Wellington, Aug 13 NZPA - Commonwealth Bank of Australia has pulled out of a deal that could have led to it owning half of ABN Amro Craigs, the largest stock broker in New Zealand by number of advisers.

Early this month CBA entered exclusive talks to buy the ABN Amro business in Australia and New Zealand after National Australia Bank Ltd dropped out of the race.

The vendor is Royal Bank of Scotland. RBS and partners Banco Santander SA of Spain and Fortis of Belgium outbid Barclays last year for Amsterdam-based ABN Amro to complete the biggest banking acquisition in history. Like many who bought a big asset before credit was crunched they are now selling assets.

CBA chief executive Ralph Norris, who is a New Zealander, said today the billions of dollars in writedowns announced by National Australia Bank and ANZ had damaged the reputation of Australian banks internationally, affecting their ability to access funding.

Mr Norris said CBA would have had to raise significant funds to buy ABN Amro.

"We came to the conclusion yesterday that, given where markets are, it would not be prudent to go ahead with the due diligence," Mr Norris said.

The New Zealand stock broking community has been keeping an eye on the deal because ABN Amro owns half of the successful ABN Amro Craigs stock broking business and all of the ABN Amro NZ investment banking business run by Simon Allen.

ABN Amro Craigs offers a full range of services -- from research to advice to wealth management and brings small companies to the market.

Analysts questioned the fit with CBA, which owns ASB Securities in New Zealand.

Some people said it was a good fit because ASB was mostly an internet discount broking business and its boss John McMahon has previously worked at ABN Amro Craigs and knew the senior management there.

Others said ABN Amro Craigs had a great business model by combining a global brand in ABN Amro with a local business that had relationships built up with rich individuals, and why mess with success.

Representatives of both ABN Amro Craigs and ASB Securities have declined to speculate on the outcome of the deal while it was being negotiated offshore.

It is understood that the local owners of ABN Amro Craigs had no ability to influence the negotiations and no buyout clause.

Sources in Australia said the value of the ABN Amro Craigs business was appreciated as was the importance of getting buy-in from ABN Amro Craigs to any deal that went ahead. The deal in total, including the Australian ABN Amro business, was expected to be worth $A500m ($NZ634m).

The ABN Amro investment banking business does debt and capital raising for the big end of town.

ABN Amro Craigs has 115 advisers, making it the largest retail stock broker in New Zealand on that measure. The next largest is believed to be Forsyth Barr. ABN Amro Craigs has 17 branches.

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