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Monday, 25 April 2011

ABN AMRO aiming to scrap “a few hundred jobs”: Making more possible… with less people? Or just `making less possible… with much less people´?!

The Dutch bank ABN AMRO is planning to scrap a few hundred jobs (all links in Dutch), according to Dutch newspaper DeTelegraaf ( 
“ABN AMRO scraps hundreds of jobs”  
State bank ABN AMRO will scrap ‘at least hundreds of jobs’.  This number is on top of the 6500 jobs there were already lost due to the integration of the bank with Fortis. This is stated by multiple sources. ABN CEO Gerrit Zalm sent all personnel members a memo, in which he states that costs within the bank are too high. Ten thousands of employees of the bank went into the Easter weekend with a miserable feeling.
 The chief executive is preparing the bank for a return to the stock exchange in 2014. According to multiple sources at least a few hundred jobs will disappear. Professor Jaap Koelewijn of Nyenrode Business University states: “a few hundred jobs seems on the low side. I rather think of thousand to two thousand jobs.

The Financieel Dagblad ( adds up the following to this story: 
Gerrit Zalm didn´t mention any jobs to be lost. However, in the meantime the personnel has been informed of jobs that will be lost. The labor unions “FNV Bondgenoten” and “De Unie” were already taking this into account. “When I read that unnecessary procedures will be cut away and junctions will disappear, we can expect loss of jobs”, according to executive Erwin Rog of labor union De Unie.

In the aforementioned memo Gerrit Zalm mentions that the bank is not ambitious enough towards its customers: 
`It gives a feeling we could do better, especially in servicing our customers. Our service can be better, quicker, with less mistakes and less complaints. This requires more efficient processes, less junctions, more cooperation, the elimination of unnecessary procedures, the full usage of our knowledge on the shop floor and a head office that is considered ´supportive´. […]
Also financially we should perform better than in the initial plans. That is necessary for creating an as-strong-as-possible position in order to decide over our own future. Our current cost level is problematic: no matter how it is measured. Even after realization of the ´charcoal sketch´ and the savings coming from the merger, we are not yet ´up to standard´.
 This does not change the A of ambition in the C of cuts. We are also aiming at possibilities for yield raises. And with realistic proposals the cost may even go before the yield. But the A for ambition is also about efficiency […] Especially the combination of cost savings in combination with better customer service offers plenty of possibilities.[…] We do put an extra accent on `putting the customer in center´, efficiency and probably successful possibilities to raise the yielding potential of the bank.

It´s no wonder that personnel of the bank didn´t have a relaxed Easter weekend after reading this memo. If you read between the lines, you don't expect that Gerrit Zalm thinks very highly of yield raises or the ´realistic proposals´. You better get hold of your boots and sit still while you get a haircut…

I don´t know yet, as it has not been officially confirmed, how many jobs will be cut, but my guess is that professor Jaap Koelewijn of Nyenrode Business University might be more right than the guys that predict the loss of a few hundred of jobs.

The position of the bank is still very awkward: when ABN AMRO was sold to the troika of RBS, Fortis Bank and Banco Santander, the bank was a global player with global ambitions and a portfolio of derivatives that was ready for `outer space`.

Now the bank is especially aimed at servicing Dutch customers in The Netherlands and abroad, except for a few profitable and high-profile activities where the bank still is considered a global player. How´s that for a down-to-earth ambition.

And on top of that the bank is still in the middle of a merger with Fortis Bank in which at least 6500 jobs need to be scrapped before 2013, due to double manned positions and banking activities that are abolished.

If you then state as ABN AMRO that you are planning to return to the stock exchange in 2014, in my opinion you are busy with a ´mission impossible / implausible´:

·         The amount of state support that ABN AMRO received is estimated at about €25 bln, including the state support for rescuing Fortis Bank:
o    The chance that an IPO in 2014 will yield this amount of money for the state is about 0,00000000001%, especially if you read what the target customer groups of the bank are.
o    I don´t know if Jan Kees de Jager (finance minister) or PM Mark Rutte are ready to tell the Dutch taxpayers that they can wave goodbye to at least €15 bln in state support when the IPO is over and done?
o    Fact is that if the state remains a partial owner by majority of the bank, the other shareholders know they don´t stand a chance when the bank comes into trouble again. The state comes first.

·         The state support excludes the bank from being a price fighter or an interest stunter, due to European Commission regulation. This reduces the chances of the bank on becoming a national champion. This reduces also the value of the bank during an IPO.

·         The chance that the world economy is healthy and growing again in 2014 is very small, if you read the latest signs. This further reduces the chances for a successful IPO.

To be clear about it: the ABN AMRO is my personal bank and I´m quite satisfied with the services they offer. Besides that I have worked there as an ICT consultant. That means I am sympathetic towards that bank. But I wonder now if they will charge me more than the current €40 per year already for just keeping up my account and my internet banking. And I saw over the last years that the amount of service given at the banking shops has reduced strongly, instead of increased. And I am very doubtful towards the possibilities of the bank to yield more money from its customer, while at the same time keeping it in center.

Every attempt of ABN AMRO to earn more money from its customers is currently very suspicious: in The Netherlands still multiple lawsuits are running on the `usury policies´ (insurance policies with an extreme amount of hidden costs in it), the effects of the Madoff fraud and the Lehman bankruptcy. People are very suspicious against all kinds of derivative investments. On top of that, the bankers are in the current envious and resentful political climate considered to be at a level, somewhere between the fly and the cockroach, with their ´bonus culture´ and their ´heads, I win. Tails you lose´ attitude.

So as far as I´m concerned the chances of ”making more possible… with less people” are very slim. I think it will be “making less possible… with much less people”.

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