* ABN, Deutsche Bank in intense discussions
* Deal is key to ABN/FBN merger
By Ben Berkowitz
AMSTERDAM, Oct 19 (Reuters) - A deal for the government to sell ABN AMRO assets as part of an EU competition ruling proved elusive on Monday and people familiar with the situation said any resolution was likely to come late in the evening.
Monday at midnight CET (2200 GMT) is the deadline for the Dutch government to present a deal to the European Commission to address a 2007 remedy order on competition in the local market. It has been negotiating on and off for months with Deutsche Bank about such a sale.
Without a deal, it will not be allowed to merge ABN AMRO and Fortis Bank Nederland, both of which it nationalised last year.
The government wants to merge the two banks and take the combined group public sometime in 2011 or later.
Without a merger, its exit strategy for its 20 billion euro-plus investment is much less clear.
People close to the deal have become increasingly cautious as the deadline nears, given the importance of the talks. But all sides agree that whatever happens will likely happen late Monday night. There was little clarity, though, as to whether a deal was likely or not.
The finance ministry had no comment other than to reiterate that talks were continuing.
When a consortium including Fortis bought ABN AMRO in 2007, the EU ordered Fortis to sell some ABN AMRO assets in the Dutch small and medium enterprise banking sector to address competition concerns.
When the government nationalised Fortis's local operations in Oct. 2008, that obligation remained.
The original remedy was to be the sale of ABN AMRO assets to Deutsche Bank, including commercial bank HBU, 13 advisory branches and two corporate client units. The Dutch state tried to renegotiate that deal because the original pact would have led to about 300 million euros in losses.
A July deadline for the sale was repeatedly extended to Monday.
European Competition Commissioner Neelie Kroes justified the latest extension by saying there was an "imminent" deal with a large international bank for HBU and the other assets -- and has made clear since then that an HBU sale to Deutsche Bank is essentially the only suitable outcome she can see.
Sources close to the situation say that the government does not have to present a final, signed deal but will have to have a letter of intent or memorandum of understanding with a buyer that shows a clear path to a final deal soon. (Editing by David Cowell)