I am a customer of ABN AMRO for more than 40 years. Last Friday I received a letter from ABN AMRO. They told me that the local branch office of ABN AMRO will be closed and integrated into a local branch office of Fortis.
One day later negotiations started to save Fortis from bankruptcy. Today I read that ABN AMRO has to be sold to another bank. This will not solve the problem at all. It will speed up the Process of Desintegration of the Banking Industry that has started ten years ago.
Just one year ago I wrote three blogs about the Merger of Fortis and ABN AMRO. Based on my own experience with the Merger of ABN and AMRO I predicted a possible failure of this merger. I predicted a possible failure because I did not believe the Technical Infrastructure and the Culture of both banks could be easily matched. I was Right. The Credit Crunch was the Cause of the Downfall but the Culture and the IT-Systems were the real reason. The Aim of Management was to make Big Deals (to get Big Bonusses) and the Systems were unable to provide the Right Data.
I have been working in the Money Market for a long time. In my opinion the biggest problem in the Banking Industry is the relationship between the Accountable, Bookkeeping, Systems and the Activities of Dealers. A small part of the Dealers are and were taking Enormous Risks by creating very complicated financial constructions (Derivatives). The Auditors (and the Management) of Banks have lost Oversight a very long time ago. This problem increases in severity when banks are merged.
Every time when a New Technology is implemented the Quality of the ICT-systems deteriorates. This has happened so many times that nobody really understands what the IT-Systems are really doing. Every time when a merger is accomplished the financial data of a bank (or other company) deteriorate. Two of more deteriorated systems are connected creating a bigger mess. Every time when a merger is accomplished the people who have an understanding of the ICT-systems know less about the Systems.
When a Merger takes place the motivated and skillful employees leave the “sinking ship”. The people that remain become “apathic”. They perform their duty in a “nine to five”-mode. Innovation stops. External advisory companies (or worse) outside outsourcing companies take over the maintenance and the development of the software. The quality of the software deteriorates again. The problem increases when packages or software layers are implemented. This happened in every bank around the world.
When I worked with ABN AMRO the biggest mess in IT was always created in the US. The main reason was the “opportunistic” attitude of the Management or the entrepeneurs attitude of the Management. They experimented with everything they could find but never finished anything. The US Financial System was far behind the Dutch Financial System in terms of Products and Supervision. Everybody believed the US was the most innovative in everything but they were certainly not the most advanced in Banking and IT.
ABN AMRO was one of the bad performers in the Consumer Banking Industry in the Netherlands. The personnel of the Bank were not motivated for a long time. The main reason was the Management. Everything was decided at the top in big Staff Departments. The Branches were forced to implement what they had designed.
The Management of the Bank loved to do Big Deals with Big Companies. ABN and AMRO were Deal-Making companies and were forced to move into the Consumer Market when the employees of all the companies in the Netherlands were forced to open bank-accounts. The Customer was never priority number one.
The decision structure of the Bank was highly complex and changed all the time. Employees at the branches were not allowed to take initiative. When they had taken initiative it took a long time before the decision was made. Most of the time the answer was negative.
The forced merger with Fortis decreased the motivation of the employees. It increased the complexity of the IT-Systems and the decision structure.
Fortis needed money and many parts were sold to other banks. Every time the Organization and the ICT-systems of the bank had to be divided in many parts. Before this process was even settled a new split was announced. This process was repeated until today.
The Consumer Banking Division of ABN AMRO, the “beautiful pearl” Fortis was after, was carefully protected. The integration of this part with Fortis proceeded. Many people moved to Brussels to create and implement a plan. Many outside advisors earned a lot of money again. Nobody had any oversight. A few weeks ago somebody finally decided to merge the branch-offices. They created new organization structures, appointed new managers, talked with the employees and send an announcement to their customers. This announcement was received last Friday! Two days later all the projects have been stopped and the employees of Fortis are leaving ABN AMRO. Nobody knows what to do!
The financial people were constantly trying to understand what the Risks were. Everytime a new problem arose and the Board had to take action. The message to the outside world changed all the time and the investors lost their faith in Fortis. The End of the (Credit) Line was reached last Friday!
A few days ago somebody decided ABN AMRO had to be sold to another bank to create enough cash to pay the current debts. The process of integration has to be reversed and a new process of integration has to be started with another Bank.You don’t have to be an expert to understand what will happen. The end of this process will be Total Chaos.
I am not afraid I will lose my Savings. The Government will take care.
I am not afraid to lose my shares. I have sold them a long time ago.
I am not afraid the bookkeeping systems of the Bank will finally break down and ABN AMRO will deny I am a Customer or present completely different data about my savings-account.
I am sure many things will go wrong. During my time as a customer of ABN AMRO the amount of mistakes that were made increased. Most of the mistakes were small but some of them really cost me a lot of time and money.
I am afraid nobody will be able to help me when things go wrong. I just want a little bit of Service. Nothing More. I have decided to leave ABN AMRO. I am moving to RABO-bank.
I hope they will not buy ABN AMRO or merge with another bank. If this happens I have to find another Bank but I really don’t know where to go. At that time I probably have to buy Gold or another Object that keeps its value a long time ago. I really don’t know what will be valuable in the future.
Perhaps I have to start a farm and grow my own food at a place that will not be affected by the rising of the sea-level or big tornado’s or big earthquakes or heavy rain or intense drought or intense cold when the Ice-Age starts.
LINKS
About the Merger of Fortis and ABN AMRO (Culture)
About the Merger of Fortis and ABN AMRO (Software)
About the Merger of Fortis and ABN AMRO (The Bank of the Heart)
About the Crisis in IT (About Software Layers)
About the Crisis in IT (About Outsourcing)
About the Crisis in IT (About ERP Packages)
About the Crisis in the Banking Industry (Avalanches)
About the Crisis in the Banking Industry (Fraud)
Dear Hans,
This story reads a bit like a personal vendetta against ABN AMRO. You have take every possible development around ABN AMRO over the last 10 years, and turned it into a reason why you are right in your decision to leave AA.
I may remind you that the entire financial industry is in turmoil, and ABN AMRO, with a capital ratio of over 15%, is one of the strongest players still out there. Try to find that somewhere else.
One problem is that Fortis has been blocked for a year by the European commission on the integration. Fortis had to pay their 24 Billion over a year ago, and they still have no recourse to the financial assets in ABN AMRO that are still there.
If the whole industry had not made a nose dive in the last year, things may have turned out much different than they have.
In my humble opinion, the real problem is:
– Mortgage crisis USA
– Complex real estate derivatives with too much leverage worldwide
– Lack of oversight of central banks and regulators into these products
Just my 2 cents about the situation.
kr,
Bert
PS. How’s Drupal working for you?…. Nice site.
I think that this perspective makes a lot of sense:
http://nl.youtube.com/watch?v=nj9KHJRRUbQ
Ron Paul cuts through Fed Chairman Ben Bernanke’s bullshit.
Bernanke’s answers demonstrate an arrogance and willful ignorance that’s truly breathtaking.
Has it been a long time since a US Congressman spoke intelligently about the Fed’s role in impoverishing Americans and people in other countries, through its currency manipulations?
Keep in mind: the Fed is not a government agency. It is a privately owned and controlled institution that has been given a monopoly over the creation of money for the United States, a currency that serves as "reserve currency" for the world – a violation of the US Constitution,
and the world.
Yowsa!
You are right. The reason of this personal vendetta is highly related to my experience as a customer and not as an employee. I have always enjoyed my work and I considered ABN AMRO as one of the most innovative banks in the world. As a customer ABN AMRO has made mistake after mistake and I always accepted this because I could guess the reason behind the mistake (mostly the IT-infrastructure!). I became very "angry" when "they" started to play with the bank. I can tell many stories about what "they" have done but I will not to do that. In essence "they" lost the relationship with their personnel and their customers. When I found out that playing the game became more important than taking care of the customers and the employees I decided to leave. I hoped their play would be stopped but it escalated. I believe ABN AMRO is one of the strongest players out there but I am not an investor, I am a Customer and as a Customer I just want Service nothing more. With pain in my heart I have deciced to move to another bank who is not planning a merger and is not playing with its customers and employees. If I find out they are doing the same than I really don’t know what to do. Perhaps I start a Bank, the Bank of the Heart.
The US started to play a long time ago with the "reserve currency" of the World. Their play is the main reason of the current crisis in the World. The "reserve currency" was Gold before the Second World War and this war was a result of playing with the "reserve currency" of that time. Many countries wanted to avoid this play by creating the Bretton Woods Agreemnent. The Fatal Mistake was to believe one Country would be able to "carry the World on his shoulder". I think we have to find something else that is able to "carry the World". Perhaps the World (Gaya) is capable to carry Herself. This is what is happening now. Mother Earth is taking control over her Own Destiny.
Fair enough, a bank not taking care of clients is off course a good reason to switch.
Please let us know when the Bank of the Heart starts operations, perhaps I will put some money in to it!
…if:
– You dont invest the money in CDO’s
– You don’t apply for a US license
– You do not operate the bank as a branch of an Icelandic bank, call it “Heartsave” and pay 16% interest in Cronar.
😀
Cheers,
Bert
A few years ago I decided to move back to ABN AMRO because I found out that RABO-bank is worse.