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Fortis Private Bank Enters Top League - CEO

Tom Burroughes

25 June 2008

Fortis Private Banking still has a lot of work ahead of it before it can complete integration of the wealth management arm of ABN Amro into its business after last year’s takeover. Even so, the Dutch-Belgian bank has already come a long way as a global player.

When Fortis acquired the private banking business of ABN Amro last year, the deal meant that Fortis was able to almost double its assets under management to a total of €225 billion, ($349 billion) with €140 billion coming from its Dutch purchase. Fortis, along with Spanish bank Santander and the UK bank, Royal Bank of Scotland, bought ABN Amro for €71 billion at what was to prove the height of the merger and acquisition boom last year. The boom has since fizzled as the credit crunch stymied mega-deals. Since then, some analysts have questioned the wisdom of the deal. In the case of RBS, for instance, the UK bank has held a rights issue to strengthen its balance sheet, a move that at least initially triggered anger from investors.

To pull together such complex organisations into a coherent whole will take time; Fortis expects the integration process of its and ABN Amro's private banking arms will not be completed until the first quarter of 2010.

But Fortis clearly believes that such an effort is worth it. At a time when demands on wealth managers from clients are becoming ever more complex, there are real competitive benefits in being a large player with a broad global reach, and the ABN Amro deal was a key step in attaining this status, Chris Vogelzang, chief executive of Fortis Private Banking, told WealthBriefing in a recent interview.

"I am responsible for integrating ABN Amro private banking into Fortis Private Banking...I believe we are on the right track overall," he said.

Mr Vogelzang is certainly in no doubt that much of the hard work in making the deal work has only just begun. "We have reached full agreement on the integration plans for each country - some 22 units, in fact. That is a very large programme," Mr Vogelzang put it with an almost English level of understatement.

To bring together teams in so many different nations with contrasting regulatory, operational and staffing requirement is no walkover. The asset management industry is full of examples of how some merger and takeover combinations have not resembled happy marriages. But as far as Mr Vogelzang is concerned, putting together the businesses gives Fortis the chance to rival some of the biggest established wealth manager players, or even overtake them.

"We will be number one in the Netherlands, and number two in Belgium, for example," Mr Vogelzang said.

"Our operations are geographically very well spread. If you can see a trend in the European market, we see an increase in the number of clients who are cross-border," he said.

He also thinks the expansion of Fortis, and its status as an ambitious, growth-minded player will prove an attractive lure to new talent, a vital issue at a time when the market for relationship managers is still tight.

"We see very few staff leaving and we are able to hire new people who can see opportunities in an expanding organisation," he said.

Fortis Private Banking has already named its senior management lineup, with a mix of Fortis and former ABN Amro top managers. While it is important, Mr Vogelzang says, to ensure that the management teams are working happily, this will be irrelevant unless it translates into good service for clients.

"A big challenge is to make sure our customers only experience positive things from the integration," he said.

In general, clients must have at least €1 million of investable assets to bank with Fortis' private banking business, although that figure can be higher in some jurisdictions, such as parts of Asia. "We have on average a high level of assets under management per customer. We have a significant number of ultra high net worth clients," he said.

As for future trends, Mr Vogelzang looks to the following developments: the "Europeanisation" of the wealth management industry and greater cross-border business; a growing focus on the businesses of clients as well as their private wealth, and rising client expectations of service quality.

"We have to make sure that the added value provided by a private bank is increasing. As a result, size is necessary to build up expertise to satisfy client demands," he said.

But while the drama of M&A activity can be impressive, Mr Vogelzang points out that at the heart of any of Fortis’ success will be its traditional status as an established banking and financial services group in much of western Europe and elsewhere.

"The client needs to feel he has the private bank around the corner," he said.