Asked about the likelihood that ABN Amro would be taken over by another bank in the coming five years, one Dutch investment banker says the probability is 100%. But that will be hard while a large chunk of state ownership remains in place, with all the constraints that will mean for the buyer in terms of pay and manoeuvrability.
At the moment, the list of candidates is short. Nordea’s chairman, Björn Wahlroos, advocated a reverse merger with ABN Amro in 2016, but that may have just been to make a point about Swedish regulatory costs – it is now simply moving its headquarters to Finland.
Sure, there are many similarities between Dutch and Nordic banks; they are in highly profitable oligopolistic markets and both have a lot of scope for digital savings.
Nordea, however, is only just getting around to properly integrating the mergers that created the pan-Nordic lender 20 years ago. That integration process will take a few more years yet. Moving immediately on to an equally complicated merger with ABN Amro might be more than investors could stomach.
Danske Bank was more forward-looking in international IT integration and it benefits from that, but its market capitalization advantage over ABN Amro is far smaller.
A takeover by Belgium’s KBC (traditionally strongest in Flanders) would face the same market-cap conundrum, while any French contenders might not have the requisite cultural fit.
Such discussions will in any case add to the frustration of those who still think ABN Amro has potential in its own right, if only its Dutch political overlords would allow it to blossom.
One insider laments how the Dutch have essentially opted out of the future of European financial services, so determined are they to avoid a repeat of the bailouts of 2008. Paris and even Dublin are now much better placed to challenge London’s dominance after Brexit.
If this is a missed opportunity, few aside from the odd Dutch investment banker seem to care. The saga around the demise of former chairman Olga Zoutendijk further suggests that any attempt to bring about a less cautious ABN Amro, for example, may have to wait.
ABN Amro’s chief executive, Kees van Dijkhuizen, is fully aware that consolidation is coming to Europe. Although the bank has enough scale today in Dutch retail and to an extent in European private banking, the question remains whether or not it should do more to bulk up, not just in European private banking but also perhaps in corporate and institutional banking.
Once a takeover becomes more realistic – particularly by a French bank – Dutch politicians might start to wonder if a more aggressive approach would have afforded better protection for a national champion.
That does not mean that the two possibilities are either a takeover or a more ambitious strategy, however. If it remains independent, it might just be because of nationalism. There is already talk among Dutch backbench politicians of the state retaining a golden share (although this is more in the context of preventing higher executive pay).
Some senior investment bankers in London cite ABN Amro as the most likely candidate to kick-start a new era of big and transformational European bank mergers. This would be a test for single market rules and for Europe’s determination to build a true cross-border market in financial services.