Best bank
ABN AMRO
Best debt house
ABN AMRO
Best equity house
ABN AMRO
Best M&A house
ABN AMRO
| Rijkman Groenink | ||||||
It’s been a year of painful restructuring for ABN AMRO, since its new chairman, Rijkman Groenink, instigated a radical overhaul last May and set ambitious new performance benchmarks. On the wholesale banking side, the bank has merged its disparate investment banking businesses with its old corporate banking operations. It’s an internal merger which, so ABN AMRO insiders claim, bears comparison in scale and numbers of people affected with the merger of Chase and JP Morgan. And it’s been bloody. Following an industry-wide trend, the bank has promoted client relationship managers for the obvious industry groups – TMT, automotive, financial institutions, energy and so on – to lead its charge where product heads, or country heads would once have been to the fore.
The bank continues to struggle to make its mark in European investment banking and its results so far in 2001 have been unimpressive. Its international network has been trimmed as the bank has exited some countries completely and shut marginal businesses in many others.
So it must come as a relief to the bank’s senior management that it still manages to sweep the board at home. The bank is, by some margin, the leader in a Dutch market which is also home to two other leading European financial companies, the bancassurers Fortis and ING.
ABN AMRO heads the arranger league tables for debt, equity and M&A deals for Dutch institutions, in the face of stern competition not so much from ING and Fortis, but rather from other leading international banks and investment banks. Because the Netherlands is home to a number of large international corporates, many of which have long outgrown their home market, it naturally attracts the strongest firms to compete for this business. ABN AMRO can at least rely on some traditional banking ties in its home market. Its strength in transaction services and its wide international network attract leading Dutch companies. In April this year Royal Dutch/Shell awarded it one of the largest ever cash management mandates on a five-year contract.
In equity capital markets its joint venture with NM Rothschild, ABN AMRO Rothschild, continues to prove itself. It acted as global co-ordinator and bookrunner on most large Dutch equity offerings in the past 12 months, including on KPN’s $4.7 billion combined equity and convertible bond offering last November, the $813 million privatization offer for TNT Post Groep this March, a $1.8 billion accelerated bookbuild for Reed Elsevier last November and a $542 million offer from VNU last September.
While the bank struggles to make a name for itself in European M&A, it is by far the most active adviser in its home market. It advised Amvest on its $1.2 billion sale to Rodamco, and Cementbouw Handel&Industries on its sales to CVC Capital Partners. It worked with Suez Lyonnais des Eaux on its deal for GTI Holding NV.
And in debt markets, ABN AMRO has led large deals for financial institutions such as Aegon and Bank Nederlandse Gemeenten, asset-backed deals for Acmea and Delta Lloyd, and corporate deals for KPN, Philips and Unilever.
But the pickings are not necessarily so easy for ABN AMRO in the Netherlands. In corporate debt it lags behind UBS Warburg and Goldman Sachs. Goldman received a mandate on the large dollar global bond for KPN last September and UBS Warburg has executed dollar globals for KPN and Unilever as well. “The competitive environment is hotting up. It’s not as easy as it used to be,” says one capital markets banker. “Dutch borrowers aren’t as loyal to Dutch banks as German issuers are to German banks.” He explains that Dutch companies are so internationally minded that they don’t even like to receive pitches in Dutch, preferring English instead. They’re very used to picking the best bank for each deal, irrespective of nationality, and for sharing business among lead managers.
ABN AMRO can be proud of the deals it has led for Dutch companies. It was a very different proposition leading the e2 billion and £175 million bonds for KPN in April than it was back in September. Its ratings were under pressure in April and at the roadshow all the questions from investors were about covenants and step-ups. KPN was probably pleased with the result in such difficult market conditions. It was the first large bond offering from a telecom company that had been downgraded to BBB and was priced successfully even on a day when Nasdaq sank to new historical lows.
Maybe traditional banking relationships count for something after all, when the going gets tough. “ABN AMRO has as big an interest as anyone in KPN’s success going forward, given its commitments to them,” says one banker. “Its working hard to build and enhance KPN’s investor base.”
