Executive pay controversy: Dijsselbloem delays ABN Amro IPO
Dutch minister of finance Jeroen Dijsselbloem (pictured) has announced he will delay the sale of ABN Amro Group due to the controversy around pay increases at the bank.
ABN Amro was taken over in 2007 by a consortium of the Royal Bank of Scotland, Fortis and Banco Santander, constituting the biggest bank takeover to date.
During the course of the 2008 financial crisis, the institution had to be rescued out by the Dutch government which bailed out Fortis in order to subsequently split ABN Amro’s Dutch assets from those owned by RBS, ABN Amro is since state-owned.
The IPO of ABN Amro ,which was widely expected to take place at the beginning of 2015, the Ministry of Finance expected to recover about half of the €30bn investment in the lender.
However, a recent increase of executive pay among the ABN Amro board caused widespread public outrage in the Netherlands, prompting Dutch MP’s to demand an internal investigation on the matter.
“The pay increase didn’t come as a surprise to be, it was based on a decision in 2012 which was approved by the house of representatives and the minister in question and the decision has been delayed for two years. But it is now very hard to justify because the bank is still in a process off restructuring where employees have to leave the bank, are dismissed or are not receiving pay rises.
“Legally, the board members were entitled to the pay rise but there was insufficient awareness of the public criticism the decision would face” Dijsselbloem said in an interview with Dutch news channel RTL Z.
In addition, the Dubai-based private banking segment also faces investigations by the Dubai Financial Services Authority for recent breaches of conduct, which led to the dismissal of six ABN Amro employees in early March.
In light of the recent controversies, Dijsselbloem confirmed that he would delay any further decision: “There is need for the situation to calm down before we can proceed with these steps” the minister stated.