The leading European custodian bank, ABN AMRO, is struggling to reduce costs. It recently merged its corporate and investment banking arms, took the axe to its Japanese operations and similar outlets in another ten countries, and is now shedding staff by the bus-load in it Netherlands home market. The bank says a total of 6673 ABN AMRO staff members have expressed their intention to make use of the voluntary staff departure scheme offered by the bank. That this reads like good news underlines how bad 2001 was for the bank. It saw revenues up just 2 per cent, operating profits down by 3.9 percent, and provisions against bad debts up massively (“due to the failure of several major corporates in the fourth quarter”).
Staff clearly lack confidence in the future of the bank. The voluntary redundancy scheme has already met 80 per cent of its February 2001 target of losing 6,250 full-time equivalents within three years. Since only 1,078 of the departees were close to retirement, the Dutch bank is having to pay the other 5,595 to go away. It is not cheap. Of the total restructuring provision of the group of EUR 900 million, about EUR 220 million will be used for the “re-positioning” of Dutch operations. From 2004 on the restructuring of the Netherlands Business Unit will yield annual net cost savings of about EUR 400 million.
The costs reflect the usual European constraint of powerful trade unions. A “social charter” agreed with employees provided guaranteed employment guarantee up to 2004. Under the scheme now agreed with the unions, those who opt for voluntary departure receive a payment equal to at least one month’s salary per year of service. Employees older than 57 and a half were offered the option of early retirement. Staff was given from 15 September until yesterday to take advantage of the scheme. The core of the present agreement is to offer the option of an incentive payment to as many staff members as possible. About three-quarters of the employees were given the opportunity to opt for the scheme initially, with the rest retained to, as ABN Amro puts it, “safeguard the continuity of our business services, particularly those involving contacts with clients.”
“I am relieved that this important phase of the process is now behind us,” said Floris Deckers, CEO of the Business Unit Netherlands of ABN AMRO. “After all, the choice we put to our staff was one with far-reaching implications. It does not surprise me that many staff members have opted to leave under the conditions we offered. It underlines the quality of the scheme presented to them. Now, we can take the next step in building our new organisation. While staffing the organisation we will still be confronted with some difficult decisions. We will do everything in our power to complete this process as quickly as possible, but without forgetting to show all due care and consideration.”
By 2003 a “new service concept” will be implemented throughout the Netherlands. It means that ABN AMRO will service clients from 570 bank branches and 80 advisory branches backed by internet, call centres and cash dispensers. By then the staffing of the Business Unit Netherlands will total just under 23,000 FTEs.