Letter from TCI to ABN Amro

12:01AM GMT 22 Feb 2007

Following is the text of a letter obtained by Reuters which TCI sent to ABN AMRO's
supervisory board chairman Arthur Martinez and the bank's chief executive, Rijkman
Groenink

Dear Mr Martinez and Mr Groenink,

The Children's Investment Fund Management (UK) LLP is the London based fund manager for
The Children's Investment Master Fund. The fund manager was formed by Christopher Hohn in
2003. I, Patrick Degorce, am one of its founding members.
The Children's Investment Master Fund currently owns more than 1pc of the share capital of ABN
AMRO Holding N.V. ("ABN AMRO") and the fund's shareholding has a market value in excess of
€50m. Enclosed with this letter is evidence of The Children's Investment Master Fund's
shareholding in ABN AMRO.
Article 28.5 of the articles of association of ABN AMRO give shareholders who represent at least
1pc of ABN AMRO's capital or who hold shares with a market value of at least €50m, per the
Official List of Euronext Amsterdam N.V, the right to request that the Managing Board or the
Supervisory Board place items on the agenda for a General Meeting of shareholders.
As Chairman of the Supervisory Board you are the ultimate guardian and fiduciary of
shareholders' interests. Therefore we are writing to give you the background to our request today
for five motions to be put to all shareholders of ABN AMRO at the next AGM scheduled for 26
April 2007.
Since the current chairman of the Managing Board was appointed in May 2000 ABN AMRO has
given shareholders a cumulative share price return of 0pc (excluding dividends) compared to (a)
the ABN AMRO selected peer group of approximately 44pc and (b) the Dow Jones Euro Stoxx
Banks Index of 44pc (all numbers are for the period 1 June 2000 to 31 January 2007).
This terrible shareholder return is a function of the fact that ABN AMRO's underlying earnings per
share has been broadly flat for around 6 years, during a time when nearly all banks globally have
enjoyed a period of strong earnings growth. The Managing Board has presented several
restructuring strategies over the last 6 years which were supposed to accelerate earnings growth
which would be reflected in a higher share price.
In 2006 they again committed to cut costs and they have so far failed to deliver. As shareholders
we are also concerned that, if the credit environment were to worsen, the current profitability of
ABN AMRO could be significantly impacted and further weaken the capacity of ABN AMRO to
invest and grow. The recent acquisition of Banca Antonveneta at a very high price has also failed
to deliver the promised shareholder value and has caused the market to discount ABN AMRO's
share price to reflect its concern over the Managing Board's acquisition strategy.
As a result of the above failures and risks, we believe that ABN AMRO's current market
capitalisation stands at a significant discount to the fair value of ABN AMRO's underlying assets.
The "sum of the parts" analysis conducted by most sell-side analysts show that the aggregate
value of ABN AMRO's businesses would justify a price significantly in excess of €30 per share.
This view was recently echoed in a note published on 11 January 2007 by the number one rated
(by Institutional Investor) European bank analyst working at Merrill Lynch, entitled "Now or
Never". In addition, most analysts see further upside from aligning the profitability of ABN
AMRO's major businesses to the level of their best in class peers.
We believe that it would be in the best interests of all shareholders, other stakeholders and ABN
AMRO for the Managing Board of ABN AMRO to actively pursue the potential break up, spin-off,
sale or merger of its various businesses (or as a whole), in much the same way you successfully
managed and executed when you were the CEO at Sears.
We believe that this strategy would not only create significant shareholder value but also would
best serve all the stakeholders who otherwise would suffer over the long term from the
structurally declining competitive position of ABN AMRO. We believe that it would be in the best
interests of all shareholders, other stakeholders and ABN AMRO for the Managing Board of ABN
AMRO to cease its current acquisition strategy which we believe could further erode shareholder
value.
In particular there has been repeated press speculation about the potential acquisition of
Capitalia SpA. We think such an acquisition would have a negative impact upon the share price
of ABN AMRO given the current high valuation of Capitalia relative to ABN AMRO's own
valuation and the risk of the acquisition causing the departure of Capitalia's very successful
management team.
For the above reasons we are requesting the attached independent motions to be put on the
agenda (as per article. 28.5 of the articles of association) as separate items for the shareholders
to vote on at the Annual General Meeting to be held on 26 April 2007. I should be grateful to meet
with you to discuss the contents of this letter at your earliest convenience.
We kindly request you to confirm to us by return that you have received this letter and will include
our motions on the agenda for the Annual General Meeting to be held on 26 April 2007.
Yours sincerely,
Patrick Degorce
The Children's Investment Fund Management (UK) LLP