Barclays, ABN Amro, and IT
From the Financial Times:
Barclays last night moved closer to a takeover of ABN Amro after agreeing to move its head office to Amsterdam and allow the Dutch bank to appoint its new chairman if a deal is finalised. Barclays, which is in exclusive talks with ABN Amro to create one of the world's biggest financial institutions, would keep the combined bank's primary listing on the London Stock Exchange and be run by John Varley, Barclays' chief executive.
So Barclays wants to buy ABN Amro. For the past few years ABN Amro has been underperforming, and it has sought ways to reduce its costs. Underperforming ofcourse means that it made less profit than before. But this profit is still skyhigh. Despite that, ABN Amro has been laying off a lot of people and has been outsourcing most of its IT to India.
The main pushing force behind this, and the actions the bank is taking to try and find a buyer, is ofcourse a Hedge Fund. Agressive investors who want quick revenue from a thriving company. In this case: "The Children's Investment Fund" (TCIF). They own 1% of the shares in ABN Amro, and have been pushing hard to split the bank up, or sell it alltogether, because of this 'underperforming'.
In comes Barclays. Another bank that is seeking to make as much profit as possible, by reducing its quality. Ofcourse they don't look at it this way, but the fact remains. Lately they have been outsourcing many of their staff (for example their entire callcenter) to India. In that respect, the business culture seems to match that of ABN Amro.
If they merge, they will be one of the worlds largest financial institutions. What does this mean for their quality? What does this mean for their staff? And then what does that mean for their internal (IT) developments?
Hedge funds can be good, but very rarely. Usualy they are overly agressive in their attempts to create quick-win situations that result in long-term losses, but only after the hedge fund has retracted its tentacles already. There is a very interesting quote from TCIF's managing partner Chris Hohn that emphasizes this:
We are very concerned that the conflict of interest of ABN Amro management may put personal job considerations ahead of shareholder value maximisation.
This shows the whole agressive and insensitive nature of the hedge fund. They do not care about the people who work there at all. It's just about generating revenue. Even more emphasized by their following demand:
If a formal offer does arise from Barclays, we will insist on a market test or so-called go-shop period of up to two months to allow any other credible institution to do due diligence and be on a level playing field with Barclays
But it's the people that work there that make the bank great. That make it run. If they force measures like outsourcing to India, what will happen to their well oiled IT engine?
Having spoken to different people on the workfloor at ABN Amro I hear the same disgruntled stories again and again. Communication is starting to crumble rightnow already, with people having to do longdistance meetings just for some software development or maintenance. Most often atleast one side of the line has a very limited understanding of the English language (which is the de-facto standard) and this is not being helped by the fact that speech is going over a phoneline and people can't see eachother. Apart from that high-skilled and well-trained staff is being laid off in favour of cheap labout with acadamic credits at the level of a first year college student.
I am speaking purely out of personal work experience and talks with colleagues in the IT field with similar experience, bot inside and outside the relevant banks, but do have a significant feeling that things like this will bode badly for the quality of service that a merged bank of that size will be able to provide to both its staff and its customer.
The one thing that's most worrying in the end is... how many new entries on The Daily WTF will this generate, and how will that influence the IT culture within the bank?
