March 26, 2020 / 9:02 AM / 7 days ago

UPDATE 1-ABN Amro clocks $200 million loss after virus turmoil slams client

(Updates with quote from ABN spokesman)

AMSTERDAM, March 26 (Reuters) - Dutch bank ABN Amro said on Thursday its clearing bank had incurred a net loss of around $200 million in the first quarter, after it was forced to liquidate a client's positions amid volatility caused by the global coronavirus outbreak.

ABN Amro said the pretax loss was around $250 million and came from a single client who traded in U.S. options and futures. The unnamed client had failed to meet minimum risk and margin requirements due to the market turmoil.

The bank said it had closed out the positions of the client and would include the loss provision for ABN Amro in its first-quarter results, based on chances for recovery.

"Our client may have another loss. We cannot mention the (name of the) client," Bikker said.

ABN Amro Clearing Bank guarantees that transactions between traders who use it will settle, and provides clients with liquidity and financing. Clients must post collateral for their positions, which in this case eroded quickly.

"You have a client with different positions who is financed and gets into real bad weather with extreme volatility and cannot meet the margin obligations anymore and the risk requirements," said ABN Amro spokesman Arien Bikker.

"These positions are actually collateral for finance ... In the end you have to make a decision: where are we, what are the chances (for recovery)? At one point we had to close it down and sell it."

Reporting by Bart Meijer; Editing by Toby Chopra and Emelia Sithole-Matarise

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