Client service lost in merger hoo-ha

The on-off merger talks between Dutch bank ABN Amro and UK institution Barclays has provided one of the most fascinating financial stories of recent years. It has included tales of side-deals, potentially divided loyalties and savage job cuts. Many of the pronouncements have focused on the cost-savings which can be squeezed out of the proposed ?66bn deal, with up to 10 per cent of 217,000 jobs to go or be moved to low-cost locations. Much “natural wastage” is expected in the UK, Spain and Italy. Very little has been said about benefits for clients. If ABN Amro’s ?210bn asset management operation, for instance were to merge with the BGI’s ?1250bn, plus the ?135bn overseen by Barclays Wealth, it may soon be swallowed up in the Barclays quantitative culture, based on low-fee indexed solutions and ETFs. For Barclays in asset management, scale really is everything. The alternative proposal, of the ABN Amro group being split three ways by a rival consortium, consisting of Banco Santander, Fortis and Royal Bank of Scotland should receive more analysis. There is already much excitement at RBS about the possible addition of ABN’s equity derivatives arm, with the Scottish bank enjoying huge sales of structured products to private banks and wealth managers. Similarly, although the CEO of Fortis Investments is rather prickly when the merger is even mentioned, the prospects for a dominant Benelux manager, creating products and dispensing them across the area through a merged retail banking network, should not be ignored. All of the Dutch banks have embraced open architecture, which gives clients a choice of products. Naturally there will also be cost savings here too, which is one of the reasons the consortium can make a higher offer than Barclays. But Barclays is already in cutting mode, as is demonstrated by its announcement to scrap more than 1,000 processing jobs from its Dorset, UK offices over the next three years to “improve efficiency”. What would be much more reassuring, for clients as well as staff, would be a merged operation that at every stage of the process, would talk about improving services. Let us look at the current link-up taking place between French banks Natexis Banque Populaire and Ixis. Pascale Voisin, CEO of the newly merged Natixis Asset Management, says that his experience of three previous mergers has taught him that this is a great opportunity to build a business, and this is what strategists should concentrate on. It is just as well. Natixis AM staff, working for the biggest funds house in France, with ?580bn under management, are already preparing themselves for the next merger, so they can really compete with the big boys at Barclays.