Butterfield’s purchase of ABN Amro is a merger of cultures
GUERNSEY and the Channel Islands may have already been a big deal for Butterfield, which has had a local presence for many years. But the islands have now become a much bigger deal thanks to the completion of the £161m. purchase of the Guernsey operations of Dutch bank ABN Amro.
‘For Butterfield itself as a group, it really achieves our goal of really balancing our risk exposures in our business among our four jurisdictions – Bermuda, Cayman, Guernsey and Jersey,’ according to Michael Collins, Butterfield’s chairman and chief executive officer.
‘As at this point with the closing of the ABN transaction, deposits from the Channel Islands now represent about 40% of our group deposit base. So it’s a substantial position in the Channel Islands and something we’re going to continue to look at growing over time.’
He added that it was a good fit for Butterfield, which is headquartered in Bermuda, with the same client base that it had in Bermuda and Cayman – with its products and services geared to the offshore market.
While Butterfield remained interested in further acquisitions, Mr Collins said: ‘ABN is a pretty big acquisition for us – 120 people and a pretty big acquisition in terms of the balance sheet size, so we’re really focused on integration.
‘So, as we’ve been saying in town halls [meetings] over the last couple of days, our focus is going to be integrating ABN with Butterfield and making their clients feel valued, making employees feel like they have got a good new home. And that’s really our focus. I think it would be unlikely that we would be doing another acquisition so quickly. It’s more important to get this one bedded down and settled.
‘I think we’ve done a pretty good job in taking the new management team from both organisations. So it really isn’t just Butterfield-led management team. Actually out of the top management group, it’s reasonably evenly distributed among former Butterfield and former ABN people. So we’re trying to make sure it is a merger of cultures as opposed to just Butterfield taking over.’
He added: ‘What is great about the ABN team is their focus on clients is really fantastic. They know them really well. So I think the process of integration of the clients will go well.’
Asked about local office sites, Mr Collins said the current Butterfield location and that of the former ABN operations would be maintained for now. ‘We’ll see what will happen in future. But it’s too early to say exactly what we’re going to be doing space wise.’
Looking to the future, the Butterfield boss was upbeat about his firm and Guernsey as a ‘fantastic’ jurisdiction. ‘I would say longer-term, we’ll probably still be able to grow the headcount. But in the short-term, there is some integration and some overlap that we’re going to need to focus on.’
Reflecting on changes in the banking sector, he also said: ‘There are fewer banks now than there were in the past in Guernsey. But we’re still interested in seeing if we can grow our market share both here and in Jersey.
‘Obviously there has been a lot of banks and trust companies that have been sold recently in the offshore world because a lot of the big UK banks don’t necessarily want to be in offshore banking any more. Simply because it’s not big enough in terms of their scale and secondly there are some regulatory pressures – particularly for banks that are partially or wholly owned by government.
‘It’s different for us because we are an offshore bank. It’s what we do. It’s where we’ve been since 1858. It is our focus and part of strategy is that we are in this period where there is a bit of a cycle where there’s a lot of sellers and very few buyers. And we’re just taking the opportunity to buy into that vacuum and try and grow while there’s that opportunity.’
The dislocation in the market would probably continue for a few more years before finding balance and settling down. ‘I think what will happen in terms of this dislocation or shake-out is you will end up with fewer offshore banks but banks that actually want to be offshore or have a subsidiary that’s offshore,’ said Mr Collins.
‘In a sense it is actually just showing who the longer term players are going to be in this market. And you want competition. It’s good for both Guernsey and Jersey to keep as many banks as you can for employment – and it makes us a better bank because we have to compete.’
