We always shudder slightly when we discuss ABN Amro, since nothing ever seems straightforward in the ongoing saga of the Dutch bank. However, this time at least nobody has died. In 2015, we noted that Chris Van Eeghen, head of the bank’s corporate finance and capital markets “startled” friends and colleagues after the “always cheerful” banker reportedly committed suicide. Van Eeghen was the fourth ABN banker suicide since the financial crisis.
When it comes to bonuses, ABN also has a chequered history. The Dutch government nationalised the bank at the height of the financial crisis at a cost to Dutch taxpayers of 22 billion Euros. There was a national outcry in 2015 over bonuses ABN paid to its top executives, as Business Insider reported.
Public outcry over bankers' bonuses is pretty common, but the anger sweeping the Netherlands, over nationalised ABN Amro's executive pay packets is on a completely different level. Over the last week, Dutch newspapers Financieele Dagblad and NOS (Holland's version of the BBC), and other media outlets were awash with debates over the justification of how ABN Amro’s high ranking executives were getting huge bonuses ahead of the bank being re-privatised.
In fact, the outcry was, and continues to be, so bad that Dutch finance minister Jeroen Dijsselbloem delayed the IPO of the nationalised bank at the end of March because the row over giving six executives a €100,000 (£73,000) bonus on top of their salaries escalated so greatly.
He even went to parliament on Thursday to answer questions over how the government is "allowing" the bank to pay hefty bonuses, compared what the average Dutch person receives in a year, even though it is still yet to be privatised, after being taken over by the state in 2008.
As we said, nothing is ever straightforward with ABN and Dutch financial newspaper, Het Financieele Dagblad, is reporting that Dutch bank ABN Amro is poised to scrap the bonus system for almost all of its roughly 20,000 staff. Unusually, the calls for ending the bonus scheme came from the staff, not ABN management. According to dutchnews.nl.
ABN Amro bank is planning to overhaul its current bonus structure for the 17,000 members of staff who are covered by a formal pay and conditions agreement, the Financieele Dagblad said on Thursday.
The paper bases its claim on people involved in the current talks between unions and the bank on a new pay deal (CAO) for 2018. A spokesman for the bank told the paper (that) company surveys showed a large part of the bank’s personnel want to get rid of the ‘performance-related bonus’.
‘We want a complete new structure: no performance assessments and no performance-related bonuses,’ he said.
How very “equitable”…as long as they’re happy. There will be a few exceptions, however, although that doesn’t include the board of directors, since the Dutch state still owns 56.26% of the equity through the NLFI investment vehicle. The directors are prohibited from receiving bonuses until the state disposes of its holding. Dutchnews.nl continues.
The plans will cover all members of staff who are paid according to the CAO (collective labour agreement). Around 100 specialists, including traders and corporate bankers, will still be eligible for a bonus. The bank’s board do not qualify for bonuses because the Dutch state still owns a majority stake.
The FD says the bank’s plan is in line with developments elsewhere in the financial services sector. Former finance minister Jeroen Dijsselbloem fought hard against the bonus culture, which he saw as a major cause of the financial crisis and introduced a 20% of salary ceiling.
Even Dutch bankers, it seems, aren’t totally magnanimous as negotiations between unions and the bank are continuing with staff demanding a 9% pay rise as compensation. We’re not sure precisely what’s behind the motivation of ABN’s staff, although it could have something to do with the bank’s interminable restructuring. As Bloomberg noted following the release of its 3Q 2017 results.
ABN Amro Group NV fell the most since May after the Dutch lender reported a third-quarter decline in earnings from banking and a capital ratio that fell short of estimates. The stock dropped as much as 3.3 percent in Amsterdam trading and was down 1.8 percent as of 9:15 a.m. Net interest income declined 1 percent to 1.57 billion euros ($1.82 billion), which is about 2 percent below consensus estimates, according to a Kepler Cheuvreux note.
Chief Executive Officer Kees van Dijkhuizen has focused on lowering costs while the bank seeks to grow its domestic retail, private-banking and investment units…While net income beat analyst estimates, much of the result was driven by cost cuts. Operating expenses dropped 12 percent in the third quarter from a year earlier, the Dutch state-controlled bank said in a statement on Wednesday.
The former global banking giant was cut back to a largely domestic Dutch lender in the wake of the financial crisis and the CEO has focused on lowering costs while the bank seeks to grow its domestic retail, private-banking and investment units. The shares have climbed 23 percent since the beginning of the year, when van Dijkhuizen took over.