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ABN to take EUR 790m charge
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ABN Amro, the biggest Dutch bank, announced it would take a one-off EUR 790m ($1bn) charge as it slashes 2,850 wholesale banking and back-office jobs, confirming a report in the Financial Times.
The bank has accelerated and broadened measures mapped out by its group shares service unit - a new division charged with finding savings - to curb costs by pooling or outsourcing back office functions. It also disclosed the impact of a program launched in October to overhaul wholesale banking operations.The net charge of EUR 530m will be taken in the fourth quarter. However the bank maintained its 2004 outlook of at least 10 per cent net profit growth, excluding one-off items. It employs 104,000.
ABN Amro said the group shared services unit measures would cost EUR 870m - EUR 146m higher than indicated when the plan was unveiled in outline in the summer. The increase is due to activities relating to the bank's real estate program, which will lead to additional savings in 2005 and 2006.
Of that cost, EUR 515m will be covered by the one-off charge, with the rest running through profit and loss accounts in the years 2005-2007.
Expected savings will rise from EUR 500m indicated earlier to at least EUR 600m a year from 2007, the bank said.
An additional EUR 170m in savings will be realised from wholesale banking changes involving collapsing seven business units into three.
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