, 2013 ABN AMRO has a new custodian for the precious metals gold, silver, platinum and palladium. This is why we will change the way we handle and administer your investments in precious metals. In this letter you can read all about it.

What’s gonna change?

Because of the switch to the new custodian from April 1, 2013 the following things are gonna change for you:

– You can no longer let us make physical delivery of your precious metals investment account.

– Do you submit your precious metals orders via the ABN AMRO investment account? Than the payment for your orders from now on will be at the bid or ask prices that are valid on the market for precious metals. So no longer based on the mid-price, as you were used to.

  • The bid price is the price that traders are willing to pay for the precious metals that is offered for sale, when you sell.
  • The ask price is the price that traders want for selling the precious metals.

– We will valuate the positions in your investment account on precious metals from now on these bid prices.

You can read more on investing in precious metals in chapter 4 of the prospectus (additional conditions for investing in precious metals). You will find these conditions on abnamro.nl/voorwaardenbeleggen

What do I have to do?

You don’t have to do anything. We will take care for the changes in the way your investments in precious metals are handled and administered.

Question?

If you have any further questions about this letter you can all our Investment Servicedesk 0900-1474 (from abroad + 31 76 5491755). You can reach us monday to friday from 8:00 – 18:00.

If you would like to submit orders or if you have other questions regarding investing, you can call with your advisor or the Wealth Advice desk at 0900-9215 (from abroad +31 10 2407004). Our employees at the Wealth Advice desk can be reached monday to friday from 7:00 – 22:00 and saturday and sunday from from 9:00 – 17:30.

We are pleased to help you.

Kind Regards,

ABN AMRO Bank N.V.

 

After the letter was published the entire gold space exploded and the default of ABN AMRO on its gold obligations was taken for granted by many.

In recent months I stumbled on some sources saying that was not exactly what happened. Why not? I asked myself, it said so in the letter. No physical delivery is no physical delivery. Just to be sure I decided to give ABN AMRO’s press division a call yesterday for more information. They were familiar with the subject I was inquiring for, and could tell me a lot right away. The details they didn’t have at hand they sent me in an email the same day. This is the official story:

Prior to the fusion between ABN AMRO and Fortis bank in 2010, the European Commission required ABN AMRO to sell its subsidiary HBU (Hollandse Banken unie). HBU had always been ABN AMRO’s custodian and facilitated physical delivery for precious metals accounts. In 2010 HBU’s activities were sold to Deutsche Bank; this ended the HBU name. What happened in 2013 was that Deutsche bank announced that it would cease the activities, prior serviced by HBU, in The Netherlands because they wanted to get rid of the small traders. Consequently ABN AMRO was stuck without a division for physical delivery – by the way, something that very rarely occurred, according to ABN AMRO. The new custodian for ABN AMRO’s precious metals accounts became UBS in Switzerland. Because physical delivery rarely occurred, ABN AMRO decided not to provide this service to its customers anymore, however, clients could/can take physical delivery from Switzerland if they arrange transport themselves. Hire a transport company or drive to Zurich and back up the truck. When I asked if the accounts at UBS were allocated or unallocated, ABN AMRO replied that 80 % was allocated.

This is the translation of an email they sent me yesterday:

ABN AMRO has two accounts at UBS in Zurich. One is allocated and the other account is unallocated, the unallocated account is necessary because this facilitates buying and selling of gold (of course you can’t trade allocated gold). The allocated account is now about 80% of the gold stock. We manage these accounts ourselves.

We switched to UBS because the conditions of storage at Deutsche Bank changed to the detriment of ABN AMRO customers and we found a better partner in UBS. The halt in physical delivery (April 2013) had therefore only to do with the distance between Zurich and the Netherlands, which made cost-effective delivery just not feasible.

Jeroen van Maarschalkerweerd | Senior Press Officer | Press & PA | Communications & Sustainability
ABN AMRO Bank N.V.

Just wanted to give you another angle on this story. All it took me was one phone call, one email and some surfing on the web. As of yet I haven’t heard any ABN AMRO gold account holder complain he couldn’t get his physical gold out of Switzerland. If I do, I will surely report on it.

Koos Jansen
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  • Zhang An Ping

    Sound research, Koos

    of course, it doesn’t sound nearly as sensational as declaring that it was a “default”, and who is actually interested in boring old fashioned details like the truth when we already know the answer? – Gold is manipulated by the Bullion Banks, but its about to skyrocket in price because all the vaults are empty, so keep stackin’

    why write anything else? everyone on KWN and Silverdoctors says that it was a default, so it must be true – no need to talk to ABN, because they are bankers and therefore must be lying to cover their asses, which is just even more proof that it’s all a ponzi scam or a shadow banking rehypothecation or a backwardation GOFO scheme based on infinite leverage in a paper promises empty inventory default did I say ponzi yet? kind of manipulation ponzi thing. ponzi.

  • Elias

    ABN AMRO absolved?

    A honest Bank would have informed clients _before_ the stopping of delivery. The selling of HBU to Deutsche Bank is no excuse, because ABN AMRO could have stated the conditions to protect the physical gold, wich belonged to its clients.

    The fact, that only a small number of customers used the physical delivery is no excuse either, because most people will wait until the bitter end… trusting these banks (and then probably find out, that they have been misled).

    Ask yourself the Question: “Did ABN AMRO stayed by their promises? Did the sequence of events really show, that they wanted to protected the interests (and assets) of its clients?”

    And my last question: “Who are you and what did you do with Koos?”

    • In Gold We Trust

      As you can read the title of this post ends with an question mark. Every reader can make up it’s own mind if ABN defaulted. I merely present the official story that was denied by many other blogs.

      The gold that “belonged to the clients”, still belongs to the clients. ABN just chose to outsource physical delivery to its customers. Yes, I would be pissed as a client, but only a moron would hold a gold account at a TBTF bank.

      Koos is trying to be open minded, flexible and report “evidence based”.

      Don’t worry Elias, we don’t need lies make a case to invest in gold.

      • Elias

        Well, i understand your motivation for “evidence based” reporting. Unfortunately, i don’t think the ABN AMRO’s press division has any evidence to offer.

        I am afraid the lies exist to make a case _not_ to invest in gold ;-)

        • In Gold We Trust

          It was the same division that informed you they stopped physical delivery, but you didn’t need any evidence when they wrote that, didn’t you?

  • David Rogers

    ”80% allocated”. Is that a fact? Well we have the banks word for it. I guess the 20% unallocated is the retailers gold? Still sounds like a farce. Koos has only reiterated the banks party line. Not really the investigative reporting we would expect. If you dont have anything substantial to add, better not to speak for the sake of speaking

    • In Gold We Trust

      The letter in itself (ABN stops physical delivery) was also the banks party line. However, you chose only to believe the ABN parties that fit your hypothesis.

      • Zhang An Ping

        ” I guess the 20% unallocated is the retailers gold

        I get the impression that you guess quite a lot of things; have you ever tried rational thought instead? Quite apart from anything else, why would it be of any importance whatsoever if the 20% was or was not “the retailers” gold – and on the face of it, surely a retailer is precisely the kind of owner who would not only need physical possession, but who would not to hold metal in a Bank vault 1000 km away

        no, on second thoughts, let’s just call it a default; ING defaulted yesterday too, by the way, and Rabobank on Tuesday. I have no evidence whatsoever to support this assertion – I just “guessed” – but it sounds pretty compelling, doesn’t it. I guess Gold is going to skyrocket as a consequence (unless TPTB “cap” it)

        • Olav

          I actually heard that the reserve ratio was closer to 60%, and still, we don’t know if there were any other claims on that gold aside from ABN PM investors because it’s pooled gold. Make sure you have 100% fully allocated gold with full legal title and the corresponding bar numbers.

          • In Gold We Trust

            Of course everybody should have 100% fully allocated gold with full legal title and the corresponding bar numbers! I hope everybody does understand that (next to the fact I’m trying to shine some light on poorly researched stories in the blogosphere).

  • SRVES339

    Thanks Koos…

    Since most of your posts are reproduced in my “daily read” list I recently deleted your blog… this blast of truth convinced me that was a mistake!

    Best,
    SRV

  • PM Dawn

    I am desperate to get hysterical. This article does not give me the fuel I need to fuel my paranoid groupthink. Please do better or I shall take my business elsewhere.

    • Zhang An Ping

      actually, the Comments tell you more than Koos’s article – nobody wants to believe it wasn’t a default – where’s the use in that kind of conclusion? that interpretation of events conveys no apparent information – a bank didn’t default. so what? on the other hand, pretending a bank did default – whether true or not – is precisely the kind of thing we are looking for, so it must be true. it’s called “confirmation bias” and many in the amateur gold investment community rely upon it as a convenient alternative to rational thought

  • Olav

    We arranged transfers for clients from ABN AMRO to our firm, GoldRepublic. In the end, no physical gold was shipped, but the gold was transferred through a supplier account. Anyone that has precious metal at ABN AMRO and looking for a solution, is welcome to contact me at o.dirkmaat@goldrepublic.com.

    • In Gold We Trust

      Thanks Olav, I think your statement underlines ABN AMRO didn’t default. Is it possible I do a small interview with one of the former ABN AMRO account holders that now have their gold safely stored (with the possibility of delivery) at Gold Republic? That would bring gold blog readers even closer to what actually happened.

      • Olav

        That would be very valuable to your readers, I’ll check it out for you. Although ABN AMRO didn’t default, many clients did felt forsaken and were unpleasantly surprised by the abrupt change without any prior notice.

        On a side note, the situation at ABN AMRO is comparable to what happened (or is happening) at the Rabobank & Deutsche Bank.

        • In Gold We Trust

          Excellent information!

  • In Gold We Trust

    Part of an email from Bron Suchecki to me earlier today:

    See page 6 of https://www.abnamro.nl/en/images/Generiek/PDFs/090_Expats_Pages/Investor_Giro_Conditions.pdf sounds like an unallocated account to me, so this isn’t a default, just another beat up by clients who don’t know what they signed up for:

    4.3. Can I also receive my investments in precious metals in physical form from the bank?

    1. You have no right to the physical precious metals in which you invest. However, under certain conditions, you can physically obtain the precious metals. This means that you actually receive the precious metals in your possession and are responsible for their custody. You can read about the related conditions below.

    3. You cannot always physically receive the precious metal. This may be due to such things as:

    ▶▶ Extreme market conditions

    ▶▶ Government measures

    ▶▶ Other situations beyond the bank’s control, such as the limited availability of the precious metal that you wish to receive, due to strong demand for the precious metal at DBN or in general. In that case, DBN will make you an offer, so that you possibly may be able to physically receive the precious metal.

    In that case, you therefore have no rights or receivables vis -à-vis DBN or the bank.

    4.5. What are my rights if DBN goes bankrupt?

    1. Even if DBN goes bankrupt, you have no right to the physical precious metals in which you invest.

    2. In that case, Stichting Beleggersgiro ABN AMRO is the creditor of DBN with an competitive claim on DBN. This means that the Foundation is entitled to a share of the bankrupt estate of DBN alongside all other ordinary creditors of DBN. The competitive claim of the Foundation is equal to the total of all investments in precious metals of the bank’s customers using the investor giro.

  • In Gold We Trust

    Official Paper from ABN: Why The Bank Halts Physical Gold Delivery

    http://homment.com/abn-Gold-stop

    Until 2009, ABN AMRO owned a small, separate bank that traded in physical gold. It was called HBU (Hollandsche Bank Unie) and was located in Rotterdam. Due to the merger of ABN AMRO and Fortis Bank Netherlands in 2009, ABN AMRO was forced by the European Commission to sell part of its commercial banking portfolio in the Netherlands to Deutsche Bank. This sale also included HBU in Rotterdam. Part of the sales agreement was that clients who would be transferred to Deutsche Bank could still make use of the facilities of ABN AMRO until they would be fully integrated into the Deutsche Bank systems. Vice versa Deutsche Bank continued the HBU services (including gold accounts) to ABN AMRO clients. ABN AMRO never offered gold accounts itself, it was dependent on HBU for this service.

    However, Deutsche Bank announced end of last year that it would cease the HBU activities in the Netherlands (including gold accounts) as per 1 April 2013 and also cease serving ABN AMRO clients. So from 1 April 2013, ABN AMRO could not longer make use of the HBU facilities. To continue providing gold accounts to its clients, ABN AMRO found a new provider, UBS. We have informed our Dutch clients of this change in a letter. The change of provider also comes with a change of conditions of the service provided.

    I hope this information if helpful.

    Sincerely,
    ABN AMRO Bank N.V.

    Marc-Paul Stufkens

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