CORRECTED - UPDATE 1-ABN AMRO says target of "dubious" bid approach

(Corrects second paragraph to read "that ended in the" instead of "and")

AMSTERDAM Jan 17 (Reuters) - Dutch bank ABN AMRO dismissed as "dubious" on Monday a statement from a group called The Children's Sustainability Fund (TCS) offering to buy the nationalised lender by recalling all the 500-euro banknotes in circulation.

The TCS's web site said it was set up as a reaction to The Children's Investment Fund Management - which as an activist investor pushed hard for what proved to be the disastrous three-way takeover of ABN by foreign banks Royal Bank of Scotland (RBS.L), Fortis and Santander (SAN.MC) in 2007 that ended in the subsequent rescue by the Dutch state.

When contacted by Reuters, the Dutch finance ministry said it was unaware of any plan by TCS to buy ABN AMRO.

Jos Hendriks, put forward as a spokesman for the fund, told Reuters it had no money at present to buy ABN AMRO.

"The money will be there when the proposition we made to the ministers of the euro countries will make their decision, like we proposed to (Dutch Prime Minister) Mark Rutte and the ministry of finance," he said.

In the statement, the fund proposed using 500 euro ($666) notes in circulation to fund its plans.

"TCS ... is getting ready for the takeover of ABN AMRO," it said in a statement, adding that EU countries in need of help such as Ireland, Portugal, Spain, Italy, Greece and Belgium could also apply to the fund.

"It involves the recall of 570 million, 500-euro notes in circulation. These are actually interest-free bearer bonds with a total value of 285 billion euros. The use of these notes (35 percent of the total euro banknotes in circulation) is still obscure."

Hendriks later told Reuters: "We do not know where those notes are. The money will be there if all the notes are returned to the banks by the people who possess the notes. The European Central Bank produced those notes without looking at how those notes are used." ABN AMRO has said previously it expects to be privatised between 2013 and 2015.

It now consists of the ABN AMRO and Fortis Dutch retail banking activities, as well as commercial and merchant banking services for Dutch firms, and private banking units in 13 countries, with a growth focus on Asia. ($1=.7512 euros) (Editing by Sara Webb, Greg Mahlich) (sara.webb@thomsonreuters.com; +31 20 504 5000)