Amsterdam-Rotterdam Bank N.V.

Foppingadreef 22
Post Office Box 283
1000 EA Amsterdam
The Netherlands
(020) 289393

Public Company
Incorporated: 1964
Employees: 23,198
Assets: Dfl 168 billion (US$83.67 billion)
Stock Index: Amsterdam

The Amsterdam-Rotterdam Bank (Amro) was incorporated in 1964 when the Amsterdam Bank and the Rotterdam Bank, Holland’s first and third largest commercial banks, merged. Since then, Amro’s assets have grown from Dfl 6 billion to Dfl 168 billion; the bank leads the Dutch domestic market today. Amro currently has 766 branches in the Netherlands and 88 branches overseas.

Before the Amsterdam Bank and the Rotterdam Bank joined forces they were competitors. The Rotterdam Bank was the older bank, established in 1863. In its first decade the Rotterdam Bank operated offices in Singapore and Batavia (Jakarta), but in 1872 it withdrew from the Dutch colonies and concentrated on financing ventures in Rotterdam, which as a seaport was very active during this period. It was the primary link between the developing industry of the Rhine Valley and the rest of the world, and at the same time served the heavy shipping needs of the Dutch Empire. As harbor traffic increased and the city’s trade prospered, the Rotterdam Bank grew.

After the turn of the century, the Rotterdam Bank found its own resources inadequate to meet the financing demands of local industry. In 1911, it made the first of several mergers, with the Deposito and Administratie Bank. Other Dutch banks followed suit in a spate of bank acquisitions. The Rotterdam Bank was soon busy outside of the city. It was the first to develop branch banking in Holland, sponsoring the Zuid Nederlandsche Handelsbank and the Nationale Bank Vereeniging in the Dutch provinces.

During World War I the Rotterdam Bank participated in establishing banking ventures overseas, but a number of these failed after the war due to generally poor economic conditions around the globe. This postwar depression took a heavy toll on the Rotterdam Bank: its capital stock fell by a third between 1922 and 1926. The Dutch central bank helped the Rotterdam Bank get back on its feet, and by the late 1920s prosperity had returned, only to face the Great Depression of the 1930s. By the time the Rotterdam Bank began to recover from this depression, Europe was again embroiled in war.

In May, 1940, the Nazis invaded Holland. The occupying force imposed highly unfavorable trade conditions on Holland and slowly drained the country’s wealth.

After the war, the Rotterdam Bank helped to finance reconstruction as Holland adjusted to the independence of its colonies and the loss of its preferred trading position with them.

The Rotterdam Bank branched out aggressively in the ten years following the war. Although the bank grew substantially throughout the 1950s and early 1960s, it faced competition from the growing number of foreign banks appearing on Dutch soil. In 1964, the Rotterdam Bank merged with the Amsterdam Bank to keep ahead of these foreign banks.

The Amsterdam Bank was founded in 1871 by several German and Dutch banks, to bring together German and Dutch money market activities. The bank remained small for its first 20 years, and then began to expand rapidly. The Amsterdam Bank was less inclined to acquire existing banks than the Rotterdam Bank, preferring instead to open new branches of its own.

After World War I, the bank prospered despite the postwar economic crunch because of its prudent lending policies. Amsterdam was the most active financial center in Europe at that time, and the bank was busy financing commercial ventures throughout the 1920s and 1930s.

During World War II, the bank coped with the disruption of the Dutch economy as best it could. After the war, the bank expanded at a frantic pace. In 1948, the Amsterdam Bank entered into an operating agreement with the Incasso Bank and fully merged with it after a short time. This merger made the Amsterdam Bank Holland’s largest commercial bank. The bank continued to grow throughout the 1950s, but, like the Rotterdam Bank, was anxious about the growing competition from foreign banks.

The merger of the two banks formed the Amsterdam-Rotterdam Bank (Amro). Amro was better equipped to deal with the needs of its customers than either of its predecessors had been, and with a broader network and increased resources, earnings grew. In 1968, Amro’s chief rival, the Algemene Bank Nederland (ABN), acquired another large Dutch bank, the Hollandsche Bank-Unie, pushing Amro into second place among Dutch commercial banks. But Amro stayed on ABN’s heels throughout the early 1970s. In 1974, a worldwide recession slowed the bank’s growth, but Amro did not suffer the losses that many foreign banks its size did. In 1975, Amro acquired the large Dutch merchant bank Pierson, Heldring, and Pierson, improving its network abroad.

Unlike its chief competitor, ABN, the bulk of Amro’s business has traditionally been within Holland. When Amro’s customers needed international services, Amro relied on its membership in the European Banks’ International Company (EBIC), a group of seven European banks established to strengthen each member’s ability to compete with larger international banks. Amro has been a loyal player on the EBIC team, faithfully participating in its joint ventures.

Although earnings continued to grow in the late 1970s, Amro was slow to react to banking trends. The bank relied heavily on its relationships with key Dutch companies and on the EBIC group for its success. In 1979, the Amro board elected Onno Vogelenzang its chairman. Vogelenzang began to expand Amro’s international branch network independent of its EBIC connections and to reduce its dependence on corporate customers, launching Amro in a more aggressive direction. By the time Vogelenzang retired in 1983, Amro was a much more dynamic institution than it had been four years earlier.

Vogelenzang was replaced by Roelef Nelissen, who continued Amro’s energetic shift in policy. Amro placed greater emphasis on project finance in the mid-1980s, playing a central role in the financing of oil and natural gas exploration in the Dutch sector of the North Sea and participating in the English Channel tunnel project.

Amro added to its capital market strength by acquiring the European Banking Company in late 1985. EBC Amro Ltd., as the London bank was renamed, strengthened Amro’s position in the European capital markets considerably. EBC’s experience in foreign exchange and in Euro-equities complemented Amro’s already strong bond market activity.

In 1986, the Dutch Finance Ministry liberalized the nation’s capital market, freeing new investment instruments from regulation by the Dutch central bank. Banks introduced floating rate notes, certificates of deposit, commercial paper, bullet bonds, and later zero coupons and medium-term notes. While Dutch response to these new investment vehicles was sluggish, foreign investors showed more interest.

Despite the stock market crash of 1987, Amro’s earnings that year increased 3.5%. The crash put an understandable dent in Amro’s securities brokerage activities (Dutch banks offer a full range of financial services to their customers), but the bank was not as shaken as other institutions.

As part of Amro’s effort to keep its operations up to date, the bank moved its headquarters across Amsterdam to a more efficient building in 1987. It also improved its electronic banking systems, ahead of its Dutch competitors.

Amro has been the most aggressive of Dutch commercial banks in the past ten years. As Europe prepares to become one integrated market in 1992, competition in financial markets will undoubtedly increase and Amro will have to continue to act boldly to maintain its edge.

Principal Subsidiaries

Amro Australia Ltd., Amro Bank (Asia) Ltd.; Amro Bank und Finance A.G.; Amro Bank Overseas N.V.; Amro Effectenbewaarbeerijif N.V.; Amro (Finance and Securities) Ltd.; Amro Handelsbank A.G.; Auto Lease Holland B.V.; Beheer-en Administratiemaatschappij Lafico B.V.; Bicker Caarten and Obreen N.V.; N.V. Consultants and Assistants “Consultass”; International Factors Nederland B.V.; Maatschappij tot Finaniering van Bedrijifspanden N.V.; Nationale Bank voor Middelang Krediet N.V.; Nationale Trust Maatschappij N.V.; Particuliere Participatie Maatschappij Amro B.V.; Pierson, Heldring and Pierson N.V.; B.V. Projektonwikkelingsmaatschappij Amro.