Saturday 2011-08-13

The Perfect Prey by Jeroen Smit

The fall of Dutch megabank ABN Amro as told by someone who thinks it's completely a human story and there's one guy at fault.

What really divided the ABN managing directors from the Amro managing directors was the way they approached credit...
It was an axiom at ABN that one bad credit decision could break a bank. That's why the ABN board met twice a week, every Tuesday and Friday morning, to review the latest credit applications...
Every credit application over 100 million guilders was referred to the complete managing board...
The Amro top considered this hopelessly outdated; the experts were the bankers, not the board.
-- Chapter 1
On an expedition to Mars, the astronauts meet some Martians who ask them... how we do it. 'Well', says the expedition leader to his female assistant, 'shall we show them?' So they do, and as they reach the end, they start to go faster, as you do. When they finished, the Martians were impressed, but immediately wanted to know: 'So where's the baby then? 'That takes another nine months,' the leader replied. To which the Martians respond, 'So why were you in such a hurry towards the end?'
-- Chapter 1
Some managing directors wondered whether McKinsey might not have been a little too statistical, too cold. But the board preferred it that way. They considered the soft side of the merger a danger. The word culture was taboo, precisely since the cultural differences were so great.
-- Chapter 1
Major companies such as Unilever, Shell, and Ahold had been advising ABN and Amro bankers for years to step up the pace. Equity was becoming an increasingly important source of finance for activities.
-- Chapter 1
In Vietnam, for example, the bank had trouble getting a banking license. It would be possible to obtain one fo a bribe of around 35,000 dollars, but Kalff and Drabbe refused absolutely to travel down that road. Drabbe asked country manager Boudewijn Poldermans to find out a little more about the governor of Vietnam's Central Bank. It turned out that he played the violin. During a visit to the Netherlands, Drabbe organized a performance by violinist Emmy Verheij at a dinner at the Muiderslot castle. The governor was deeply moved. A few weeks later, the bank had its license.
-- Chapter 4
Maurice Lippens came from a well-known French-speaking aristocratic family living in Flanders which was one of the founders of AG insurers in the early nineteenth century. Although his father, mayor of the Belgian town of Knokke, considered the commercial world a nest of thieves and had warned his son against becoming involved, he had followed his legal studies by doing an MBA at Harvard.
-- Chapter 4
They were already paying 25 billion for a bank (Generale Bank) that made less than a billion guilders profit...
And so the board accepted the Fortis offer, raised by 15 percent to almost 26 billion guilders.
-- Chapter 4
Value creation would therefore now be central.
-- Chapter 7
Less than a year after the takeover, Fortis was on the verge of bankruptcy. Last year's predator had itself become a prey.
-- Epilogue