Brian Stevenson, head of global transaction services at RBS, tells Charlie Corbett how the bank’s global footprint has received a huge boost from its acquisition of ABN AMRO’s transaction banking business.
The Royal Bank of Scotland-led purchase of ABN AMRO was a landmark transaction, not just in terms of its immense scale but in terms of how banks’ attitudes towards transaction banking have changed. Most in the market agree that one of the primary incentives behind RBS’s decision to purchase ABN AMRO was its world-class transaction banking unit.
Brian Stevenson, the new head of global transaction services at RBS, tells The Banker that the purchase effectively doubled the bank’s footprint from a geographical point of view and put it in the top five global transaction banks.
Mr Stevenson says: “[RBS chief executive] Sir Fred Goodwin and others made it clear that one of the chief attractions of ABN AMRO to RBS was that it allowed us to bolt on a transaction banking business. Those opportunities do not come along very often in the banking world.
“We are in more than 50 countries around the world now, which is a large extension from where RBS was before. It was not a global transaction bank and it now becomes a powerful force for the future.”
Reach and scale
Mr Stevenson looks upon transaction banking as an anchor service, particularly in the current market environment, because it is stable and provides a solid base for the business.
However, in order for a bank to be successful in the long term, scale is vital. Mr Stevenson says: “In the future, banks that have both reach and scale will be the ones that survive and prosper in the transaction banking world. You will increasingly see those banks that have the scale and reach to be able to increase volume and profitability in times of price compression and those that opt to outsource to others. The combination of ABN AMRO and RBS is, in part, designed to take advantage of such potential changes.”
Face of competition
It is clear that increased consolidation in the industry will lead to heightened levels of competition. It is a market dominated by three to five enormous institutions that will have to slug it out in the future to establish market share. Mr Stevenson says: “There is a group of banks, the usual suspects of JPMorgan, Citi, HSBC, Deutsche Bank and RBS, that will pose a considerable competitive challenge to each other in the medium term. That challenge will intensify to a certain extent, given the choppiness of other markets,” he adds.
An onerous task
As to the future, big hurdles remain. The integration of the two large financial services institutions will not be easy. Most market participants that spoke to The Banker agreed that RBS has its work cut out, but that when complete, the new entity will be a formidable competitor.
For Alan Verschoyle-King, Bank of New York Mellon’s managing director and head of European payments and trade services, the RBS purchase was a watershed event that will change the European banking landscape for ever.
He says: “It is a big acquisition; RBS has taken the majority of it and it has a lot to chew on during the next couple of years, but history would say that it does that well. NatWest was integrated quickly and effectively, so the smart money is on RBS doing the same thing with ABN AMRO.”
Huge potential
One head of treasury, who did not wish to be named, believes that RBS will become an imposing competitor. He says: “When it gets out of the integration process, which normally takes a couple of years, I really see it as an important force to reckon with. We will watch it carefully – we have a lot of respect for RBS.”
The primary concern for RBS’s Mr Stevenson in the shorter term is getting the integration right.
He says: “The separation of a €71bn bank is not something that is going to be completed in short order. It is a complicated separation process but we are well on track.”
