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Wednesday, 3 July 2013

Will the latest trick of Rabobank, Robeco and DNB be the end of the executive bonus?! Don’t put your money on it!

I don't know how it happened 
It all took place so quick 
But all I can do is hand it to you 
And your latest trick

Robeco is a large, Dutch, Rotterdam-based wealth management company, owned by the Dutch sifi bank Rabobank. Robeco has €135 billion in invested capital, spread over shares (49%), bonds (28%), hedge funds (5%) and miscellaneous investments (18%) (source: Dutch Wikipedia).

In order to become leaner and meaner and focus on the core activities, Rabobank put Robeco ‘for sale’ in April 2012. Of the three possible buyers, the Japanese financial service provider Orix became the company that reeled in the big fish. Two days ago, on 1 juli 2013, the news was published that the sale of Robeco to Orix would be finished soon: everybody happy!

However, the story didn’t end there…

Yesterday, the word was spread that Robeco had ‘pampered’ 53 executives and key operatives with a retention bonus of in total €33 million, in order to make them stay through the takeover period. This news was an unpleasant surprise for Dutch finance minister and chairman of the Euro-group Jeroen 
Dijsselbloem, who is very much aware that the public opinion is radically against bonuses these days.

Even more unpleasant for him was the news that the Dutch national bank De Nederlandsche Bank (DNB) had approved of this bonus, due to the ´extraordinary situation´ at Robeco and the circumstance that the current staff remaining in office, was part of the sales deal for Orix.

The following snips come from Het Financieele Dagblad:

The bonus of Robeco is actually against the rules, but nevertheless De Nederlandsche Bank (DNB) approved of a one off-retention bonus for 53 executives and key operatives at Robeco.

This was disclosed in a letter from DNB to the Rabobank, from which RTL Nieuws quoted on Tuesday. This Monday, the bonus became effective through the sale of Robeco to the Japanese Orix Corporation. Rabobank was the parent company of Robeco.

In the letter, DNB writes that the bonuses were necessary to keep employees, who were of crucial importance for the company and especially the success of the sale. The operational and financial risks that emerge during the sales process, are containable this way.

Jeroen Dijsselbloem was not amused at all: he demanded the DNB executive in charge, Jan Sijbrands, to visit his Finance Ministery at the shortest possible notice and give him a thorough explanation about how this mega bonus could have happened.

Yesterday, executive director 'Supervision' Jan Sijbrand of De Nederlandsche Bank (DNB)  sparked outrage in minister Jeroen Dijsselbloem. At the shortest possible notice, the DNB executive has to justify himself at Dijsselbloem’s Finance Ministry, because he allowed wealth management company Robeco to hand out a €33 million retention bonus to 53 key employees. This was disclosed after a confidential letter of DNB, concerning the multi million euro bonus, had leaked through the televised news program ´RTL-Z´. 

Such a retention bonus violates the ´Arrangement Restrained Rewarding Policy´of DNB and the Authority Financial Markets (AFM). At the explicit request of Robeco’s parent company Rabobank, the DNB approved of this bonus.

Yesterday, Dijsselbloem called this bonus arrangement ‘a questionable decision, insensible and against the common opinion of these days’.

This seemingly firm response by Dijsselbloem was by far not enough to get the outraged labour union for the financial industry `De Unie´(i.e. the union) at ease. An infuriated chairman of De Unie, Reinier Castelein, snarled on BNR News Radio:

“I don’t understand one bit of this. The minister should ruthlessly interfere in this case. Dijsselbloem acts upon this affair, as if he is shell-shocked. These 53 people, who collect these bonuses, get away with this, when I hear Dijsselbloem talk like he did yesterday.”

Castelein called it ‘weak’ that Dijsselbloem tried to blame the bonus on his predecessor Jan Kees de Jager. “Was this the same minister who brought Cyprus to its knees and told the Russians ‘that they were on their own’? And here, they give away €33 million. That is more than enough to keep 600 to 700 laid off workers at work for one more year”.

Personally, I am frustrated by the enormous differences in income and the exuberant bonus culture within the financial industry. On top of that, I’m disgusted by the fact that these executives and key operatives of Robeco must be bought with large sums of money, like expensive prostitutes, in order to let them maintain their current position with the new owner at the helm.  And I am utterly frustrated that this €33 million in bonus money is indeed enough to keep 400-600 laid off workers at work for at least a year.

Still, I’m afraid that chairman of De Unie Reinier Castelein is right about these ’53 guys of Robeco getting away with this mega bonus’. Especially the fact that Dijsselbloem tried to put the blame on former finance minister Jan Kees de Jager, cannot conceal that Dijsselbloem has been ‘caught by surprise’ through this bonus arrangement.

Now Dijsselbloem tries to contain the damage by administering ‘speech 22a’ from his book ‘250 speeches to ease up the general opinion’ to Jan Sijbrands of DNB. Sijbrands will eat ‘humble pie’ and he will promise that this was really, really, really the last time.

Subsequently, he will tell that at this moment this deal is a rock-solid agreement between DNB and Rabobank, which must not be violated or else the DNB / state might by sued by the Rabobank. Dijsselbloem will swallow his pride and accept the deal reluctantly. One thing: Dijsselbloem himself with certainly not earn bonus points with this event…

Although the media have tried ‘to bake a nice cake’ from this story, I noticed that the public showed a luke warm reaction to this event. The people in The Netherlands were seemingly not surprised that rules, preventing against the handing out of excess bonusses, have been bent once more.

At the same time, employees lose their jobs by the thousands at that same Rabobank. Also concerning these massive lay-offs the general public has probably been softened up by the stockpile of misery that went over them in the past two years. Their modus operandi is currently: ‘everybody for themselves and God for us all’. 

Still, this case won’t do any good for repairing the relation between the ‘fat cat bankers’ and Jan Modaal (i.e. Joe the Plummer) in the Dutch Main Street. This relation is now at a sub-zero level and it will stay that way for many years to come. Nevertheless, although I hope that this has been the last episode of the long-lasting soap opera ‘Mind your Bonus”, I have many doubts about that.

In a few years, ABN Amro and SNS Bank – both Dutch state banks at the moment – get labeled ‘for sale’. The ‘lucky’ buyer will probably demand that the people in charge at key positions will ´continue at the office´ within the company. 

These people are of course more than willing to do so, provided that ‘something will be done to maintain their loyalty’: “might we suggest a small bonus, sir?”


  1. This article is mind blowing I read it and enjoyed. I always find this type of article to learn and gather knowledge.

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  2. Great article quoting the right sources. It just goes to show the special relation in place between banks and their supervising authorities.The old boys are at it again.....just wait for those scandals to keep rolling in Joe Sixpack.