ABN AMRO to slash 15 per cent of jobs

ABN Amro has announced that it will cut up to 15 per cent of all jobs, amounting to more than 2,700 jobs, in the next four years. This move is part of its strategy of reducing operating costs by €700 million by 2024 to €4.7 billion.

Currently, ABN Amro employs more than 18,000 FTEs, the lion’s share in the Netherlands. By 2022, the reorganization will be complete and most of the 2,700 jobs will have disappeared. The company will also reduce the number of offices, in line with the trend of tech-savvy customers increasingly managing their finances online, rather than going into a branch.

New strategy
The cost-saving measures are part of the new strategy that the bank has introduced in recent months under the leadership of CEO Robert Swaak, who took office this year. This summer ABN Amro announced the drastic reorganization of the problematic business division. The bank had decided to discontinue risky activities, such as commodity trading. It also cut ties with a third of its corporate clients. The bank had posted a loss in the first half of the year after taking hits with individual corporate clients. This meant that the once ambitious bank, that wanted to conquer the world in the years before the crisis, was withdrawing its operations from outside Europe. In Northwest Europe, the bank will seek to bolster lending in the energy and digital sectors.

The bank’s strategy for growth includes providing more mortgages in the Netherlands. It also plans to increase its market share among customers in small and medium-sized businesses. Furthermore, the bank seems to be betting on private banking for wealthy individuals, specifically the younger generation.

Although the bank will continue its policy of paying out at least 50% of profit in dividends, any other shareholder remuneration above that will be paid via share buybacks rather than dividends payments, as was the case in previous years. At the moment ABN Amro has a higher financial buffer than is required by law. The company’s costs are expected to rise to €5.3 billion next year, from €5.1 billion in 2020 due to an increase in regulatory levies, anti-money laundering costs and strategic investments.

Buffering the consequences
The bank understands that its employees will be affected. “We will limit the consequences to our employees through natural attrition and retraining for roles in which we foresee shortages in the coming years,” said the CEO in the press release. The bank said that there would be a demand for new staff in the department countering money laundering and other fraudulent activities. A chunk of its employees might be retrained to take up these positions.

Gustav Mahlerlaan HQ on sale
As part of managing its costs, the prestigious headquarters on Gustav Mahlerlaan near the financial centre of the Netherlands, Amsterdam Zuidas, will go on sale in 2025. ABN Amro is expected to realize a make profit with this sale. But for the time being, ABN Amro will still lease this space. After 2025, all of the employees not affected by the reorganization will have been relocated to a new office.

As for the new home, rumours have it that the bank is planning to move back its former headquarters on Foppingadreef in Amsterdam Southeast. The building is currently being renovated into a climate-friendly space and can serve as an iconic home base for the 1000 employees who are now working in Amsterdam.

Other banks follow suit
In recent months, ABN Amro’s competitors have also announced mass layoffs. For example, ING is cutting 1,000 jobs worldwide. The largest bank in the Netherlands wants to freeze salaries for several years. Rabobank will close approximately half of its 230 branches. The reasons given by these banks are more or less the same as those of ABN Amro: customers are more often arranging their finances digitally.

Although ABN Amro said that it would rigorously simplify its operations, it warned that profits would not return to pre-pandemic levels for the foreseeable future.

Written by Stephen Swai