Positioning for Europe
Achmea m erger
The shifting balance of power in European financial services, combined with
inexorable technological advances, oblige every player to operate in an ever more
innovative and cost-efficient way. Last month's announcement of a strategie merger
with Achmea, a Dutch cooperative organization that ranks as a leading player in
this field, marks our latest response. What's NewS examines the far-reaching
implications of this important deal.
Number one venture
Sharing traditions
Redrawing financial power
Key figures for the joint venture as of 1 January 1999
(based on year-end 1997 information)
Optimizing knowhow
Expanding operations
What'sNewS Issue8-August 1998 5
Against the backdrop of rapid
restructuring in European financial
services, carefully-modulated economies
}f scale and scope have become
issential to strategie survival and
further growth. This is why Arthur
Arnold, director of strategie alliance
projects, describes the Achmea deal as
an agreement of the highest strategie
importance. 'For some years, people
have recognized "All-Finanz" as a wave
of the future in financial services. The
big challenge remains to optimize the
balance between banking, insurance,
and asset manage-ment. As a result of
our deal with Achntea, we will achieve
the correct balance. We will also secure
a much higher profile not only in
Holland but as a substantial player
in "Euroland".'
Ijfhe first stage of our merger, to be
complcted by the start of next year,
will see the creation of a 50-50 joint
venture that will join our fund
management subsidiary Robeco and
our insurance operation Interpolis
together with the full portfolio of
Achmea operating units that include
Centraal Beheer, Avéro, and FBTO
(insurance), Zilveren Kruis, (the top
Dutch health insurer), plus PVF
(pension fund) and Staal Bankiers
(private banking). Together, the venture
will have at least NLG 300 billion in
assets under management, and thus
rank number one on the domestic scene.
It will also be the top non-life and
health care insurance company, and
second in the life sector. When the
merger is finally complete at the
ooperative level within three years, it
will create a capital base of over NLG
35 billion, bringing together assets on
the balance sheet projected well in
excess of NLG 500 billion.
More importantly, perhaps, the
combination will have access to 4.5
million out of the total 6.5 million Outch
households. By sharing investment in IT
and product development over a wider
cliënt base, it will operate more efficiently
and be able to offer customers a broader
range of more competitive products and
services. After all, both Rabobank and
Achmea share the same cooperative
tradition, and customer focus lies at their
philosophical core. 'The customer should
be able to decide which financial services
he wants and needs. Our aint is to meet
that demand with as many distribution
channels as possible,' Arnold explains.
Moreover, this wider customer base
improves the scope to address a number
of emerging opportunities. For exaniple,
as individuals start to rake on more
New
Rabobank
Achmea
Group
joint venture
Total assets*
423
63
486
101
Capital base*
26
8
34
10.5
Assets under management**
205
95
300
260
Premium income life**
3.2
3.0
6.2
6.2
Premium income non-life**
1.6
4.1
5.7
5.7
National health insurance**
0
4.4
4.4
4.4
Turnover*
34.3
16.2
50.5
23.5
Net result*
1,907
674
2,581
1,113
Employees
44,650
9,750
54,400
12,500
in NLG millions; in NLG billions
responsibility for their own health care,
pension, and other financial services
arrangements, the combination of
Rabobank and Achmea will be in a strong
position to carve out a substantial
position in the market for packaging such
employee benefits. While the deal will
clearly redraw the landscape of financial
power in the Benelux - strengthening
our position at the launch of the common
European currency - its success will
clearly require hard work.
The challenges include rebundling our
operations in a more market-oriented
way. Key aspect of managing this
important business integration therefore
include merging diverse corporate cultures
and further cultivating our human
resource base. The idea is to optimize
both financial and intellectual knowhow;
after all, balance sheet figures are
important - but success in providing a
stronger, more innovative and integrated
package of banking, insurance and asset
management services to our customers
will depend on the combined and expert
efforts of our people. Thus, both in the
short and long-term, this merger lias been
conceived with the widest sense of the
stakeholders involved. Ir will address the
needs of both our customers and also
advance our employees' interests and
potential for further career development.
The deal will also call for a new,
rationalized branding strategy. 'Different
names aren't necessarily a bad thing,'
Arnold says. 'We can maintain a range
of different brands,
provided each is
among the strongest
in its respective field.
The deal was very
positively received
by customers and on
the financial
markets,' he
continues. 'The
leading rating
agencies have
reviewed the
essentials of the deal,
and confirmed our
triple A rating.
These facts, together
with our common
commitment to the
cooperative culture, will build a stronger
platform so that the Rabobank/Achmea
axis can both substantiate opportunities
and expand its cooperation with other
players in "Euroland."'
