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ABN Amro's profit drops 20 percent in second quarter

ABN Amro Holding NV said second-quarter profit fell 20 percent as the largest Dutch bank set aside 583 million euros (US$569 million) to cover potential losses on loans to clients including WorldCom Inc.

Earnings fell to 534 million euros, or US$0.34 a share, from 671 million euros, or US$0.44, in the year-earlier period, Chief Executive Officer Rijkman Groenink said. ABN Amro will cut more jobs at its investment bank to revive growth.

``We're seeing anemic economic growth and you might see further corporate failures with debt levels high,'' said Andy Killean, who helps manage ?16 billion (US$24.6 billion) at Britannic Asset Management in Glasgow.

ABN Amro said profit this year will be in line with last year, reiterating a forecast the bank made in February.

"A lot of people thought they'd revise the outlook," said Jaap Meijer, an analyst at SNS Securities. "Provisioning is disappointing, but that's the only minus."

ABN Amro more than doubled provisions from 253 million euros in the same period last year.

"We've assumed a slightly higher level of provisioning for the year due to the unprecedented level of corporate defaults," Groenink said in a statement.

Under Groenink, earnings have dropped for eight successive quarters. Like rivals, the bank has cut jobs and is exiting less profitable businesses to halt the slide in profit.

The Amsterdam-based bank said it will cut another 400 to 500 jobs at its corporate and investment bank, or 2.4 percent of the unit's workforce. Corporate and investment banking posted a loss of 125 million euros, compared with a profit of 106 million euros in the same quarter last year.

"Groenink in the past hasn't delivered particularly well but they're trying to move in the right way," said Killean.

ABN Amro has cut more than 3,000 corporate and investment banking jobs since the beginning of last year as it aims for "at most zero cost growth" at the unit this year.
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