Interview with our CEO

2019 was an eventful year for ABN AMRO, also one in which the bank made progress on various fronts. Kees van Dijkhuizen talks about the bank’s activities on detecting financial crime, digitalisation, low interest rates and ABN AMRO’s pioneering role in sustainability.

Our purpose, Banking for better, and our strategy enjoy widespread support. Kees van Dijkhuizen Chief Executive Officer ABN AMRO

Kees, how do you look back on 2019?

“We can look back on a solid year financially, despite the difficult low interest environment. We posted a return on equity of 10% while strengthening our Basel IV capital ratio to above 14%. Our share price development was however disappointing, also due to investor concerns on low interest rates and the Dutch Public prosecutor investigation. We take investor concerns very seriously. We have already taken firm action, for instance we announced negative rates in the Netherlands for clients with deposits over EUR 2.5 million and we have a detailed delivery plan in place to build a future-proof organisation for ‘detecting financial crime’. We have a strong capital position and are delivering on our cost savings programme. All in all, ABN AMRO is in good shape to face the current challenges."

What would you say were the most important highlights and low points?

"Our purpose, Banking for better, for generations to come, and our strategy enjoy widespread support – no less than 92% of our workforce is keen to help create a sustainable bank. A low point in 2019 was, of course, that we had to announce that the Dutch public prosecutor is investigating whether we’d been strict enough in applying anti-money laundering laws.”

Banks are expected to fulfil an important role in society. What are your thoughts on this?

“I am regularly approached by people who want to know why a bank should be responsible for something typically performed by the government. In response, I explain that we want to be a key gatekeeper in preventing financial crime. Crimes are committed everywhere, and banks are sometimes used for this purpose. Clients trust us with their money, so we do everything we can to keep financial transactions secure. In 2019, ABN AMRO collaborated more intensively with other banks and with the Dutch police, the public prosecutor, the Fiscal Information and Investigation Office (FIOD) and the Financial Intelligence Unit. We discussed this several times with various cabinet members, including the Dutch Prime Minister and the Ministers of Finance and Justice & Security. One result of these talks is that banks are now allowed to work together to monitor financial transactions. Banks want to be allowed to exchange information about criminals. The privacy issues associated with this are currently being explored.
We also want to keep society safe when it comes to cash. Last year, ABN AMRO temporarily closed 380 ATMs very quickly to prevent casualties caused by violent ATM explosive attacks. That was a hard decision to take, but we stand by it. And in 2019 we announced – as the first bank in the Netherlands – that we would not charge negative interest to clients with savings under EUR 100,000. That, too, is an example of banking for better.”

What dilemmas did the Executive Committee discuss with the Supervisory Board in 2019?

“We talked at length with the Supervisory Board about the public prosecutor’s investigation, of course. And we exchanged ideas about how our bank can remain relevant in a low-interest – and some say negative interest – world. We also reflected on the collaboration between the Executive Committee and the Supervisory Board. We did this intensively during a combined trip to New York, where we explored innovation in the industry among other things. While in New York, we visited our office in the city and met with researchers from Columbia University, FinTechs, McKinsey and several US banks.”

Accelerating the sustainability shift is the theme of this Annual Review. How is ABN AMRO contributing to this goal?

“Sustainability is at the heart of our strategy. With total assets of just over EUR 375 billion, our bank can really make an impact, so we have a responsibility to help make the world a better place. Last year, for instance, we introduced the Sustainable Home Mortgage. Our sustainable investment portfolio at Private Banking has doubled in the space of just two years. More than half of new investors now opt for sustainable investment. And, in 2019, ABN AMRO signed the UN Principles for Responsible Banking, together with 129 other international banks. The signatories, representing onethird of the total assets of all banks worldwide, agreed that they will align their business strategies with the UN Sustainable Development Goals and with the Paris Climate Agreement. ABN AMRO is also trying to encourage more challenging industries, such as palm oil and energy, to move in the right direction. If a company refuses to cooperate, we can ultimately end our relationship with them. And we are one of the pioneers in carbon accounting, a method for measuring carbon emissions associated with loans and investments. The more financial institutions that join us, the better. Banks in the US are now also showing an interest in this initiative.”

The financial industry is becoming ever more digitalised. What do clients think of this development?

“At ABN AMRO, we also want to lead the way in digitalisation – and our clients appreciate that. Things are moving faster than we expected a few years ago. Two-thirds of our mortgage consultations now take place by video banking, sometimes in the evening, sometimes at the weekend. Clients who use this service are extremely satisfied with it. Remote working is also helping us to boost efficiency. Honestly, we didn’t expect this service to catch on at Private Banking, but more than 20% of their advisory meetings are now held via video banking. Of course, we haven’t lost sight of our more vulnerable clients; they’re assisted by our financial coaches.”

Is there room for growth?

“Eighty percent of our operations are based in the Netherlands, a healthy market. Our share of the Dutch mortgage market grew in 2019. At the same time, clients are paying back their mortgages early – because of low interest rates. So we need to pursue growth in other client segments, such as lending to small and medium-sized businesses. Our returns outside the Netherlands must improve before we can pursue further growth abroad.”

The world has changed since our Investor Day in 2018. What developments have taken place in terms of dividends, targets and costs?

“At the end of 2018, everyone expected interest rates to rise – but they took a downward turn instead. Interest rates in Europe fell sharply, pushing down our net interest income. At the same time, we’re spending more on compliance and on detecting financial crime. So we won’t be able to meet our cost/income ratio target in the short term – meeting that target will take a bit longer. We are, however, still one of the best performing banks in Europe in terms of returns and capital position.”

Your term ends on 22 April. How do you look back on your time as the CEO of ABN AMRO?

“In the past three years, ABN AMRO has delivered good results. We’ve made great strides in terms of digitalisation. And we’ve launched an inspiring new purpose and strategy, which our clients and employees are enthusiastic about. I look back on all this with great pleasure. My intended successor will press ahead with our anti-money laundering policy and with new business models in the low-interest rate environment. I have every confidence that, under his leadership, the bank has a bright future.”