CABN AMRO Holding Essay

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The parent company of the ABN AMRO consolidated group, ABN AMRO Holding N.V. provides global financial services. In its history of more than one and a half centuries, the company went through a number of mergers and acquisitions. Its origins can be traced back to the Netherlands on March 29, 1824, when Nederlandsche Handel-Maatschappij (Netherlands Trading Society, or NTS) was established. It worked for the Dutch government as a banking concern and also provided finances to industrial houses in the Netherlands and Dutch East Indies. From 1874, the NTS went into banking on a global scale.

In the Netherlands, ABN AMRO’s branches increased significantly after World War II. It merged with Twentsche Bank Vereeniging in October 1964 and came to be known as Algemene Bank Nederland (ABN). In the same year, there was a merger of the Amsterdamsche Bank with the Rotterdam Bank, with headquarters in Amsterdam. The new name was the Amsterdam-Rotterdam Bank (AMRO).

Talks began between ABN and AMRO about the expansion and strengthening of the two banks, whose capital bases were both strong. ABN AMRO Holding was set up on May 30, 1990, and the legal merger became effective on September 22, 1991.

With headquarters in Amsterdam and a network of over 3,500 branches in 63 countries, ABN AMRO became a premier financial institution providing products, asset management, and a diversified array of commercial, investment, and retail banking services. From 1991 to 2007, ABN AMRO ranked among the largest banks, having total assets of $1.3 trillion at the end of 2006. It employed 102,556 persons and served approximately 20 million clients. Its main area of operations were the Netherlands, the U.S. midwest, and Brazil. ABN AMRO went on an acquiring spree and entered into joint ventures in all three areas.

ABN AMRO acquired the Cragin Federal Bank for Savings in Illinois in July 1993. It began to dominate in the American midwest banking sector after also taking over Michigan-based Standard Federal in 1996. After five years, the takeover of Michigan National Corporation strengthened ABN ARMO’s position in the United States even further.

Although ABN AMRO had been making its presence felt in Brazil since 1917, the bank became a more active player after the acquisition of Banco Real in 1998, which was followed by Bandepe and Paraiban. The position was buttressed further after the 2003 takeover of Sudameris bank; ABN AMRO was then the fourth-largest bank in Brazil.

The bank’s other international acquisitions included the London stockbroking firm of Hoare Govett (1992), the Scandinavian investment bank Alfred Berg (1995), and the German banks Delbruck and Co. (2002) and Bethmann Maffei (2003). It had also entered into joint ventures with N.M. Rothschild & Sons of London (1996) and Mellon Bank Corporation of Pennsylvania (1998). In 2006 it was able to hold a majority stake only of Italy’s Banca Antonveneta.

ABN AMRO undertook an overhaul of its organizational structure and by 2006 it had seven Strategic Business Units (SBUs); two international and five regional. Global clients included rich individuals and about 550 multinationals. Regional clients of the SBUs were from the Netherlands, Europe, the Americas, and Asia. ABN AMRO pursued a very high standard of professionalism, and its business principles are to aim at excellence in its services to business partners and shareholders. ABN AMRO has also done considerable work in contributing to sporting events and projects such as the World Tennis Tournament, the Volvo Ocean Race, and Ajax Football.

RFS Holdings (a conglomerate of the Royal Bank of Scotland Group, Fortis, and Banco Santander) became the owner of ABN AMRO in October 2007. The Dutch government then purchased Fortis’s interest in the company on October 3, 2008. It was interested in the SBUs of the Netherlands, private clients, and the International Diamond and Jewelry Group. On October 15, 2008, the finance ministry of the Dutch government appointed its nominee to the supervisory board of ABN AMRO. The Dutch state and the bank would work together for better performance from ABN AMRO. The interim financial report of ABN AMRO Holding ending in June 2008 noted various types of market risks relating to interest, foreign exchange, and equity price. It recorded a profit of about $3,750 million after tax, proving the soundness and vitality of the business. In the present scenario, ABN AMRO Holding has a bright future.

Bibliography:

  1. “ABN AMRO—Braveheart Two,” Economist (v.8531/84);
  2. ABN AMRO, The 2007 Guide to SEPA: Becoming a Reality (Euromoney Publications PLC, 2007);
  3. ABN AMRO, www.abnamro.com (cited March 2009);
  4. “After ABN AMRO: Three Amigos, Only One Conquistador,” Economist (v.8589/88);
  5. “Banking: ABN AMRO Aims to Be One of Asia’s Big Three,” Far Eastern Economic Review (June 18, 1998);
  6. Douglas G. Cogan, Corporate Governance and Climate Change: The Banking Sector: A Ceres Report (RiskMetrics Group Inc., 2008);
  7. Deborah Orr, “Dutch Colonizers—ABN AMRO’s Expansion,” Forbes (June 14, 1999).

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