Mixed emotions
Royal Bank of Scotland's buyout of ABN Amro produces good and bad news for its Australian staff.
Staff at ABN Amro Australia probably don't know whether to laugh or cry. On the same day that Angus James was replaced as CEO by the Royal Bank of Scotland's (RBS) own man, staff were informed that their shares would be bought out by their new majority owner, but more can expect to lose their jobs.
After failing to attract the interest of Commonwealth Bank and National Australia Bank, RBS has decided on an integrations process that will see its own management put in place, the phasing out of the ABN Amro brand and what RBS describes as a "rationalisation of roles.”
RBS will buy the 23.9 per cent stake in ABN Amro held by staff because, according to RBS regional head John McCormick, the RBS culture does not operate with "abnormal or unusual compensation programs." RBS, it seems, like to operate with a fairly vanilla salary and bonus scheme.
There has been considerable speculation on what the 23.9 per cent stake is worth, and whether there was a 'make-good' agreement struck with previous owners ABN Amro NV when staff last bought shares early in 2007.
If there is, there would also appear to be a performance measure included in any buyout agreement, which is why the buyout with RBS will not occur until after the 2008 calendar results are known.
About 450 of ABN Amro's 700 staff in Australia and New Zealand own shares in the company. Based on the reported CBA and NAB offers, their stake is worth a combined $100 million, but based on the share purchases made last year, it could be closer to $200 million.
In 2007, ABN Amro lifted profits by 50 per cent to $131 million. Its slide down the advisory and ECM tables in 2008 suggest staff may have been distracted by the ownership events of the current year. McCormack says putting the buyout off until after the end of the year will give staff the opportunity to "get focused again".
ABN Amro Australia also owns 50 per cent stakes in the ABN Amro Morgans and ABN Amro Craig retail broking joint ventures in Australia and New Zealand. McCormick says these will not be bought out at this time as the bank has "bigger fish to fry.”
McCormick says he cannot quantify any future staff losses, but says that RBS has become "quite good at integration” following its merger activity of the past few years.
Indeed, Australia and New Zealand are the last outposts of the ABN Amro empire to be subsumed by RBS since its involvement in the three-way buyout of the Dutch giant.
McCormick says RBS is "firing the gun” – as it were – on the integration process today. "We're ready … we've got integration teams on the ground. I've been through four M&As myself, we're good at optimisation and efficiency, there's a lot of costs to be taken out.”
He says some functions may move to regional hubs in Asia, echoing the comments of Merrill Lynch and its staffing changes last month.
One plus for the ABN Amro M&A and ECM teams is that RBS has little presence in that sector at the moment but says it is keen to grow that part of the business.
The new head of what is now RBS Australia is Stephen Williams, whose background is in corporate and structured finance, and has headed the 100 strong RBS team in Australia for the past five years.
After failing to attract the interest of Commonwealth Bank and National Australia Bank, RBS has decided on an integrations process that will see its own management put in place, the phasing out of the ABN Amro brand and what RBS describes as a "rationalisation of roles.”
RBS will buy the 23.9 per cent stake in ABN Amro held by staff because, according to RBS regional head John McCormick, the RBS culture does not operate with "abnormal or unusual compensation programs." RBS, it seems, like to operate with a fairly vanilla salary and bonus scheme.
There has been considerable speculation on what the 23.9 per cent stake is worth, and whether there was a 'make-good' agreement struck with previous owners ABN Amro NV when staff last bought shares early in 2007.
If there is, there would also appear to be a performance measure included in any buyout agreement, which is why the buyout with RBS will not occur until after the 2008 calendar results are known.
About 450 of ABN Amro's 700 staff in Australia and New Zealand own shares in the company. Based on the reported CBA and NAB offers, their stake is worth a combined $100 million, but based on the share purchases made last year, it could be closer to $200 million.
In 2007, ABN Amro lifted profits by 50 per cent to $131 million. Its slide down the advisory and ECM tables in 2008 suggest staff may have been distracted by the ownership events of the current year. McCormack says putting the buyout off until after the end of the year will give staff the opportunity to "get focused again".
ABN Amro Australia also owns 50 per cent stakes in the ABN Amro Morgans and ABN Amro Craig retail broking joint ventures in Australia and New Zealand. McCormick says these will not be bought out at this time as the bank has "bigger fish to fry.”
McCormick says he cannot quantify any future staff losses, but says that RBS has become "quite good at integration” following its merger activity of the past few years.
Indeed, Australia and New Zealand are the last outposts of the ABN Amro empire to be subsumed by RBS since its involvement in the three-way buyout of the Dutch giant.
McCormick says RBS is "firing the gun” – as it were – on the integration process today. "We're ready … we've got integration teams on the ground. I've been through four M&As myself, we're good at optimisation and efficiency, there's a lot of costs to be taken out.”
He says some functions may move to regional hubs in Asia, echoing the comments of Merrill Lynch and its staffing changes last month.
One plus for the ABN Amro M&A and ECM teams is that RBS has little presence in that sector at the moment but says it is keen to grow that part of the business.
The new head of what is now RBS Australia is Stephen Williams, whose background is in corporate and structured finance, and has headed the 100 strong RBS team in Australia for the past five years.
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