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					The novel matrix-type business
structure for corporate banking.

Case of ABN-AMRO
Table of contents

1 ABN AMRO

2 ABN AMRO‟s Structure

3 Client Segmentation & Product Business Units

4 Profitability, Revenue Control & Capital Allocation

5 Basel II – Risk Advisory Services




                                                        2
1
    ABN AMRO




               3
                                  Introduction

   Well-positioned Bank(2)             ABN AMRO is the largest Dutch bank and one of the world’s leading financial institutions uniquely
                       Ranking          positioned as number one foreign bank in the US & Brazil with one of the strongest balance sheets in
Total assets                            the industry
- Worldwide                  18
- European                   11        We believe in building strong teams and strong relationships. The rich diversity of cultures, expertise
Tier One Capital                        and experience we possess is harnessed to work on behalf of our client base.
- Worldwide                  20
- European                   11        Our goal is to create value for our clients through a constant focus on their financial services needs.
                                       Our network spans the globe, with over 3,000 branches in 59 countries and territories, and about
     Solid Credit Rating                100,000 employees
                   Long-term
Moody’s                  Aa3
                                       We operate in three distinct customer segments: Wholesale Clients, Consumer and Commercial
Standard & Poor          AA-            Clients, Private Clients and Asset Management
Fitch IBCA               AA-
                                       ABN AMRO is now Europe’s 11th largest bank and the world’s 18th largest bank by total assets, with
                                        a 180-year history of financing international trade.
     Global Resources(1)
                                       ABN AMRO has more than 90 years of experience in Latin America with presence in 9 countries with
Employees worldwide 97,000+
Branches and offices  3,000+
                                        more than 30,000 employees in our region.
Countries/territories     59




   Strong Balance Sheet(1)

                       EUR (bn)
Total assets              701.8   (1) 31 December 2004
Group capital              33.2   (2) The Banker, July 2004
Risk weighted assets      231.6   (3) Federal Reserve Board report on US offices of foreign banks, April 2005




                                                                                                                                                  4
                            Wholesale Clients Global Network


With specialists in all
major sectors and a
broad product range,
ABN AMRO has the
capacity to provide local
and global execution
capability for complex
cross-border deals




North America

United States                                                                   Middle East and Africa   Japan
Canada                      Europe           Luxembourg                                                  Kazakhstan
                                             Netherlands                        United Arab Emirates     Korea (South)
Latin America               Austria          Norway                             South Africa             Malaysia
                            Belgium          Poland                                                      New Zealand
                            Czech Rep.       Portugal
Argentina                                                                       Asia Pacific             Pakistan
                            Denmark          Romania
Brazil                                                                                                   Philippines
                            Finland          Russia
Chile                       France           Spain                              Australia                Singapore
Colombia                    Germany          Sweden                             China                    Taiwan
Mexico                      Greece           Switzerland                        Hong Kong (China)        Thailand
Venezuela                   Ireland          Turkey                             India                    Uzbekistan
                            Italy            United Kingdom                     Indonesia                Vietnam

                                             Rep offices in Ecuador and Egypt
                                                                                                                   5
C&CC: Commercial & Consumer Clients‟ network




              North America                    Asia
Europe
              United States                    Greater China
Netherlands                   Middle East      India
Belgium       Latin America                    Pakistan
                              Saudi Arabia     Taiwan
              Brazil          U.A.E.           Indonesia
              Paraguay                         Singapore
              Uruguay



                                                               6
                          Future investments and acquisitions aimed at growing revenues


                                                                                      THE NETHERLANDS
                                                                                      Top commercial bank for large
                                                                                      SME and affluent clients
THE US MIDWEST

Top ranking US regional
franchise




BRAZIL
                                                                                                       INDIA
Top 3 privately owned bank                                                                             GREATER CHINA
#1 foreign bank in Brazil                                                                              New Growth
#4 non-state-owned bank in                                                                             Markets
Brazil
#5 bank based on total assets
9 million clients
5,400 branches and mini
branches                           Expanding our sweet spot through growing our positions in existing home
28,000 employees                    markets and, if value creative, by adding new home markets
                                   Improving our product capabilities through selective investments




                                                                                                                       7
                     ABN AMRO Presence in Latin America

    Mexico                                                             Venezuela
    Est. 1993                                                           Est. 1995
Assets: EUR 998mi                                                   Assets: EUR 177mi
  Employees: 80                                                       Employees: 60


                       Colombia                                                           Brazil
                         Est.1997                                                        Est. 1917
                    Assets: EUR 577mi                                                Assets: EUR 20bi
                     Employees: 120                                                   Branches: 2,000
                                                                                     Employees: 28,000

   Ecuador
   Rep Officer
                              Paraguay
                             Branches: 15                                                  Uruguay
                            Employees: 300                                                  Est. 1952
                                                                                          Branches: 23
                                                                                         Employees: 540

                                              Chile
                                             Est. 1995              Argentina
                                         Assets: EUR 870mi
                                                                     Est. 1914
                                          Employees: 160
                                                                 Assets: EUR 237mi
                                                                  Employees: 180


Of the 9 countries in Latin America where ABN AMRO is present, Brazil distinguishes itself with
around 5,400 selling points and full retail banking capabilities.


                                                                                                          8
2
    ABN-AMRO‟s
    Global Structure


                       9
            Optimising the execution of this strategy requires some changes



                                  Old structure...


                                 Managing Board

 WCS         NA         NL             Brazil         New         PC         AM
                                                     Growth
                                                     Markets




Global
           Products   Products       Products        Products   Products   Products
Markets

Services   Services   Services       Services        Services   Services   Services


                             Group Shared Services

                                 Corporate Centre


                                                                                      10
                      Leading to a more integrated Group structure

                                                                    Better co-operation and
                                                                          alignment in
                         Managing Board                                Commercial and
                                                                    Consumer Segments to
 WCS         NA           NL       Brazil      New         PC          drive growth and
                                              Growth
                                              Markets                     profitability
                       Consumer Segment
                       Commercial Segment
                                                                        A Group Services
Global                                                                    A Group Services
           Products    Products   Products    Products   Products      concept overseeing
Markets                                                                  concept overseeing
                                                                           all services
Services   Services    Services   Services    Services   Services            all services
                                                                       and operations (BUs
                                                                        and operations (BUs
                                                                              + GSS)
                       Asset Management                                         + GSS)

           Transaction Banking (incl. Trade Finance)
                                                                           „Transaction
                      Group Shared Services
                                                                         Banking‟, a global
                        Group Functions                                      payments
                                                                           organisation
                                                                         servicing all BUs
                                                                                              11
                              In-Country Governance for WCS Branches


                                                                                                                                    Country Executive Team

                                                                     Country Executive
                                                                                                                              Chief Operating
     In-Country Value Centre Heads
                                                                                                                                  Officer

                                                                                                    CRO                                         Finance
                                                                                              Corporate Centre
 Global Markets                     Structured
                                    Derivatives
                                                                                              Compliance                                         OPS
                                                                                              Corporate Centre
   Commercial                     Global Clients
    Banking                                                                                         Audit                                          IT
                                                                                              Corporate Centre
                                                                                                    Where regulations allow
                                                                                                                                                Property

                                                                                                                                                 Legal

                                                                                                                                                Comms

                                                                                                                                                  HR
Reporting:
• All in-country VC heads report directly to the CE on strategic and country related issues.
• The COO reports to the CE on strategic and country related issues.
• Country Executive functionally reports into the VC and into the Regional Network Manager (RNM).
• CRO, Compliance and Audit: functional reporting lines to Group Functions




                                                                                                                                                           12
3
    Client Segmentation
    & Product Business Units


                               13
Global Client Segmentation

Three global Strategic Business Units, each with clear responsibility for a distinct client segment


 Strategic Business       Wholesale                       Consumer and                    Private Clients and
 Units                    Clients                         Commercial Clients              Asset Management


                          Integrating the bank’s          Focusing on consumer            Combining the asset
                          global corporate and            clients and small and           gathering activities of the
                          investment banking              medium-size corporate           private banking and fund
 Target client            activities to serve             clients in selected key         management businesses in
 segments
                          corporate, institutional and    markets worldwide               an integrated global
                          public sector clients                                           business




                          corporate finance               retail products and services    investment advisory
                          financial markets advisory      fixed income                    portfolio management
                          equities                        Foreign exchange                investment funds
 Product and              fixed income                    loan products                   international estate
 service offerings
                          foreign exchange                transaction services            planning
                          working capital                                                 trusts




 “Excellence of service to our clients and leadership in our chosen markets are of paramount importance to our
 long-term successs.” Rijkman Groenink, Chairman of the Managing Board



                                                                                                                     14
                       Wholesale Clients Business Units

                                           Our sector specialists…
                                            … play a proactive role in developing
                                            relationships with clients, establishing a
                                            thorough understanding of client
                                            business objectives and challenges

                                             … work closely with our product experts
                                             to establish the best mix from our full
                                             range of products and services
Financial Institutions and Public Sector
                                           That means we always offer advisory and         Healthcare & Chemicals
                                           financing responses custom-cut to the
                                           needs of the client




                                                Industrials
                                                                                  Integrated Energy
   Telecom, Media & Technology

                                                                                                              15
                            Product Business Units

                            Wholesale: the best of both worlds
                                As a wholesale bank, we offer a full spectrum of products of both investment banking and commercial
                                 banking products to our chosen clients

                            Customised product offering
                                Our client-facing teams work proactively to develop a strong relationship with our clients, establishing
                                 a thorough understanding of their objectives and challenges. They work together with our product
                                 experts to tailor made the advisory and financing solution that suits you best our customer base
                                                                Quality product offering

       corporate finance and
                                            equities                            fixed income, FX and futures                         working capital
    financial markets advisory

      strategic advisory             sales                        government bonds               loan syndication              payment/collection
      mergers and                    trading                      corporate bonds                credit structuring             services
       acquisitions                   research                     bank capital                   portfolio management          liquidity management
      global financial               derivatives                  asset securitisation           specialised lending            Services
       engineering                    equity capital markets       leveraged finance/              products                      trade payments and
                                       through                      high yield                     project finance and            documentary products
                                       ABN AMRO Rothschild          interest rate derivatives       structured debt               global custody through
                                                                    credit derivatives             structured trade finance       ABN AMRO Mellon
                                                                    FX                             asset-based lending           securities clearing
                                                                    FX options                     futures                        services
                                                                    money market                                                  commodity finance




                                                                                                                                                         16
                      Corporate client service model

Our Coverage                                                                      Client
delivers key benefits
to clients:                                             continuous
                              Relationship banker      communication
   A single point of
    contact - a
    „gateway‟ to all of
    the bank’s
    products                                                                 service delivery
   Client-centric
    model streamlines                                                 Products
    product delivery
                                Co-ordination              corporate finance
    and commitment
    times                                                  equity capital markets
    Feedback loop to            Capital
                                                          equities
    ensure consistent           allocation
                                                           private equity
    quality of service
                                Sector                     fixed income
                                expertise
                                                           FX & futures
                                                           working capital

                                                                                            17
                          Focus on mid-market segments will lead to profitable revenue
                          growth

                                                                       Focus on mid-market segments in
                         Product innovation                             which we have a strong and distinct
                                                                        competitive advantage
                                                                       Focus will lead to further improvement
                                                                        of product offering and optimisation of
                                                                        service delivery for our mid-market
                           Top
                                                                        clients
                          Private                                      Profitable revenue growth to be
                          Clients   MNCs                                achieved by

          ‘SWEET
                                                                        –   adding new clients to our mid-
          SPOT’                                                             market segments
                        PC /        Mid-
                    Mass Affluent   Market/FIs                                   *    in existing home markets

                                    Small                                        *    by entering new home
                                    Business                                          markets
                      Mass Retail
Feeder                                                Provider of       –   enlarging share of wallet of our
channel                                               scale                 existing clients in the mid-market
                   Consumer              Commercial
                                                                            segments

                                                                                 *    by better leveraging
                                                                                      product capabilities



                                                                                                                  18
4
    Profitability,
    Revenue Control &
    Capital Allocation


                         19
                 Wallet Sizing - How to measure client potential


   Wallet sizing is the exercise of estimating, via client interviews and market data, how
    much is the total amount of financial services to be acquired by a client.
   After establishing the wallet potential the client service team estimates how much of
    this wallet could be won and which strategy need to be set to achieve it.
   After agreeing on the client strategy joint targets are set by the relationship manager
    and the product teams that will be the basis of their performance review
   Client results are tracked via a MIS system that recognizes 100% of the revenues for
    the relationship manager despite of the product or country where it is booked.
   Capital & Credit decisions are made taking in consideration such wallet exercise
    among other metrics like Economic Profit, Rating outlook, Sector concentration etc...
   Main benefit of such wallet exercise is to be the basis of a client led strategy that
    emphasiszes long term relationship gains instead of short term product returns.




                                                                                              20
                                        Economic Profit as Fundamental Driver


Economic Capital (EC) = The economic capital expresses the risk on the transaction. Given a confidence level
  of 99.95% (equates to a A- rating), it is the maximum amount of loss likely to occur. It is determined using
  Monte Carlo simulation that allows for incorporation of portfolio specific features such as diversification by
                                            region and industry sectors.

Credit Income (Revenue on Facility or Relationship)

 - Operating Costs (Per Performance Contracts)

 - Provisions for Loan Losses (Expected Loss)

 - Taxes (@33%)

Net Income

 - Capital Charge (Ke * Economic Capital)

Economic Profit (EP)


RAROC = Net Income / Economic Capital

                                                                                                                   21
                       Capital Allocation - Governance Structure

                                          Global Capital Management
                                              Committee (GCMC)

                                            Regional Capital Allocation Committees




                                           In-Country Capital Allocation Committees


Guiding Principals:
   Total capital pot allocated per Region via a Steering Committee
   Capital reallocation per region effected by way of GCMC recommendation
   Capital pots per country allocated by Regional Capital Allocation Committee (CAC)
   Capital deployed via scheduled Regional and In-Country CAC’s
   No incremental capital to be allocated to client relationships generating revenue =< EUR 25 thd / exceptions
    considered case-by-case / new relationships must generate EUR 25 thd in year one.
   Defined decision rights for Regional and In-Country CACs
   Risk Weight Assets to be managed globally across all business units by Portfolio Strategy & Execution
   Where capital relates to a sector in breach of global portfolio parameter a special allocation approval is required
   Dedicated resources, like compliance & risk & portfolio management officers, will be put in place to manage the
    capital allocation process in conjuction with the business areas;



                                                                                                                          22
              Revenue Control - Shadowing


              Client View                             Booking Country View                    Commercial vs. Product View




                                                        Total Country‟s Revenues
          Country A                                                                Client A




                            Total Client‟s Revenues
                                                                                                                                   Product A




                                                                                                           Segment B


                                                                                                                       Segment C
                                                                                              Segment A
          Country B                                                                Client B                                        Product B
Reports
          Country C                                                                Client C                                        Product C


          Country D                                                                Client D                                        Product D


           Senior RBs                                       Country Reps                                  Global Product
                                                            Network Manager                               Heads
Users                                                                                                     SRBs




                                                                                                                                           23
5
    Basel II
    Risk Advisory Services


                             24
Overview of Basel II
      Basel II is all about creating a better link between regulatory capital and risk and enhancing
       market discipline through more detailed disclosure.
      The main business benefits for the bank are:
         –   further improvement in our risk management processes,
         –   the potential for lower capital charges,
         –   greater insight into risk adjusted pricing,
         –   capital allocation and active portfolio credit risk management.




                                                                                                        25
                              Risk Advisory Services

  Our strategic goal of          ABN AMRO employs more than 700 risk professionals in 58 countries, and
     becoming Basel II
                                  possesses some of the most advanced risk management systems of any
  compliant under the
         Advanced IRB             financial institution in the world
approach is supported            The Bank is among the global leaders in managing the Basel II evolution,
 by our own renowned
                                  witnessed by the membership of our CFO, Mr. Tom de Swaan, on the Bank
      risk practitioners
                                  Liaison Committee of the Basel Committee
            ABN AMRO             Through its dedicated Risk Advisory Services group, ABN AMRO is able
   commitment to risk
        management is             to share its risk management and Basel II expertise with select clients
recognised by leading
                                 Risk Advisory Services offers a holistic, market driven approach to Basel II
   rating agencies and
 industry publications            Advisory. The offering covers Operational, Credit and Market Risk
                                  management
Risks Waters Operational
Risk Achievement Award           ABN AMRO is positioned to offer a unique solution based on our own
2004 by Basel Alert for the
"Best Overall Back Office
                                  experience as practising in banking and risk management. ABN AMRO’s
Programme for Operational         practitioner-to-practitioner approach is a practical alternative to the systems-
Risk Management”
                                  based offerings of other Basel II consultants




                                                                                                                26
                      Risk Advisory Services
                         ABN AMRO‟s global footprint as a financial institution, coupled with strong relationships with
                         financial institution and public sector clients, ABN AMRO is able to deliver a unique advisory
                                                                      offering

Our own experience as global practitioners have created               … helping us build a commercial reputation for
  a wealth of internal risk management know-how …                      transferring that know-how to select clients

                                                         Banque
                                                         Misr
                                                    Sole advisor for         Advisor for         Sole advisor for       Sole advisor for
                                                   Restructuring and     Derivatives Trading    Risk Management        Risk Management
                                                     Risk Advisory        Set-up and ORM         implementation         implementation
                                                   Services contract       implementation

                                                                          Feb ‘05, May ‘02
                                                                           (respectively) -    April 2005 - present,     March 2005 -
                                                     October 2004 -            present,            Netherlands             present,
                                                     present, Egypt           Indonesia                                  Netherlands




                                                    Advisor for Risk      Sole advisor for      Advisor for Credit      Advisor for Risk
                                                      Management         Risk Management        Risk Management,       Management, Basel
                                                  Training Programme      implementation         Basel II scoping          II scoping



                                                                           October 2004 -
                                                  June 2005 - present,                              April 2005,           April 2005,
                                                                           present, Qatar
                                                         Egypt                                     South Korea             Taiwan


                                                                                                                                        27
Questions?




Thank You!




             28
Curriculum Vitae
Carlos Braga is the Regional Network Manager for Spanish Speaking Latin America. Responsibilities
include the coordination of the Bank’s WCS activities in Argentina, Chile, Colombia, Venezuela, Ecuador
and Mexico. He brings to ABN AMRO´s customers a diversified background as Head of Financial
Markets Latin America Business Unit (2002-2004), Head of Loan Products Latin America group (2000-
2002). Prior to this posting Mr. Braga held several postings in the product & corporate bank areas of
ABN AMRO in Brazil and US. Mr. Braga joined ABN AMRO Bank in 1988.


Mr. Braga received his Degree in International Trade Management from UCLA and his MBA from the
Instituto Brasileiro de Mercado de Capitais (IBMEC), Rio de Janeiro. Mr. Braga also has a Degree in
Economics from Facultade Candido Mendes and a Management Corporate Resources Degree from IMD
in Switzerland.




                                                                  CARLOS BRAGA
                                                                  Executive Director
                                                                  Regional Network Manager Latin America

                                                                  Tel.: 55-11-3174 7475
                                                                  fax.: 55-11-3174 7477
                                                                  e-mail: carlos.braga@br.abnamro.com

				
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