(Bloomberg) — Robert Swaak had a clear mission when he joined ABN Amro Bank NV in the midst of the Covid pandemic: clean up the bailed-out Dutch lender to help the state sell down its stake. His aspirations for the next chapter appear more modest.
As the 63 year-old embarks on his second term as chief executive officer, he’s eschewing the forays of his peers into new markets or popular products such as private credit. Delivering on a plan mapped out when rentrenchment was still the buzzword among Europe’s lenders, he’s buying back shares and investing in technology and capabilities to help companies make the transition to a low-carbon economy.
“Executing our strategy is what moves this bank forward,” Swaak said in an interview at ABN Amro’s headquarters in Amsterdam. “I’ll continue to be focused on that execution.”
Swaak, who previously worked at consultant and auditor PwC, pulled ABN Amro back to its core markets in the Netherlands and northwestern Europe, settled a Dutch probe of deficient money laundering controls and eliminated hundreds of jobs at the investment bank. But cuts to higher risk businesses such as trade and commodity finance have weighed on revenue while expenses for remediation and improving its risk data are stubbornly high, causing the lender to scrap a cost target for this year.
Now, as the government continues its gradual divestment and higher interest rates fuel profits and growth ambitions across the industry, some analysts are asking whether his strategy is still adequate. Shares of the lender have started to trail peers, after outperforming for much of Swaak’s first four-year term.
“ABN Amro is in need of a Plan B,” Bloomberg Intelligence analysts Philip Richards and Uzair Kundi wrote in a note late last month. “The corporate bank has been downsized, but more cost cuts and franchise growth are key to lifting its return on equity.”
ABN Amro’s smaller revenue footprint reflects the country’s experience during the financial crisis. At the time, government was forced to spend almost €22 billion ($23.8 billion) to rescue parts of the bank, which had long punched above its weight before it fell prey to a disastrous takeover by a group of rivals just before the crisis hit.
Rebuilt on a much smaller scale as a largely consumer-focused lender for the domestic market, ABN Amro went public again in 2015, allowing the government to start a gradual divestment process. While the firm also has wealth management and corporate banking, the disposals have turned ABN Amro into a perennial takeover target for rivals, much like its German peer Commerzbank AG.
“My heart bleeds as a former ABN Amro banker,” said Dorien Rookmaker, a Dutch member of the European Parliament. “ABN Amro is unfortunately not the bank it used to be. It’s very political, it’s not so much about making a profit and serving entrepreneurs anymore, but rather ESG and compliance driven.”
Swaak said his overhaul has cut the bank’s riskiness, as shown by its credit loss provisions as a share of loans. He declined to say if he’s trying to attract new anchor investors to replace the Dutch state and protect against a potential takeover. The bank regularly reviews its ownership structure and communicates with investors, he said.
Instead of unveiling any new efficiency plans, the CEO said existing steps such as the closing of about 50 branches and providing services via video calls, as well as a gradual decline in anti-money laundering costs should suffice to lower ABN Amro’s expenses to about 60% of revenue in 2026.
“We’re happy with the government beginning their sell down,” Swaak said in the interview. “It’s indicative of where we are.”
ABN Amro’s repurchases of €500 million a year of stock since 2022 have bolstered the share price, boosting returns for investors and raising the price of any takeover by a competitor.
Swaak signaled that the next buyback could be bigger, although it will depend on ABN Amro’s profits, the state of the economy as well as its risk-weighted assets, a metric which determines its capital strength.
“We began this journey of transforming the bank at a time of uncertainty,” Swaak said. “We delivered what we wanted to deliver.”
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