Awards for Excellence 2016
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Finding examples of troubled banks is easy in Europe in 2016. Happily, there are other examples of banks whose management has succeeded in turning around their institutions, often putting bailed-out banks back on a more sustainable course.
All these banks have stories that are heartening for investors and clients: Lloyds in the UK (a turnaround Euromoney has previously recognized), Bankia in Spain, Bank of Cyprus, or Austria’s Bawag. The list could also include Allied Irish Banks, KBC, ING, Natixis, or even the older story of UBS.
However, in a year that saw its landmark partial return to private hands in the biggest European bank IPO since the financial crisis, the best bank transformation must be ABN Amro. This is an institution that has been to hell and back. It is about a third of its pre-crisis size, and whereas in its previous form it had operations across Europe, Latin America and the US, now 80% of ABN Amro’s revenues are in its Dutch home market.
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ABN Amro HQ |
Few in 2008 would have predicted its recovery over the past half-decade. It is the result of getting through an immensely complex separation of the bits of the old ABN Amro bought by RBS and Santander, and rapidly achieving synergies from a subsequent merger with the Dutch part of Fortis.
It has cut costs dramatically (arguably ABN Amro’s longest-standing problem). In private banking, it has fine-tuned its offering; selling its Swiss operation, for example, but adding Credit Suisse’s on-shore German private banking business, recognizing the importance of scale (it is Germany’s and the eurozone’s third-largest private bank).
But most of all, it fixed on a well-defined and compelling new business model – sticking to good businesses where it has a foothold and not embarking on growth in areas such as international investment banking. It is an approach that investors appreciate and, from the depths of despair, at the end of the awards period it had a valuation close to book value (almost unheard of in Europe) with a 2015 return on equity of 12% and tier-1 capital of 15.5%.
