ABN AMRO Bank N.V. (ABN) Earnings Call Transcript & Summary

Ladies and gentlemen, shareholders and holders of depository receipts; I am pleased to open the meeting and to welcome you to this virtual Extraordinary General Meeting. On behalf of the Supervisory Board, I am present, Tom de Swaan, Chair of the Supervisory Board. On behalf of the Executive Board, Robert Swaak, CEO is present. And Hanneke Dorsman will serve as Secretary to this meeting. On behalf of the Employee Council, Arlene Bosman is present. Welcome, everybody. At this meeting, we are pleased to introduce Annerie Vreugdenhil as proposed new Member of the Executive Board. Annerie is present to introduce herself to the meeting. First, I'd like to call your attention to some general remarks. As in previous meetings; at this meeting, we have decided to conduct it entirely virtual. And according to the convening notice we expect that this will be the last time given the measures announced by the government starting this week. That means that no visitors, shareholders or depositary receipts are present in person here. Although of course, it is possible as at previous occasions to ask questions via the live chat. As usual the meeting will be conducted in Dutch and will be broadcast in both Dutch and English on live webcast at the ABN AMRO website. And an audio recording will be made of this meeting to draft the minutes. And these minutes will be made available from 18 May 2022, at the latest, for 3 months for any comments and they will be posted on the ABN AMRO website. I note that shareholders and Depository Receipt holders had been convened in keeping with the law and the Articles of Association and that shareholders and Depository Receipt holders have not submitted any proposals for agenda items on this meeting. Now regarding our procedure, there is one agenda item to discuss and for notification. So there are no voting items on the agenda. We would like to enable all shareholders and Depository Receipt holders that registered for the meeting in time to ask questions, but if you would like to ask questions via the live chat, please do so as quickly as possible so that we can answer your questions during the agenda item concerned and we will let you know in time when we will be closing the live chat. Prior to this meeting we received questions from the VEB. Thank you for those. In answering the questions, we will start with the questions that we received in advance. The VEB will then be given the opportunity to take the floor live and ask follow-up questions by a telephone connection. And then of course, we will answer the questions that participants ask live during the meeting. I -- concluding agenda item 1 and moving on to item 2. Item 2 is discussing the composition of the Executive Board of ABN AMRO and particularly introducing Annerie Vreugdenhil as proposed member of the Executive Board; as Chief Commercial Officer, Personal and Business Banking. I think that's a wonderful title to accelerate implementing our new strategy and serve our customers. As a personal Bank in the digital era, the Bank has simplified its organizational structure. Effective from 24 November 2021 the Bank has replaced the 4 business lines at the time with 3 client segments personal and business banking, wealth management and corporate banking. Choy van der Hooft will be heading up the wealth management customer section and Dan Dorner will be in charge of the corporate banking client segment. Both were appointed to the -- as new Executive Board members on 24 November 2021. You probably remember the AGM at which Choy and Dan introduced themselves to you. In the meantime Frans van der Horst is heading up the client segment personal and business banking and reports to CEO Robert Swaak until a permanent successor is appointed, Annerie Vreugdenhil [ grant ] is not a member of the Executive Board. And the search by the Supervisory Board, obviously in conjunction with the Executive Board for this position, has led to the nomination of Annerie Vreugdenhil as Chief Commercial Officer. The ECB has approved the intended appointment and the Employee Council has issued a positive advice regarding the intended appointment. The most important elements of Annerie's remuneration have been posted on ABN AMRO's website. Annerie is bringing on board over 30 years of experience in banking. She comes from the ING in which she held various leadership positions in different sectors in a broad spectrum of positions with customer contact, a broad experience in banking and innovation makes Annerie perfect for our client and personal and business banking. After this meeting, the Supervisory Board will be appointing Annerie for a 4 year term, her term of appointment will end upon the conclusion of the Annual General Meeting in 2026. Annerie is present here and looks forward to introducing herself to you, so I will give the floor for that. Annerie?

Thank you, Tom. Good afternoon ladies and gentlemen. I'm pleased to introduce myself to you briefly. I'm Annerie Vreugdenhil, I'm from [ Felder Moulson ] a town in the [ Batou ] area. My parents both worked as teachers there. I'm married, I have 2 sons, they are students and have already left home. I have [indiscernible] spent most of my professional career working for banks and have held many different positions. But the guideline has always been client service. After studying law at the University of Amsterdam, I went to work at a bank because there was one thing I knew after studying and having some odd jobs I wanted to hold a commercial position preferably at an international company. I just happened to enter banking but I felt that I had really lucked out because I felt that I was truly able to add value for customers. I started at the Nederlandse Credietbank, which soon merged with Credit Lyonnais, first as a relations manager for business clients and later on as the office director. After that, I transitioned to the ING and held various positions at the business bank close to client service from relation management to rendering all kinds of complex credit systems from 2010 to 2016 as member of the management, Netherlands and head of commercial banking, I was responsible for all kinds of services for business customers at ING from the self-employed to large multinationals. In 2018, I had the opportunity to work for the bank as the head innovation for the business bank. And from 2021 as chief innovation officer for all operations of ING globally. I believe that in all companies especially banks, innovation is indispensable. Our world is changing rapidly. New technologies make new products and services possible. At the same time, client demands are changing. Many clients have become used to the convenience of doing everything on their cell phone and expect the same from their bank. Based on my roles in innovation, I've had the opportunity to see close up how startups can grow and thrive. I chaired the -- I used to chair the Komgo Supervisory Board, a FinTech that made trading commodities more efficient and safer. I was also a member of the supervisory board at R3 that's a platform creating infrastructure for safe use of blockchain technology for banks and others. And I was a member of the advisory board of Squirro, a software company that uses artificial intelligence to create new insights for companies. I worked at the ING for nearly 30 years. I never expected to work for a single company for so long, but ING is a company that accommodates people and something new always happened for me. I'm very curious and filled with energy and I'm fascinated at new challenges. So now I have a new task at the ABN AMRO. What I like doing most of all is working for and with clients. I'm delighted to get to work as Chief Commercial Officer Personal and Business Banking. At this job I will have the opportunity to pursue all my passions and connect all my passions for clients banking and innovation. I believe in the ABN AMRO strategy of personal bank in the digital era. And I believe that this strategy beautifully complements ABN AMRO. ABN AMRO has an excellent track record in terms of innovation in digital offers for customers. ABN AMRO was one of the first to launch a mobile app. And of course, we all know that the Tikkie app is here to stay. Last year over 100 million Tikkies were sent. And ABN AMRO has an extended track record of expert personal advice and I also believe that this strategy has been the right choice for this time. As I said many customers would like to be able to arrange as many other daily banking operations as possible from their phone but at the same time, they want personal contact and that's what fascinates me about this bank, combining personal with digital. Because banking is both about daily convenience, and about important moments and choices in your life. For example, purchasing a home is a major decision for many people with serious financial consequences. And there are also important moments for companies with major financial choices such as opening a new branch or acquiring a new business and at that moment it's important for customers to have personal contact and to receive good advice or the confirmation that their financial decision is responsible. That's why I believe in ABN AMRO's strategy of being a personal bank in a digital era. And I'm greatly looking forward to getting to work as Chief Commercial Officer Personal and Business Banking. Ladies and gentlemen, Tom, I'll leave it at this, and I'll be happy to answer any questions you may have.

Thank you very much for this fine introduction. Now you will have the opportunity to ask questions about Agenda item 2. And, as stated previously, we received questions about this agenda item from the VEB. I'll read out the questions they asked and then I'll answer them or I'll ask Robert or Annerie to answer those questions. The first question is addressed to the Supervisory Board so I'll cover that one myself. The question is whether we can explain why under Annerie Vreugdenhil was selected over the other internal and external candidates? Well, the simplest answer is listen to her introduction and it's clear why we have selected Annerie. I'd like to add however, that recently, as you're able to meet the 2 individuals in November at the AGM, we were able to position 2 important candidates in the Executive Board and we appointed Dan Dorner, and Choy van der Hooft. Obviously, with these types of positions we look inside the bank and outside the bank. And it was very clear, as I mentioned in the introduction that Annerie was the best candidate in our view. And that's why we're so delighted that she'll be joining our team. The second question from the VEB is as follows. In the explanatory note to the AGM agenda, the Supervisory Board mentioned that Annerie Vreugdenhil will be able to take operations to the next level. And I think that's a wonderful sentence. What did the Supervisory Board expect from Annerie Vreugdenhil in her role as CCO Personal and Business Banking? Clearly, our strategy is to be a personal bank in a digital area and add convenience to our clients' daily lives as well as expertise at moments that matter to intensify and sustain personal contact. For years there has been a trend in which clients have been doing their banking, digital and that trend endures. The same holds true at ABN AMRO. So we would like to be able to offer all our services remote in the course of this year and Annerie has broad experience in banking and innovation and in our view that makes her perfect to head up our client unit Personal and Business Banking where digitization is progressively expanding. The third question from the VEB concerns whether Ms. Vreugdenhil can describe what her due diligence was like? And she told me earlier, I'm sure she can explain that, and could you please address her opinion about the strategy revenue model and distinctive edge of ABN AMRO as well as the dominant influence of the Dutch state as the controlling shareholder. Before I hand you over to Annerie to talk about her due diligence process, I'd like to give the floor to Robert Swaak to answer the second section of the question. Robert, over to you.

Thank you, Tom. As was said a few times and indicated, the strategy is to be a personal bank in a digital era. And to us that is explicitly the bank's distinctive edge. It combines personal and expert advice together with the digital customer service. As we explained previously, it's incredibly important for the bank to continue to focus and scale in Northwest Europe. And we aim to grow in specific, identified segments and we will continue making the bank simpler and more efficient. Next, the question as to whether -- next the question about the Dutch state as shareholder. Let me confirm once again. We head up and run the bank as we would do if the state were not a shareholder. So we stand behind our strategy and implement it on a standalone basis. And that was how it was put together based on this strategy as well.

Thank you very much. Now, Annerie, your due diligence process.

Thank you, Tom.

Please go ahead.

As is undoubtedly known, finance [ type ] is a highly regulated sector. So preparing for such a position you need to follow an extensive from introductory program to learn many different sections of the bank so that you know what you're getting into. And you do your own due diligence that way. And that way you also get off to a flying start. I'm still in the midst of this, but when I start on March 1, I'll basically have finished most of this and we'll have a fairly good idea of the bank. As for the bank strategy of personal bank in a digital era, I mentioned that in my introductory remarks, I think this perfectly complements and is a wonderful match for ABN AMRO and it's a good choice for this period. Many customers would like to do as much as possible of their daily banking operations from their phone. It's nice and convenient but they also value personal contact and that remains important. That's what makes this job so important. And it's also why this is such a good strategy. At the important moments personal contact and general bank operations can be largely digital that's why I'm a firm believer in the ABN AMRO strategy of being a personal bank in a digital era.

Thank you, Annerie. Now, on to the fourth question from the VEB. Last month, it was announced that CI&TO Christian Bornfeld would be leaving on 1 May 2022. After the General Meeting of shareholders on 21 April 2021 Bornfeld was reappointed for a second 4-year term. He is among the longest-serving ABN AMRO Board Members and is responsible for crucial case files. Can the Supervisory Board address the profile used for his successor and indicate when the candidate will be presented for appointment? First I'd like to tell you that losing Christian Bornfeld is a loss to the bank but we understand his desire to be and work closer to his family and relatives in Denmark. Of course, searching for a successor is in progress and ongoing. And we're taking a discerning look at the desired profile as we do with every vacancy. We cannot yet provide any statements about its exact content. As soon as we're ready we'll get back to you and we'll discuss this with you. That takes us to the last question from the VEB, which is as follows. In recent years ABN AMRO has experienced a significantly higher turnover of Board Members as some confirmed by the announced departure of Bornfeld than most other public companies in The Netherlands. How does the Supervisory Board explain this? And what are the lessons learned. As stated Christian Bornfeld is leaving because he's accepted a position that will enable him to live and work closer to his family and relatives in Denmark. We understand this and respect it. We're not jumping for joy about this. But we respect it and understand it. Last October we announced that we would be simplifying our organizational structure. We replaced the Executive Committee with a larger Executive Board. The Executive Board has been expanded to include the present CHRO Gerard Penning and 3 new CCOs. Two of them are being advanced internally and one is being brought in from outside. The Executive Board thus comprises a combination of experienced and more recent Board Members. In addition, these people collectively have a lot of very broad experience in finance, whether at ABN AMRO or at other organizations. The larger composition of the Executive Board that we recently introduced moreover ensures that we safeguard continuity better and the Supervisory Board considers this to be especially important. Upon Board changes more members will remain that know everything about what's going on than in the past with a smaller composition of the Executive Board because we now have more members. So we believe that continuity is thereby safeguarded that we are highly experienced in finance whether ABN AMRO as confirmed by the 2 appointments of their own employees as CCO members last year or from other financial institutions. And that way we're comfortable about the continuity and in-depth knowledge of the Executive Board. Ladies and gentlemen, those were the questions asked in advance by the VEB. The VEB has indicated that they would also like to take the opportunity to ask follow-up questions live via the telephone connection. And I'm pleased to hand you over to the moderator for the follow-up questions by the VEB. Mr. Moderator, Please go ahead.

Mr. Chairman, I believe that we've connected with the director, Mr. [ Herrmann Eyford ] from the Association of Stockholders.

Welcome, Annerie Vreugdenhil, on board the ABN AMRO team. Thank you for your personal explanation about this agenda item. I'd also like to thank Mr. de Swaan and Mr. Swaak, for answering the questions we submitted in advance. I conclude in the meantime, that Annerie will be an excellent complement to the team. And let me also take this opportunity to ask 3 other additional questions. Robert Swaak, you just mentioned that you are running the bank as if the state is not a shareholder. Can you say anything about the announcement by the Minister of Finance considering marketing some of their shares and what timeframe do you expect in consultation with the Ministry of Finance? That's one question. The second question relates to that in some respects, you can certainly run the bank as if the state is not a shareholder but that curtails your flexibility especially as the acquiring party last year, there was announcement of a strategic reorientation regarding cooperating with other parties such as for example, Goldman Sachs which offered to facilitate this. Can you tell us the status quo and is it still the objective to look for nice banks and institutions in Scandinavia that would complement ABN AMRO's portfolio? And the last question is an update. We have identified information about the higher interest rates that are in the pipeline and how that would impact our returns in the years ahead. However, Mr. Swaak, you've indicated that the interest income will bottom out in 2023. And we believe that that's crucial for equity, for the return on equity. So is that still expected in net cost reductions? In any case last year, the cost-benefit ratio, so the money that you spend on your staff was 76.4%, that was spending on staff and that will be reduced to about 63% or 64% by 2024 following some acquisitions. What could accelerate this and what do you expect? So give us a random impression of the current status quo.

I'll hand you over to Robert Swaak. But we need to consider that your questions do not truly relate to the introduction of Ms. Vreugdenhil. But nonetheless, I believe that Robert Swaak has enough ready knowledge about the bank that he can answer some of those questions. Robert, over to you. Please unmute Robert.

Thank you, gentlemen, for the questions asked, and I'm pleased to elaborate on those. Regarding your first question. The role of the bank as a shareholder, excuse me the role of the state as a shareholder in the bank and the recent comment by the minister in the House of Representatives. That has been the standing policy of the government from when I joined. In the Governing Council agreement it was mentioned that the state, the state would eventually reduce its holding in ABN AMRO over time. That's also what the minister told you. As for additional details in timing, however, you should ask that shareholder concerned as you might expect me to. Regarding your question about flexibility in implementing the ABN AMRO strategy. I can tell you that in the nearly 2 years that I've been the CEO of ABN AMRO, I have not experienced any limitation in flexibility of implementing strategy. We do it as we should and we've been very clear and consistent in our communications. And I experience that every day. As for your questions about possible acquisition endeavors, so for example, in Scandinavia. What I said and continue to repeat is that we continuously explore M&A opportunities. And in November 2020 we stated this as part of our strategy and we continue to state that every day. And when such opportunities arise, we will certainly follow up on those. What's important to note, as I've said previously, is that we continue to consider that this will add value to our strategy and for the shareholder. Regarding a higher return for 2020, we announced that we aim for a realistic return of 8% by 2024. And we repeated that, in our many conversations both with investors and in our analyst calls. And our financial planning is focused on maintaining that and we'll continue to do so. As for costs, I'm sure you also heard our explanation in the analysts call in which, once again, our long-term ambition to cut costs was confirmed to less than EUR 4.7 billion in 2024 and we're on track for that. In recent years, however, ABN AMRO has demonstrated how important it is to curtail our costs and we'll continue along that track.

Thank you very much, Robert. Could I refer you a letter from Minister Kaag to the House of Representatives about her policy intentions yesterday? ABN AMRO was mentioned there too. Now I'm pleased to give the floor to the moderator unless the VEB has additional questions.

No, we don't. Thank you for answering them.

Thank you for your questions, Mr. Eyford. And I hope we'll see you live at the AGM in April after 2 years. We're looking forward to it. Now over to the moderator for any questions received via the live chat. Mr. Moderator?

Mr. Chairman, no additional questions have been received via live chat.

Okay. That takes me to the next item, which is closing this meeting. I note that no questions remain and I hereby close the meeting. I wish Annerie all the very best. And after this meeting, we will be officially appointing her and as of 1 March, her duties will start here. I'd like to thank everybody for attending and for contributing to this meeting. The meeting is closed.

Thank you for listening.