Rabobank - Failed in London, try Frankfurt
Triple-A Dutch bank Rabobank wanted to build a flourishing international business in London. Things didn't go well, not least because the local staff were given too free a rein. A crackdown had to come. Now Rabo's taken a new tack, an alliance with Germany's DG Bank. It could be a fruitful match, but negotiations are protracted and the final arrangements far from settled. Laura Covill reports.
Not until the Grosvenor House ball was it obvious the end had come. Rabobank's London operation, particularly in equities, had been in trouble for months. The redundancies, hiring freezes and strategy reviews had begun in autumn 1998. Head of equities Marcus Grubb went shortly before Christmas, to be replaced by the man in charge of Dutch equities. Rampant overspending scuppered the Christmas party. Then Alex von Ungern-Sternberg, head of the investment-banking division, was thrown out too. His promise to turn a profit on equities after 12 months now seemed a bad joke.
The spring of 1999 brought a mysterious thaw. Management in Utrecht ordered bonuses to be paid out at once, even though they could have been paid in instalments over two or three years. A new investment-banking boss arrived from Citibank. In May, a huge ball was organized to celebrate belatedly the opening of the new trading floor. Hundreds of expectant staff turned up in black tie to meet their leader. Was this a new start?
It wasn't. The London branch manager kicked off with a misjudged joke about how Barclays had fired 6,000 people that day.