Why the Merger of ABN AMRO and Fortis will Fail (Part 2 Culture) if They Don’t Apply The Lessons Learned

In the first blog about the merger of ABN AMRO and Fortis I tried to show that the integration of the technical infrastructure of both banks will be very difficult. In this blog I want to talk about a much more important issue called Culture.

When the merger of ABN and AMRO was starting I was part of a management development course. The person behind the course was a very wise person. He told us what would happen the next years and he was right.

What he explained was that ABN was a very old bank that came out of a very long history. ABN was more or less the succeeder of the Dutch Trading Company VOC that was founded in 1602.

ABN was a deal-making bank. The culture of “deal-making” was very visible in everything we were doing. This was the reason why I could talk and “make a deal” with senior manager at every level without any problem.

AMRO (Amsterdam Rotterdam Bank) has its history in the big harbors of Rotterdam and Amsterdam. It supported the people who were transporting cargo all over the world. The culture of AMRO was dominated by the Amsterdam culture. The culture of Amsterdam is one of the most difficult cultures to handle. People are always “playing games” and some of them are “dirty” or better “clever games” (practical jokes). Let’s call this culture “political” because politics is the game people of Amsterdam play the best. The political game is hidden behind the façade of the hierarchy.

The very wise person told us that the political game of the AMRO would finally kill the deal-making culture of ABN. This is what sadly enough really happened. It was the main reason why I left ABN AMRO. Many people were playing the finite game. They wanted to win and when you win there are always loosers and losses.

So to make it very clear what Fortis is buying is AMRO and not ABN. The ABN-part (deal making) was preserved in the International Network (bought by Santander) and Corporate Finance (bought by Royal Bank of Scotland). In my opinion Santander has  made the best deal!

The merger will only be a success when the Fortis-culture is able to cope with the “political (Amsterdam) culture” of ABN AMRO.

The Fortis culture is a combination of two Insurance Companies (Belgian and Dutch) and a bank VSB (Verenigde Spaarbanken) that originated out of a Cooperation (just like RABO). A insurance culture, a cooperative culture and a Belgian culture fit. At this moment Fortis can be best seen as a “Belgian Bank”.

Before the merger with ABN AMRO tried to merge with a big Belgian bank. This merger failed. The “Amsterdam culture” and the “Belgian” culture are completely opposite cultures. Belgians play the game of socializing. Everything happens behind closed doors and is arranged in restaurants. Belgian people enjoy food and wine. People in Amsterdam are also making fun but they make fun of each other.

Now let us have a look at what Fortis is really buying.

ABN and AMRO started to operate on the Retail market when the Dutch Companies around 1960 decided to pay the salary of their employees by a bank account. Before that time the employees were paid in cash. Both banks were more or less forced to move into the consumer market. Before that time both banks had really nothing to do with consumers. Consumers (Poor people) were served by the Postal Bank (now ING) and Cooperative banks like VSB.

Because “Consumer banking” was not part of the “essence” of ABN and AMRO were never (!) able to serve those customers. This is still the case. The Services of ABN AMRO are constantly valuated by their clients on the lowest level possible.

What Fortis buying is a part of ABN AMRO that is of a very different culture, operating with a very low service-level and supported by a very complicated technical infrastructure. Many customers of ABN AMRO are already very frustrated. They are not stupid and they know that the merger will not help to improve the service-level. The only thing that is stopping them is the burden of moving their accounts and the extreme low service-level of the competitors on the Dutch Market (ING is has moved to the first place in non-performing, ABN AMRO is now second).

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