Monday 24th November 2014
NEWS TICKER: November 24TH 2014: This morning, US time, President Obama accepted a letter of resignation from US Secretary of State for Defence, Chuck Hagel, who says he will service until his successor is confirmed by the US Senate. “You should know I did not make this decision lightly. But after much discussion, the President and I agreed that now was the right time for new leadership here at the Pentagon,” he wrote in an official statement announcing his resignation - .Bank of America Corporation today announced it will report its fourth-quarter 2014 financial results on Thursday, January 15th 2015. The results are scheduled to be released at 7am ET, followed by an investor presentation at 8:30am ET - The Straits Times Index (STI) ended -4.79 points lower or -0.14% to 3340.53, taking the year-to-date performance to +5.55%. The FTSE ST Mid Cap Index gained +0.23% while the FTSE ST Small Cap Index gained +0.34%. The top active stocks were Forterra Trust (+20.97%), SingTel (-0.77%), CapitaLand (+1.53%), DBS (-0.45%) and Suntec REIT (-0.52%). Outperforming sectors today were represented by the FTSE ST Technology Index (+0.88%). The two biggest stocks of the FTSE ST Technology Index are Silverlake Axis (+1.22%) and STATS ChipPAC (+1.12%). The underperforming sector was the FTSE ST Telecommunications Index, which declined -0.68% with SingTel’s share price declining -0.77% and StarHub’s share price unchanged. The three most active Exchange Traded Funds (ETFs) by value today were the IS MSCI India (+0.26%), SPDR Gold Shares (+0.47%), STI ETF (+0.30%) - Moody's Investors Service has today upgraded SCHMOLZ + BICKENBACH AG's (S+B) corporate family rating (CFR) to B2 from B3 and probability of default rating (PDR) to B2-PD from B3-PD. The rating of the senior secured notes due 2019 issued by SCHMOLZ + BICKENBACH Luxembourg S.A. (a wholly owned subsidiary of S+B) is also upgraded to B2 from B3. The outlook on the rating is stable. -- The Nasdaq Stock Market says that trading was halted today in MOL Global Inc at 09:10:08 Eastern Time for "additional information requested" from the company at a last price of $4.09. Trading will remain halted until MOL Global Inc. has fully satisfied Nasdaq's request for additional information - The ICE January Brent futures contract settled $1.03 higher at $80.36/b Friday after a surprise interest rate cut by the Chinese central bank lifted hopes the world's second largest economy could grow faster. Crude benchmarks on both sides of the Atlantic closed at their highest levels since November 12. NYMEX January crude futures ended the session 66 cents higher at $76.51/b.

20-20: Can ABN AMRO stake a comeback claim?

Thursday, 15 December 2011
20-20: Can ABN AMRO stake a comeback claim? It was never going to be simple but chief executive officer Gerrit Zalm had been making steady progress in turning round beleaguered ABN AMRO. The year 2011 started out promising with a strong first half but the eurozone crisis has put a question mark over whether it will return to the public markets by 2014. Despite the uncertainty, Zalm is seen as heading in the right direction. Lynn Strongin Dodds reports on the outlook for the bank. http://www.ftseglobalmarkets.com/

It was never going to be simple but chief executive officer Gerrit Zalm had been making steady progress in turning round beleaguered ABN AMRO. The year 2011 started out promising with a strong first half but the eurozone crisis has put a question mark over whether it will return to the public markets by 2014. Despite the uncertainty, Zalm is seen as heading in the right direction. Lynn Strongin Dodds reports on the outlook for the bank.

ABN AMRO’S fall from grace has been well-documented. The bank had become the symbol of the financial hubris of the pre-Lehman days with its fast past growth, high-profile takeovers and subsequent collapse. By 2007, ABN AMRO was the second-largest bank in the Netherlands and the eighth largest bank in Europe by assets. It had operations in 63 countries, with more than 110,000 employees and almost $63.9bn in revenue.  

The moniker was set to disappear when Royal Bank of Scotland, Fortis and Santander split up its international assets between them in a €72bn deal that was ranked as the world’s largest banking takeover. The financial crisis exploded a year later and the Dutch government was forced to step in to rescue not only the domestic assets of ABN AMRO but also Fortis, at a cost of some €27bn.



The two banks were subsequently merged under the ABN AMRO name and Zalm, a former finance minister who earned a reputation as a fiscal hawk, was called in as chief executive in 2009 to oversee the integration.

His task is to get the bank’s income ratio structurally below 60% and to lay the foundation for a public listing in three years’ time. To this end, Zalm has been busy cutting the workforce by about 9%, bolstering key business lines and resurrecting its energy, commodities and transportation (ECT) operations. It had sold its ECT business to Fortis in 1997 and so it is back in the fold.

Integration is still under way and the goals include improving cost efficiency, rebuilding the bank’s franchise in commercial banking and increasing market share lost in the Netherlands. Zalm is also carefully developing an international presence in the bank’s core competencies such as ECT. It has re-established a foothold in the US oil and gas market by opening an office in Dallas, staffed by a six-person team it lured away from UBS. Moscow and Shanghai are also on the list as cities where it would like to re-establish a presence.

Zalm has also returned the brand to the Dutch high street; a move which, says Claudia Nelson, senior director of Fitch, plays to the bank’s strengths. The combined entity is now the third-largest domestic bank behind rivals Robeco and ING with a market share of 15% to 25% depending on the product line, involving some 6.8m customers.

Zalm has also strengthened the private banking franchise via the respected AMRO MeesPierson brand. The bank targets customers with wealth in excess of €1m and holds around €165bn of assets under management split equally between ABN AMRO, MeesPierson and a widely spread international network. The division is also known for its global diamonds and jewellery group, which specialises in providing lending, cash management, merchant banking and transaction banking services to small and medium enterprises in the industry. Zalm is a master of detail, evinced in his product diversification strategy: he has, for instance, introduced a special service for entrepreneurs both as a private individual and as a representative of their enterprise; while ABN AMRO MeesPierson has created a dedicated service advising a wide range of non-profit organisations.

Analysts remain optimistic about the bank’s prospects on the home front, but they are more circumspect about its global ambitions in the energy sector. The general consensus is that ABN AMRO could have difficulty in competing against French banks such as Société Générale and BNP Paribas, which have a lock on the field in Europe. In fact, ABN AMRO’s former energy team ended up at BNP Paribas after it took over part of Fortis during the demerger.  

Analysts though are encouraged that Zalm appears on track to deliver the bank back to the public markets by 2014. The first-half results in 2011 show net profits of €974m compared to €325m in the same period in 2010 while its core tier-one capital ratio was 11.4%. The cost structure had also been whittled down with expenses dropping to 63% from 75% a year ago.

With the eurozone crisis rumbling in the background, the bank’s third-quarter results showed it had taken a battering as profits were almost erased by a €500m writedown on Greek corporate loans. “Uncertainty as a result of the sovereign-debt crisis, and the impact thereof on the European economy, caused us to impair part of the €1bn Greek government-guaranteed corporate exposures,” Zalm noted at the time.

Nelson says: “It is difficult to know what will happen because all banks in the eurozone will be affected. However, there has been some investor appetite for the Netherlands and there is still scope for ABN AMRO to continue to build up its business.”

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