The three-way acquisition of ABN AMRO by RBS, Santander and Fortis proved a remarkable collaborative effort, as Fortis CEO Jean-Paul Votron tells Geraldine Lambe.

When the final group of Fortis shareholders voted to approve the Belgo-Dutch bank’s role in the three-way bid for ABN AMRO, the decision propelled Fortis into the European ‘Champions League’ of banks. The deal has been transformational for Fortis; more so than for its two partners. It has created the dominant player in the Benelux region, taking it to fifth position overall in Europe and third in private banking, and spawned a top-tier asset manager.

In terms of market capitalisation, at just under €50bn, Fortis is now larger than Deutsche Bank and close to Credit Suisse. Measured by revenues, it has emerged as the number three banking group in the world, behind Citigroup and Crédit Agricole, according to the Fortune Global 500.

The man orchestrating this quiet revolution is an old hand at transformation. “I have a 30-year track record of acquiring companies and turning them round to add value,” says Jean-Paul Votron, CEO of Fortis. “My first job in banking [after leaving Unilever] was to restructure the retail banking operations of Citibank in Europe. I’m very proud that I was part of a team that created the ‘model’ branch in 1992, and that is still how Citi operates today.”

His role has been no less revolutionary at Fortis. He has introduced a performance-related culture at what was, not so long ago, a sleepy Belgian bank. And for all the column inches that the acquisition of ABN AMRO has generated, it is but one in a long list of acquisitions and changes that Mr Votron has overseen. Fortis’s 1999 purchase of General Bank was even bigger than its portion of ABN, and in 2005 and 2006 it made a further 24 acquisitions.

Mr Votron says this is no ego-stoked acquisition trail but the determined execution of a logical vision. “Everything we do is to create long-term value for our shareholders and our customers. This is clear from the support that we have from our shareholders and the market. The success of our rights issue and the recent Tier 1 issue is a clear signal that there is a great deal of confidence in our plans and the integrity of the bank,” he says.

The past year has been hard work. From the moment Merrill Lynch’s Andrea Orcel (whom Mr Votron knew) telephoned him in early March 2007, saying that he had a great idea and would Mr Votron like to meet with RBS’s Sir Fred Goodwin (and later Santander’s Emilio Botín) to discuss it, the Fortis chief has been on a rollercoaster of meetings and splashy media coverage.

He immediately knew that this was a once-only opportunity that could not be missed. “We had always said that we would like to boost our Dutch presence, but we never thought we would have the opportunity to buy a piece of ABN AMRO. Like ING, it was just too big and too expensive.” From the first meeting, he says the partners realised they could make it work. “We understood each other very quickly. Most importantly, there was no conflict between us over how we would divide the assets.”

Individual contributions

Fundamentally, this ground-breaking deal worked because the three of them could work together and each had something essential to bring to the table. “Emilio brought his knowledge of the Latin American market – and the word obstacle is just not in his vocabulary; Sir Fred is very determined to succeed and was a driver of the technicalities behind the deal; I brought understanding of the sensitivities surrounding the Dutch business.”

The glue holding it all together was the sole advisory role of Merrill Lynch. “If we had each insisted on having our own adviser, it would never have worked. Merrill did an amazing job of keeping the deal on track,” says Mr Votron.

The working relationship has been key, with a lot of give-and-take between the partners. “It has been critical that we are able to call each other and work closely. We are straight to the point; there is no circling around. We have looked at every decision in the broadest context: what will happen if we take this path? What will happen if we do this? That is the only thing that has enabled us to move forward together,” Mr Votron adds. One example of the consortium’s co-operation is the creation of a ‘redeployment centre’ that enables staff to redefine their roles and move between each of the organisations. It illustrates how, from the beginning, the trio adopted a consensual approach to the break-up of ABN that attempts to find human resources synergies, at least, by mutual consent. Whether that particular recipe will work has yet to be proven.

Crucially, no partner was treated as more important than the others. “There is an enormous amount of respect between us,” says Mr Votron. “I never had the impression that Fortis was seen as the smaller partner.”

This contrasted with how the trio were portrayed in the media, where Fortis was routinely referred to as the junior partner (and even as the weakest link). Doubts were cast on Mr Votron’s ability to obtain shareholder approval and to pull together the considerable financing package required.

At times, he says, it almost felt as if the media were “briefing against” Fortis, making it a bit trickier to persuade shareholders. “I communicated closely with our shareholders, but stayed away from the soap opera and did not react to negative press. Reacting would have been doing a favour for our opponents [Barclays]. Why would I make us look as if we were on the defensive and help to raise their profile?

“The temptation to respond was bigger than you can believe,” he adds. “I was under some pressure to defend Fortis and its plans, and I found it pretty hard to keep quiet. But better to control what you say than try to control what others say. The best thing I could do was to get on with my job and deliver the things that critics were suggesting we could not: shareholder approval and finance.”

Sitting victorious in Fortis’s swanky head office in Prins Bernhardplein, Amsterdam, Mr Votron looks happy with what the team has achieved – and relaxed about the job ahead. Some commentators believe his task is one of the most difficult – to overcome Dutch sensitivity to what is portrayed as a Belgian takeover, and to combine two organisations that often have branches only metres apart.

He denies any notion of a cultural divide, and says the proposition is actually selling itself. Getting people on board early was essential, but pretty easy. “From the start we clearly outlined what we wanted to achieve and when we wanted to achieve it by. This was crucial in getting their interests aligned with ours. All my contact with ABN AMRO staff has shown that there is a great willingness to do this deal. There is a real sense that they understand the industrial and strategic logic of bringing these two businesses together.”

More important now, he says, is to move on from the technical aspects of the transaction and focus on the business proposition. And when faced with what the acquisition adds to their business, people begin to get excited. “It is when you ask people, in the private bank, for example, what it will mean to their day-to-day operations to be the third largest private bank in Europe, that they really begin to think about the enormous advantages – the visibility, the power – that this transaction will give them.”

He does not underestimate the challenges. “The most difficult element is the people side: ensuring you keep employees and clients on side. There is always a solution for IT and operational issues; there is always a cost, but it is doable. Therefore, it is very important as CEO that you let the technicians do their job, and you get involved in the sensitive issues that require subtle judgements, such as defining the culture, the objectives and the client relations. These are not things that you delegate.”

Consistent vision

For the trio of bank CEOs involved in this extraordinary acquisition, this is one transaction in the many that made up the transformation of their banks from domestic players into global institutions. But Mr Votron says his vision for the shape of Fortis, which he has pursued aggressively, has remained consistent: a strong, wealthy Benelux foundation as the base for a diversified portfolio of businesses – retail banking and consumer finance, insurance, private banking, and the merchant bank, which includes its corporate services – and an increasingly global footprint.

The media attention has given Fortis the kind of global brand recognition he could only have dreamed of a few years ago (helped along, no doubt, by a new and lavish advertising campaign). The approach by Chinese insurer Ping An in the middle of the ABN negotiations, and its subsequent purchase of 4.18% of the Fortis Group for $2.7bn, shows how powerful such visibility can be: “Ping An is the second largest insurance player in China and it can help us to open up our Asian operations. Our bancassurance models are very compatible. We can learn from them and they can learn from us.”

Mr Votron has much to do. He has set himself only two to three years to deliver about €1.2bn of synergies, which he says is “perfectly deliverable”.

If 2007 was the year of putting in place pieces that he believes are key to Fortis’s growth over the next decade, then 2008 is the year of delivering on high expectations. Fortis may have risen silently, but it is now lodged in the full glare of the media spotlight. Mr Votron says: “This year will be about moving out of the back room doing deals, moving on to the front line and just getting on with it.”


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