ABN Amro takes $200 mln hit on U.S. client felled by market turmoil

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FILE PHOTO – ABN AMRO logo is seen at the headquarters in Amsterdam, Netherlands May 14, 2019. Picture taken May 14, 2019. REUTERS/Piroschka van de Wouw

AMSTERDAM (Reuters) – ABN Amro’s (ABNd.AS) clearing business has suffered a net loss of around $200 million after an unidentified U.S. client got into difficulties during the market turmoil sparked by the coronavirus pandemic, the Dutch bank said on Thursday.

Shares in the bank fell around 5% after it said it was forced to liquidate the U.S. client’s position, after the customer – which traded U.S. options and futures – failed to meet minimum risk and margin requirements.

Clearing firms guarantee that transactions between traders who use their service will settle, and they provide clients with liquidity and financing. Clients must post collateral for their positions, which in this case eroded quickly.

ABN said the pretax loss was about $250 million and it would book the provision for the loss in its first quarter results.

Spokesman Arien Bikker said the client might have incurred further losses not related to ABN Amro. “We cannot mention the (name of the) client,” he added.

ABN Amro shares have fallen 48% so far this year in the market rout triggered by the coronavirus pandemic. The $200 million one-off charge at the clearing business compares with the group’s 2019 earnings of 2.05 billion euros ($2.25 billion).

Losses for clearing firms are rare.

“This has never happened before,” Bikker said. “We have had credit losses, but not of this size.”

In the United States, CME Group CME.N said on Friday it had auctioned off the portfolios of proprietary trading firm Ronin Capital, an apparent victim of the market turmoil in which U.S. stocks have plunged more than 30% from their peak.

Reporting by Bart Meijer; Editing by Emelia Sithole-Matarise and Mark Potter