Download - Transactions Banking
Transaction Banking A Global Product Business
Ann CairnsCEO Transaction Banking
ABN AMRO Investor DayDuin and Kruidberg, 14 December 2005
2Unlocking the Intrinsic Potential of the Group
Agenda
What is Transaction Banking at ABN AMRO?
How are we organised?
Delivering strong results
A strategy for growth
Measuring progress
In summary
4Unlocking the Intrinsic Potential of the Group
Transaction Banking gives the ABN AMRO Group a key competitive advantage
ScaleBillions of transactions in multiple currencies, operating from 59 countries – 3rd largest networked bank
High qualityearnings
Predictable recurring operating income in excess of EUR 4 billion in 2005
Innovation
Enterprise-wide approach
Product breadth, with 200 plus local, regional and global products
Industry awards for best in market solutions
5Unlocking the Intrinsic Potential of the Group
Transaction Banking at ABN AMRO
Transaction Banking
Cash Management Trade Cards
Core product lines
6Unlocking the Intrinsic Potential of the Group
Transaction Banking at ABN AMRO
Transaction BankingBusiness
Cash Management Trade Cards
Core product lines
International Supply ChainPartner Banks
Treasury Payables ReceivablesWorking Capital
Solutions(examples)
S. America N. America Netherlands Europe AsiaRegions
7Unlocking the Intrinsic Potential of the Group
Examples of client solutions
Transaction BankingBusiness
Cash Management Trade Cards
Core product lines
International Supply ChainPartner Banks
Treasury Payables ReceivablesWorking Capital
Solutions(examples)
S. America N. America Netherlands Europe AsiaRegions
8Unlocking the Intrinsic Potential of the Group
Examples of products for our different client segments
Consumer Clients Private Clients Commercial
clients Global Clients Financial Institutions
Payments
Point-of-sale Cash/Credit
Credit Cards
Money Transfer
Money Market Deposit Account
Payments
Collections
Liquidity Management
Account Service
Supply Chain Financing
Trade Finance
Trade-related Guarantees
Payments
Point-of-sale Cash/Credit
Credit Cards
Money Transfer
Payments
Collections
Liquidity Management
Treasury Service
Account Service
Supply Chain Financing
Trade Finance
Trade-related Guarantees
FI Outsourcing
CLS
Trade Finance
Corporate Account Service
Clearing
Trade-related Guarantees
Correspondent Bank Business
10Unlocking the Intrinsic Potential of the Group
A group-wide model
Transaction Banking established as a global product organisation at beginning of 2005
The enterprise-wide approach provided:
Necessary scale to compete effectively as Top 5 provider
Ability to drive innovation by transferring product capabilities across client segments and regions
Mechanisms to leverage our extensive global network
Global Markets
Europe North America
Latin America
Asia PC Global Clients
NL
Asset Management
Group Functions
Services
Transaction Banking
Consumer Client Segment
Commercial Client Segment
Local Products
Local Products
Local Products
Local Products
Local Products
Local Products
M&A ECM
Our enterprise-wide approach is cutting-edge in an industry where most banks still operate localised transactions banking centres
11Unlocking the Intrinsic Potential of the Group
Transaction Banking organisation
Established 1st January 2005
EuropeDaniel Cotti
AsiaPeter Chow
LATAM(ex Brazil)Claudio Migliore
NetherlandsMaarten Mol
North AmericaCindy Murray
BrazilSergio
Costantini
Client Service - Ian Holden-Semple
Global Transaction Delivery - Edward Glassman
CIO Transaction Banking – Robert Langefeld
Head GSS Operations, Transaction Banking – Rob De Ridder
Byron HaynesCOO Functions
Mark TowsonHuman Resources
CEO Transaction BankingAnn Cairns
13Unlocking the Intrinsic Potential of the Group
The enterprise-wide approach is delivering strong results
Major improvement across entire business:
Strong organic growth in Brazil and North America
Operating Result driven by both consumer and commercial businesses
Significant Growth versus YTD 2004
12%
46%
0%
20%
40%
60%
Operating Income Operating Result
% G
row
th
14Unlocking the Intrinsic Potential of the Group
Low capital use in Transaction Banking
Efficient use of capital because of low risk weighting
Overall Return on Equity is 18%, we expect this to rise into the 20’s in the next two years
– example; trade financing can use 1/10th of the capital required for an unsecured loan
However room for further improvement as capital usage varies considerably by segment and country
15Unlocking the Intrinsic Potential of the Group
A leading Transaction Bank
No. 2 Cash Manager in Western Europe and Central and Eastern Europe
Cash Management Poll
October 2005
Best Bank forCross-border Pooling and Netting Western Europe
April 2004 and March 2005
Best Trade Finance BankEurope
June 2002, February 2003, 2004 and 2005
Best Online TradeFinance Bank
Award for Excellence
June 2003,2004 & 2005
Best Bank for Liquidity/WorkingCapital ManagementEurope
January 2005
Best Online Cash Management Bank Europe
January 2005
Best Online Trade Finance Website
January 2005
Winner, Risk Management
Technology Awards 2005
June 2005
Best Electronic Services in Trade Finance
Euromoney Technology Awards
March 2004 & 2005
Best Trade Platform/Best online Trade Provider
July 2005
Best Providers of CLS offering for FIs
Cash Management Poll 2005
September 2005
Excellence in OutsourcingABN AMRO and KeyCorp
May 2005
No. 1 Customer Satisfaction Eastern Europe
Cash Management Poll
October 2005
Best at Cash Management Western Europe
Awards for Excellence
July 2004 and 2005
Cash Pro WebNo. 1 Internet Application for Cash Management Services
November 2005
An extensive network:
Including large and successful local businesses in Europe, the US and Brazil
Enables us to compete as one of the Top 5banks in Transaction Banking
In some cases we achieve number 1 position
16Unlocking the Intrinsic Potential of the Group
Client and industry recognition
No. 2 Cash Manager in Western Europe and Central and Eastern Europe
Cash Management Poll
October 2005
Best Bank forCross-border Pooling and Netting Western Europe
April 2004 and March 2005
Best Trade Finance BankEurope
June 2002, February 2003, 2004 and 2005
Best Online TradeFinance Bank
Award for Excellence
June 2003,2004 & 2005
Best Bank for Liquidity/WorkingCapital ManagementEurope
January 2005
Best Online Cash Management Bank Europe
January 2005
Best Online Trade Finance Website
January 2005
Winner, Risk Management
Technology Awards 2005
June 2005
Best Electronic Services in Trade Finance
Euromoney Technology Awards
March 2004 & 2005
Best Trade Platform/Best online Trade Provider
July 2005
Best Providers of CLS offering for FIs
Cash Management Poll 2005
September 2005
Excellence in OutsourcingABN AMRO and KeyCorp
May 2005
No. 1 Customer Satisfaction Eastern Europe
Cash Management Poll
October 2005
Best at Cash Management Western Europe
Awards for Excellence
July 2004 and 2005
Cash Pro WebNo. 1 Internet Application for Cash Management Services
November 2005
18Unlocking the Intrinsic Potential of the Group
Strategy for growth
Transaction Banking
Organisational structure
Roa
dmap
Rat
iona
lisat
ion
Rev
enue
Gro
wth
Res
ourc
ing
Res
ilien
ce
Foundations
Pillars
Performance Contract & KPIsInvestment Budget
Alignment across SBUs
19Unlocking the Intrinsic Potential of the Group
Industry trends support our revenue strategies
Concentration of banking relationships
– clients are reducing banking relationships and concentrating with major providers
Globalization
– commercial clients are seeking new markets and sourcing from new suppliers
Supply chain management
– Companies are linking their logistics and financial supply chains. We have market leading technology in this space.
Remodelling of the banking market
– many banks are considering outsourcing their payments and trade
– Successful partnerships include Barclays (UK), Keycorp (US), Groupe CaisseD’Epargne (FR), Suncorp (AU)
20Unlocking the Intrinsic Potential of the Group
With globalization, cross-border flows are forecast to grow strongly
Asia
Brazil
US Mid West
Source : BCG Payments Report 2004
EuropeEurope
Volume: 3508 million (131%)Value:$367 trillion (100%)
Volume: 1566 million (224%)Value:$101 trillion (29%)
Volume: 1082 million ( 112%)Value:$136 trillion (97%)
Volume and value projections for 2011 (growth over 2001)
We are well placed to capture cross border flows between home markets and regions and high growth markets
22Unlocking the Intrinsic Potential of the Group
Efficiency ratios are key
Efficiency Ratio
60%
70%
80%
90%
100%
Q104 Q204 Q304 Q404 Q105 Q205
JP MorganDeutsche Bank
ABN AMROCitigroup
Non-Consumer Clients
Our quarterly efficiency ratio (ER) for non-consumer clients is comparable to Citigroup, which has the lowest at 65%
1). ABN AMRO 2004 Numbers derived from FY2004. Source: Company Accounts 2004 – 2005 and ABN AMRO Analysts. HSBC claimed an efficiency ratio of 50% but it is not supported with financial data. Deutsche Bank, JPM Chase and Citigroup includes in their number custody. ABN AMRO includes only Cash and Trade.
23Unlocking the Intrinsic Potential of the Group
Room for further improvement in our efficiency ratios
The efficiency ratio for the non-consumer segment is market leading
– comparable to our peers who cover commercial segment, but not consumer
ABN AMRO Transaction Banking’s blended efficiency ratio across both consumer and non-consumer segments is 80%
However, at specific centres, still much room for improvement as other centres have very different efficiency profiles
– Consumer clients have a 95% efficiency ratio
24Unlocking the Intrinsic Potential of the Group
Transaction Banking delivers diversified revenue streams
% revenue by region 2005 (annualized) Commercial % revenue split by product
1% 14%
13%
72%
Credit cardsOverdraftTradeCash Management
Consumer % revenue split by product
Commercial
Consumer
32.64
95.47
54.52
49.96
79
45.48
50.04
7.09 0.4
38.31
4.53
19.79 1.63 100
67.37
80
EMEA
Asi
a
LATA
M NL
Bra
zil
NA
Cen
tral
Tota
l
8.1
24.68
16%
28%56%
0.5%
Credit cardsOverdraftTradeCash Management
25Unlocking the Intrinsic Potential of the Group
Strong revenue flows from target client segments
2005 Forecast Revenue Split 2008 Forecast Revenue Split
14%
67%
47% 53%
19%
29%
Consumer Commercial
Mass Retail
MNCs
Mid-market
PC /Mass
Affluent
Top Private Clients
Small Business
FIs 52%19%
52%
42% 58%
23%
Consumer Commercial
64%39%
9% 13%
Target Segments
27Unlocking the Intrinsic Potential of the Group
Leading Transaction Banking gives the ABN AMRO Group a key competitive advantage
Focus Value drivers
Scale Well positioned to insource partner bank volumesOne of the largest global transactional networks
High qualityearnings
Well diversified, low capital businessAnchor banking products; pivotal to cross-sellingCore banking product for commercial clients
InnovationSuccess transfer of product capabilities across client segments, global to commercial, and within segments from region to region
Enterprise-wide approach
Coordinating payments capabilities across global, consumer and commercial segments