AMSTERDAM: Dutch bank ABN Amro said on Wednesday it would shed 250 jobs as it shrinks its international corporate bank activities to increase profitability. ABN said it would focus its Corporate and Institutional Banking (CIB) division to higher-yielding activities, such as lending to Dutch corporations, clearing and private equity.
“To improve profitability, capital allocated to CIB will be reduced. This will predominantly be in global sectors, mainly in trade and commodity finance,” Chief Executive Kees van Dijkhuizen said in a statement. ABN in December last year said it would weigh the future of its corporate bank, as new regulations hurt profitability by requiring banks to hold more capital for assets with a relatively high risk.
The cut in corporate activities will reduce the risk-weighted assets on ABN’s balance sheet by 5 billion euros ($5.81 billion) by 2020, the bank said, to 34 billion euros. The division had around 2,600 employees at the end of June and delivered 11 percent of ABN’s total net profit in the second quarter. ABN Amro on Wednesday reported a 28 percent fall in second-quarter net profit at 688 million euros ($799.5 million), but beat analysts’ average expectation in a Reuters poll of 562 million euros.
Dutch bank ABN Amro on Wednesday said the possibility of returning extra capital to shareholders through higher dividends or share buybacks have increased in the second quarter. “We feel more confident now than we did three months ago,” Chief Executive Kees van Dijkhuizen said at a news conference. “We will decide on possible extra shareholder rewards at the end of the year.” ABN Amro’s core capital adequacy ratio at the end of June increased to 18.3 percent, near the top of a 17.5-18.5 percent range the bank has said was necessary for extra shareholder rewards.