Most banks call their financial institutions coverage team the FIG group, but ABN AMRO has created an even broader group called FIPS – which stands for financial institutions and public sector team.
Clients range from domestic commercial and public sector banks to central banks; while the businesses run the gamut from foreign exchange and credit derivatives through to equity capital raisings. Add in insurance companies and investment management groups and that's a pretty big client base.
Global head of FIPS, Sam Zavatti says these clients typically have "very large wallets" and adds that he sees enormous potential in Asia. As such the team in Asia has been ramped up significantly with a slew of new hires.
The head of the group in Asia, Mark Stadler has recruited David Ng from BOCI to head Greater China banks relationship management; Aki Kinjo from IBM Consulting to run Japan banks; David Khoo from JPMorgan to assume responsibility for Indonesia, Malaysia and Singapore; and Bonny Landers (likewise from JPMorgan) to take responsibility for all central bank relationships.
The team has been expanded to 20 from eight only two years ago.
Zavatti sees enormous potential. On the central bank front over 50% of the world's reserves are held by Asian central banks. He says that they are now diversifying their asset bases and buying products further down the credit curve – a profound change that will lead to a great deal more business for intermediaries.
Moreover he estimates that Asian central banks will move 20-30% of their reserves into euros. "They will diversify their asset base into euros," he predicts. "And as a European bank that plays to our strengths."
Zavatti says this is a process that is just starting.
Stadler comments that an equally momentous trend that is just starting is the Basel 2 revolution. By 2004 all banks will have to be ready to adopt the new Basel 2 standards. "If Basel 2 passes in its existing form," says Stadler, "the whole landscape will change in Asia and that is an opportunity for our group."
ABN estimates that on a global basis Basel 2 will affect $50 trillion of risk assets and lead to $25 billion of spending on new IT infrastructure and systems. Asian banks will find the adjustment to Basel 2 enormous (see FinanceAsia magazine cover story, June 2001). Most Asian banks haven't even started preparing for the overhauls required in operational risk management that this will necessitate.
Says Stadler: "Asian banks want the advice of banks like ABN AMRO on such matters because we are actually implementing the changes ourselves. They want to know how ABN AMRO is making the transition."
He points to the example of Bank Mandiri, for which ABN has a one year mandate to offer operational risk management advisory (as well as joint-lead its IPO and advise on bancassurance possibilities). This, Stadler points out, won't be the last such mandate in the region, and ABN AMRO will target its advice to the region's leading banks.
"Basel 2 doesn't get discussed by many people," says Zavatti. "But it is very serious. And the timeframe is very tight."
Of course, for those banks that can't cope with Basel 2, M&A will beckon. All of which suggests the FIG area will continue to grow.
Little wonder ABN AMRO is so keen to hire.
