Enterprise Risk Management at ABN AMRO
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Case Details:
Case Code : ERMT-023
Case Length : 19 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : ABN AMRO
Industry : Banking
Countries : Global
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Background Note Contd...
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ABN was smaller than AMRO until it bought merchant bank Mees & Hope (1975)
followed by the purchase of Chicago-based LaSalle National Bank (1979).
After the merger in 1991, the bank turned its attention to overseas markets like
the American Midwest, where LaSalle National Bank began to gobble up competitors
like Talman Home Federal Savings (1991). ABN AMRO also took control of European
American Bank (EAB), which had sustained heavy losses in real estate deals and
Third World loans. The company bought investment banks Chicago Corp. and Alfred
Berg in 1995.
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Expansion brought internal oversight problems during the next few years. In
1995, Swiss banking authorities asked ABN AMRO to better police its branches
after the bank lost as much as $124 million due to embezzlement. In 1997, the
firm closed its diamond office after losing about $100 million due to fraud.
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In 1998, ABN AMRO bought Brazil's Banco Real and Bandepe banks (and then closed
their European and US offices).
The next year, it began buying minority interests in banks in Italy. Also in
1999, the company decided to be a major player in European real estate with the
acquisition of Bouwfonds Nederlandse Gemeenten, the Netherlands' fifth largest
mortgage lender.
As part of this effort, it expanded its mortgage-servicing portfolio with the
purchase of Pitney Bowes subsidiary Atlantic Mortgage and Investment Corp. |
ABN AMRO cut 150 branches in its saturated home market (and about 10% of its
Dutch workforce) in 2000. It bought the energy-derivative business of Merrill
Lynch, Barclays' Dial car-leasing unit, and Alleghany Corporation's asset
management unit.
In 2001, ABN AMRO sold EAB to Citigroup and bought US-based Michigan National
Corporation from National Australia Bank and merged it with another Michigan
holding, Standard Federal Bancorporation, to form Standard Federal Bank, one of
the largest banks in Michigan. It also bought the US brokerage and corporate
finance operations of Dutch rival ING Groep in a quarter-billion dollar deal...
Excerpts >>
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