Credit Risk Management at ABN AMRO

Abstract

Holland’s leading bank, ABN AMRO operates more than 800 offices at home and another 2,600 in 75 other countries. In the US, ABN AMRO owns Chicago-based LaSalle Bank and Standard Federal Bank, one of Michigan's largest banks.

ABN AMRO’s comprehensive risk management framework aims at combining centralized policy setting with broad oversight, supported by risk execution and monitoring in the Group’s network. ABN AMRO’s goal is to identify and analyze risks at an early stage; to set and monitor prudent limits; and to learn and evolve continuously to help it face a volatile and rapidly-changing risk environment. The case discusses in detail how ABN manages credit risk.

INTRODUCTION

Holland’s leading bank, ABN AMRO operated more than 800 offices at home and another 2,600 in 75 other countries.

In the US, ABN owned Chicago-based LaSalle Bank and Standard Federal Bank, one of Michigan's largest banks. ABN also had a large presence in Brazil (through its ownership of Banco Real and Paraiban) and Malaysia (where it had operated for more than 100 years). The bank was expanding its presence in the Philippines, India, Singapore, Taiwan, and Thailand. ABN had three major business segments: private clients & asset management, consumer and commercial clients, and wholesale clients, but its strategic focus was on the mid-market segment. The bank believed it had a strong and distinctive competitive advantage in this segment, where it felt it could be most profitable in the future.

GLOBAL STRATEGIC BUSINESS UNITS

Each of ABN’s Strategic Business Units (SBUs) was responsible for managing a distinct client segment or product segment, while also sharing expertise and operational excellence across the Group. These included:

• Consumer & Commercial Clients, which served almost 20 million consumer clients and clients in the small and medium-sized enterprises sector worldwide.

• Wholesale Clients, which provided integrated corporate and investment banking solutions to more than 10,000 corporate, institutional and public sector clients in nearly 50 countries.

• Private Clients, which provided private banking services to wealthy individuals and families, and had EUR 115 billion assets under administration in 2004....

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        Case Code   FINA021
   Case Length    15 Pages
              Period    -
 Organization     -
        Pub Date     2005
Teaching Note    Not Available
     Countries    Netherlands
      Industry    -

Issues

• How Risk is being governed in ABN AMRO.
• How Credit Risk Management is done in ABN AMRO

ABN AMRO, Credit Risk at ABN AMRO, Risk Management & Internal Controls at ABN AMRO, Organization of Group Risk committee at ABN, Global Strategic Business Units at ABN AMRO, Risk Framework at ABN AMRO, Organization of Group Asset & Liability Management at ABN AMRO, Management of Commercial credits at ABN AMRO, Commercial Portfolios at ABN AMRO and Consumer Portfolios at ABN AMRO.

Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.