March 19, 2007 / 4:51 PM / 12 years ago

ABN AMRO's Groenink faces tough times

AMSTERDAM (Reuters) - ABN AMRO AAH.AS boss Rijkman Groenink has long been described by the financial press as “tough” and “ruthless” but with his bank under pressure to break up or sell itself, those labels may no longer apply.

Rijkman Groenink, CEO of ABN AMRO, speaks during the presentation of the 2006 full-year results in Amsterdam February 8, 2007. Groenink has long been described by the financial press as "tough" and "ruthless" but with his bank under pressure to break up or sell itself, those labels may no longer apply. REUTERS/Toussaint Kluiters

British hedge funds The Children’s Investment Fund Management (TCI) and Toscafund are calling for a shake-up at the Netherlands’ biggest bank, and Barclays (BARC.L) has approached ABN with a merger blueprint that would create a global bank worth about $160 billion, sources familiar with the matter said.

The possibility of ABN being broken up or sold to a bigger bank has also attracted the attention of the Dutch central bank (DNB), where governor Nout Wellink said last month TCI’s initial letter to the bank was a “bridge too far.”

Now, Groenink, 57, will have to focus his energies on placating activist shareholders, who note ABN’s share price has lagged its peers since he took the top position at the bank in 2000.

It wasn’t always this way.

In 2004, Groenink was named “European Banker of the Year” by the Group of 20+1, an association of foreign finance and business correspondents.

In 2005, when ABN finally gained control of Antonveneta, Groenink proved his relentless pursuit of the Italian bank could successfully crack into the country’s cozy banking establishment.

Antonio Fazio, the Italian central bank chief who opposed the deal, resigned after allegations he had unfairly favored Italian banks in the bidding for Antonveneta.

After winning Antonveneta, Groenink stood atop a far-flung banking empire that included solid businesses in Brazil, the U.S. midwest and Italy, which he bet — along with a restructuring to focus on small- to mid-sized banking clients — would fuel growth outside ABN’s mature Dutch market.

But the cost of integrating Antonveneta and the slow pace of cost-cutting at ABN has led to questions over whether ABN should stick to its current strategy or consider more radical steps.

Acknowledging such concerns, Groenink promised in January 2007 would be a “year of delivery” and the bank would have to work harder to reach its goal of being in the top five in its peer group, based on total shareholder returns, by end-2008.

“Is it not possible that Rijkman Groenink already knew something was brewing amongst the shareholders of ABN AMRO?” asked the Dutch magazine FEM Business.

“The undervalued shares, the lack of focus and the cost levels at the bank only show it hasn’t gotten the hang of things. These are great ingredients for a shareholder revolt.”

LONG HISTORY

When Groenink, who once spent three months driving a Land Rover from the Middle East to India, took charge of ABN in May 2000, he inherited a bank with a history stretching back to 1824.

ABN AMRO was first formed as the Netherlands Trading Society by King William I in order to help the country’s trade and industry recover after being ruled by the French. The bank financed plantations in the Dutch East Indies.

The early banking operations became the Algemeen Bank Nederland (ABN) in 1964.

Groenink joined the Amsterdam-Rotterdam (AMRO) Bank in 1974 and worked his way up to become a member of the bank’s managing board in 1988. Groenink studied law at Utrecht University and has a degree in business administration from Manchester Business School in Britain.

In 1991, ABN and AMRO merged to create the biggest bank in the Netherlands.

Groenink has long been described as a tough banker who was determined to get on the board at AMRO Bank. His negotiating skills impressed top management when the bank ran into problems with a debtor. The debtor had Russian ships as collateral, the contents of which Groenink sold to help pay the debt.

The Dutch media called Groenink “The Terminator” for a while after he took the top job and launched a wide-reaching restructuring to modernize business practices.

Groenink was named a knight in 2004 by Queen Beatrix.

Earlier this month, Royal Dutch Shell Plc. (RDSa.L)(RDSb.L) said it planned to appoint Groenink as non-executive director at the oil giant.

But the Dutch press, pointing out Groenink’s duties at Shell could take up as many as 30 days per year, have criticized the appointment at a crucial juncture for ABN AMRO.

“What inspired Rijkman Groenink to become a director at Royal Dutch Shell?” asked Elsevier magazine, saying the top executive of a bank under attack should not be distracted by other pressing duties. “Groenink’s timing is remarkable.”

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