Wednesday 10th February 2016
NEWS TICKER: KPMG has appointed Adrian Stone as its UK head of audit with immediate effect, succeeding Tony Cates who now leads KPMG's international markets and government practice. Stone joined KPMG's Sheffield office in 1984 and has been an audit partner since 1997. He previously held several senior roles in KPMG's audit practice including head of audit for the north of England and Scotland, chief operating officer for the UK audit practice, head of internal audit and head of KPMG's department of professional practice. He has been KPMG's interim head of audit since November last year - Bridge Bank says it has provided faith based Spark Networks with a $10m revolving credit facility - BNP Paribas Securities Services has been appointed by Sampo Group, the Finnish financial services group, to provide global custody and settlement services for Sampo’s €25bn of insurance assets held globally - Saudi Arabia is reportedly reconsidering the requirement for foreign companies setting up in the country to have a local partner. A committee led by the Saudi Arabian General Investment Authority, the Ministry of Commerce and Industry and the Ministry of Labour, will look at ways to spur additional inward investment into the realm, according to newspaper Asharq Al Awsat. The committee is expected to ease the bureaucratic barriers for foreign firms that want access to the Saudi Arabian economy. Foreign direct investment is vital as the kingdom looks to make up foreign exchange losses and balance its $98bn budget deficit – European president Donald Tusk met with Georgian premier Giorgi Kvirikashvili today. Discussion focused on continued reforms of the Georgian judiciary, rule of law and human rights are important priorities and I underlined the EU's readiness to assist. It is crucial that criminal investigations and prosecutions be evidence-based, transparent and impartial, in line with the commitments of the Association Agreement. “I share Georgia's concerns about the continued implementation of the so-called “treaties" between Russia and Abkhazia and South Ossetia. I saw for myself the situation at the administrative boundary line, including the "borderisation" [sic] process, during my last visit to Georgia,” said Tusk following the meeting. The European Union will continue to give its firm support for the territorial integrity of Georgia within its internationally recognised borders.” - February 9th 2016: The Polish Financial Supervision Authority (KNF) at its meeting today confirmed the appointment of Małgorzata Zaleska as President of the Management Board of the Warsaw Stock Exchange, following her appointment as president on January 12th. Zaleska is the director of the Institute of Banking, Warsaw School of Economics; the Chairperson of the Committee of Finance Sciences of the Polish Academy of Sciences; a member of the NBP Economic Research Committee; a member of the Central Commission for Degrees in Finance – Today’s equity markets tell a tale of fears of a global slowdown with even the US considered a candidate for recession. The US session yesterday was not pretty, with the S&P500 down 1.42%. The index has lost around 9% of its value this year and is now 13% below the nominal high that it reached last year. The DJIA was down 1.1% and Nasdaq100 fell 1.59%. The Nasdaq100 is now 17.92% below the nominal high that it reached last year. Swissquote says: “The sentiment is risk-off at the moment, with gold reaching $1,200 for the first time since June. Gold’s bullish momentum continues yet commodity linked currencies such as the AUD and NZD failed to gain the advantage as outside precious metals and other commodities broadly fell. In particular, WTI Crude is now back around below $30 a barrel over continued oversupply concerns. Markets are now fearing that this period of lingering low oil prices could last a long time”. – In the Asian session Japanese stocks fell more than 5% and the yield on the benchmark government bond dropped into negative territory for the first time. The decision by the Bank of Japan to introduce negative interest rates looks to have pushed down yields for both short and longer termed bonds. In afternoon trading in the Asian session, the benchmark 10-year government bond was yielding minus 0.025; in other words, investors were willing to lend the over-indebted Japanese government money for 10 years and get back less than they put in. Remember that Japanese sovereign debt is more than double the country’s GDP. The question is now, how far down can yields go? Moreover, when will central banks stop flirting with negative interest rates. It is a dangerous policy. The stock market took the brunt of investor fears today, as the Nikkei Stock Average closed y down 5.4%, falling 918.86 points to finish at 16,085.44. This is a sizeable drop and the largest one-day fall for about two and a half years. Yet again, the yen did well, rising against the US dollar to 114.80. Financial shares took the brunt of today’s pain with Mitsubishi UFJ Financial Group Inc. (MTU) shares closing down 8.7%, and Nomura Holdings losing 9.1%. Australia's S&P/ASX 200 ended the session 2.9% lower, and New Zealand's S&P/NZX 50 was down 1.3%. India's Sensex was 1.2% lower. Chinese, Singapore and Korean markets are closed today. In Europe, equity futures are mixed. The CAC40 has dropped 0.22%, the DAX is down 0.21% while the FTSE100 is unchanged, but there’s still half a day’s trading to go.

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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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