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Saturday, 11 February 2017

In which country The Netherlands do I live?!

“Can you tell me where my country lies”
Said the Unifaun to this true love’s eyes

We live in confusing times, that is without a doubt...

Times in which feelings and emotions suddenly come to the surface that we thought to have "pushed under the rug" for eternity, after the first half of last century.

Times in which fear for other people, other countries and other religious groups seems to beat our feelings of compassion, cooperation, friendliness and hospitality.

And times in which some people – mostly politicians and influential opinionists with their own hidden agendas – shamelessly exploit our darkest fears for their own benefit and ‘claim to fame’. People, whose only achievement is seemingly to have broken down things, that better people than they built up for them before them, with their own blood, sweat and tears.

And now, I am confused in which country The Netherlands I live?!

Do I live in The Netherlands of LinkedIn and the 'highlighted' tweets?

A country in which 'passionate and meticulous freelancers' and 'independent, selfstarting teamplayers' achieve miracles on a daily basis and the impossible once per week?!

A country in which ICT, robotization, agile/scrum, outsourcing/offshoring and blockchain technology lead to a technological Utopia with interesting work for everybody, in which there is only room for ‘shiny, happy and successful people’ without any doubts and fears.

A country in which failure, uncertainty, temporary lack of self-confidence and a realistic view upon one's own weaknesses are fatal flaws, as they don't fit in the image of the shiny, happy and successful people.

A country in which no problems, but only challenges exist; ready to be conquered by the shiny, happy and successful people

And a country in which (excess) consumption and a life full of traveling in style, extravagant luxury, food from Michelin chefs and other tinsel are the only things that count.

Do I live in The Netherlands of the mainstream politicians?

A country were every hard-working man and family is promised €1000 in cash from the Prime Minister’s liberal-conservative VVD party, until the PM is re-elected! Then nobody from his party talks about this €1000 anymore.

A country in which the same Prime Minister shamelessly promises €2 billion extra money for extra jobs and large improvements in homes for the elderly, until he is re-elected. Extra jobs and improvements that must mitigate the years-long negligence regarding these homes, that the same Prime Minister allowed. After his re-election, everybody from his party will suffer from spontaneous, but lasting micro-amnesia regarding this very topic.

A country in which the vice-PM from the Labour Party promises even more money on behalf of care for elderly people, until hé is elected as PM. Then everybody from his party will complain that this very promise turned out to be an impossible proposal to negotiate upon with their counterparts in the new government.

A country in which one party fears the ubiquitous climate change and promises to change the country in one big greenzone, while another party promises unlimited tarmac for every car-addicted person to drive upon, with the highest possible speeds.

Do I live in The Netherlands of the populist parties?

A country 'allegedly' being victimized by nameless, yet invincible herds from the Middle East, Africa and Eastern Europe, who are going to take away our money, our jobs, our pensions and private wealth, our women, our own religion and our freedom of speech and freedom of religion and replace all those for the eternal darkness of new religious middle ages. And perhaps they are going to take away our lives too!

And a country, in which the remaining debris and the last remains of our own free will and freedom allegedly are annihilated by 'the faceless herds from Brussels', who want to assimilate everybody into nameless and unresisting monsters, akin to the Borg in the Startrek series.

A country, in which the populists are the only ones to understand and express the real ‘vox populis’, while ignoring all the voices from the people that disagree with them for various reasons, as “these are not the real voices of the real Dutch people”, but only ‘fake persons’ that should move out of their way.

Do I perhaps live in The Netherlands of the captains of Industry? (source: Financieel Dagblad)

A country in which ‘the captains of industry’ want to starve the beast of populism, by offering a “positive alternative”, as “the country lacks a clear growth perspective, which feeds the negativism. To fight populism the country needs a new business model; a dot at the horizon towards which we can work during the following decades...".

These business men realize that “they live an a world in which people increasingly zoom in on what divides them and not what bonds them. They look for a way to create an exiting, future-proof and sustainable society, together with positive people; people from all layers of society.”

Are these the same captains of industry who had put shareholder value and profit hoarding above everything else? And who had put their factories at the spots where labour costs and establishment costs were the lowest and where governments resided that didn’t care too much about labour circumstances or the environment?

And were these the same captains of industry, who spurred their companies to hunt for the lowest – if any – corporate taxes and who built up their labour force around temporary labour, flexible labour, (East-European) freelance labour or outsourcing and offshoring of labour to the Far East?!

Or were those captains of industry, avoiding corporate taxes and turning their labour force in a totally flexible one, all DIFFERENT captains of industry and do these captains of industry from the FD-article all preserve their Dutch factories and their fixed (Dutch) labour force for the mid-term future?!

Do these very captains of industry indeed want to live in a country in which the Dutch people have decent jobs against decent payments, including those captains of industry themselves.

And won’t these captains of industry look to American executive paychecks anymore as thé standard for their own future paychecks?! Because these huge wage differences, between the highest and lowest paid people and people living on welfare, are appaling and bad for the country in the end?!

Or will their compassion go skindeep instead and is it only aimed at making the Dutch satisfied, meek, humble and obedient again, so they accept their fate with an understanding smile and without any form of protest?!

Do I live in The Netherlands of Alt Right? (Source: Elsevier (paywall))

Statement by one of the Alt-Right people translated below
Courtesy of: Elsevier.nl
Click to enlarge
 
Do I live in arguably one of the happiest nations in the world, in which seemingly deranged people under the moniker Alt-Right nevertheless predict “a civil war in which people with a migration background will die, ‘just as Dutch people who don’t care for their own people”’?

Do I live in a country in which the same deranged people tell the world that they are following shooting practice and combat training, as they fear “...that it will be us or them... in a very bloody battle”?

Or do I live in The Netherlands of my office and my children's chess club and basketball club?!

Do I live in a country were people of all colours, religions and cultural backgrounds work together successfully, respectfully and joyfully, with humour and compassion and with a keen eye for the needs of their companies, as well as their colleagues?! Because working together and achieving successes or coping with failure together is fun and makes you feel confident in others.



My children's chess club
Picture by : Ernst Labruyère
Click to enlarge
Do I perhaps live in the country of my children’s chess club, where people from Indian, Russian, Surinamic, Chinese, Bulgarian, Italian, Turkish or Moroccan descent and a zillion other backgrounds fight their peaceful battles on the 64 fields of the chessboard, in order to see who’s best at chess? Children who all speak the language of this fascinating game and use every break between games to play that other favorite sport of them: football?


My son's basketball club
Picture by : Ernst Labruyère
Click to enlarge
Maybe do I live in the country of our basketball club where again children from a zillion backgrounds play together in teams to become better basketball players and also better people, under the loving guidance of voluntary coaches, who spend all their spare time to teach these youngsters the noble game of basketball?  

And where I see insecure youngsters – initially “at war” with their quickly changing, juvenile bodies – turn into confident and well-trained teamplayers, who appreciate the help and the displayed confidence of their team mates, bringing them all on a higher level?!

Do I still live in a country where a Dutch comedian can create a hilarious, multi-million-viewer mini-movie, in which he advocates The Netherlands as the natural number two behind Donald Trump’s “America first”?!

The answer is: “Yes, I do!!! I do live in this country The Netherlands!”. And strangely enough, the answer applies to all the aforementioned questions, regarding The Netherlands.

That is the strange and ambivalent situation that the Dutch have to live in, knowing at the same time that the political and societal situation in many other countries is equal or even much worse, when it comes to the upcommance of Alt-Right and populist movements and people. And also much worse with respect to unreliable, dishonest and disloyal politicians, who are only in it for the money and for their eternal claim to fame.

I realize that there is a lot at stake currently with the upcoming Dutch parliamentary elections of March 15th, 2017. Therefore I hope that the The Netherlands of the last category will win eventually: the country in which the people have humour, love, confidence and compassion with other people, as well as the headstrong directness that people in other countries might hate, but that made us to what we are today.

Not the picture-perfect, unicolourous small country with only white people that some of us might want to see, but a real country with real people; with real, but nevertheless resolvable problems. A country in which the mainstream politicians keep their relative fairness and honesty they always possessed.

My beloved country The Netherlands in which not the cynics, fearmongerers and warmongerers win, but the normal people of good will and good faith! 

Sunday, 5 February 2017

Will 2017 be the breakthrough year for the non-bank, fintech companies?

Or will 'fintech' remain a buzzword without many further consequences, because becoming a real bank is more difficult than it seems at first glance?!

During 2016, I had the idea that all the large, Dutch  banks were preparing for a heavy and bloody war against the non-bank, fintech companies, like Google, Paypal, Apple, Amazon and a few other large American tech-companies. It seemed so clear that these companies were planning to take over the classic banks by storm... and the old and distinguished banks with their vast network of brick & mortar offices would probably be first on the list to be taken over.

Consequently, the aforementioned large (and internationally operating) banks, as ING Bank, ABN AMRO, Rabobank and SNS Bank, were all involved in massive lay off rounds that cost thousands and thousands of bank employees their job. They all did so in order to become “lean & mean” again in the eve of the big battle against the fintech companies. This made 2016 arguably one of the worst years for personnel working in the banking industry, as not only their own companies were involved in massive lay-offs, but also all their competitors.

Having brick & mortar bank offices suddenly seemed so “2005” and so utterly obsolete and overly expensive, that litterally all large, Dutch banks were involved in closing many of the already quite limited number of bank offices that they had left, dismissing their personnel in the proces. Only on a few key locations in larger cities, one bank office remained open. Most other offices were replaced by ATM's and cash back machines or just simply vanished from the face of the earth.

They argued in particular that their customers demanded better, quicker and especially much broader online and mobile services, covering the whole pattern of banking services, instead of having a B&M bank office around within 10 km from nearly all of their customers: 

Why would someone have to visit a bank office, when he can do almost everything via the internet or his cellphone. Online and mobile is everything and brick & mortar is nearly dead”.

In the process they took the risk of offending some of their elderly customers, as these could have nowhere to go, when they were not online or using a mobile phone. These were the casualties of this battle for the best online, realtime strategy and the best customer experience. 

The future of the banks lie on the online channels and the online channels alone: “be there or be square” was the bank strategists' motto. And in the online battles against the fintech companies, it was paramount to be cost efficient and to have the best, the broadest and the most userfriendly software for the customers. If not, the fintech companies would probably conquer their companies.

And I have to be fair to the banks: candidates for overtaking the role of the classic banks seemed everywhere around. Apple, Facebook, Google, Amazon, Paypal and perhaps some other new kids on the block, of which we had not even heard yet, but which was making its plans to surprise the industry. You name it, they would do it…

But now? We are almost a year later and I wonder where the large fintech breakthroughs are?! Except for buzzwords like 'blockchain' and a lot of background noise, I don't see real improvements and the real killer apps yet. Am I just too impatient? Or won't it happen, in reality?!

Many people were talking about the blockchain as killer technology and everybody seemed worried about the future of classic banking.

However, when you ask a few persons where they would go with their money when the classic banks would vanish immediately, I guess they would say: “I will put the money in my pillow again, just like my great grandmother did”. 

In other words: none of these “emerging” fintech companies is ready to collect your savings’ money yet (in my humble opinion), none are offering the products and services yet that the classic banks do and nobody from outside the banking industry has yet invented the killer app that 'solves it all.

Is it perhaps not so simple to replace the classic banks as it seemed initially? '

And are the banks perhaps better in what they do than these new kids on the financial block?! That is not so improbable as it seemed last year.

It is quite easy to offer some of the services that the classic banks do. You can easily:
  • Sell a mortgage;
  • Sell a car loan or another kind of personal loan;
  • Offer a credit card;
  • Start a special purpose bank for collection of private savings’ money and deposits, like the Dutch special purpose bank Leaseplan Bank did in order to finance their car fleet (as car leasing was Leaseplan’s core business);
  • Sell Small and Medium Business loans, if one is willing to take the risk;
  • Offer a certain range of financial services to corporate and wealthy private customers.

However, the big point is: there is no fintech company yet, as far as I’m concerned, which can do it all and which can do those things better, quicker, more efficient and especially cheaper than the classic banks can! 

The simple fact that one's company swims in a stockpile of cash and investment money does not make one a better entrepreneur in the banking industry automatically.

And especially the American entrepreneurs and shareholders prefer a mindless share buyback program above an awkward and risky investment in a finance company, when it is not their core business. Share buybacks keep the shareholders happy and lift the obligation of thinking about profitable investments much longer and harder.

Wonder why for instance Apple and Cisco chose to enter the path of clueless, multi-billion dollar share buyback programs in 2016 and not chose for starting a fintech bank, when it is indeed so easy and prosperous as the fintechies always say?! Go figure! It is definitely not a lack of cash within these companies.

It is rather this: the current bank strategists and employees are not just “a bunch of pathetic losers and nitwits who blatantly fail in thinking out-of-the-box and just maintain doing the things that they had been doing for ages, with the techniques and infrastructure of ages ago”.

People like Ralph Hamers (CEO of ING) and Peter Jacobs (CIO of the same bank) are really some of the smartest, brighest and most visionary people of their breed and they are both darn capable of envisioning the future in the banking industry, as well as of acting to enable this future they envision within their bank. 

And they both sit on nearly hundreds of years of experience in the financial industry, as well as on very trusted computer and software systems that were improved and optimized during decades of ICT projects, without neglecting the modern developments. These guys are extremely hard to beat, even if you have billions and billions of available cash money to beat them, as they are simply masters in THEIR line of business: the finance industry and everything that comes with it.

And also the other large Dutch and most modern European banks are generally very good in what they do and how they do it, making it very hard to beat them on their own turf.

To be frank: I don’t see it happen that suddenly a fintech company emerges that takes the rest of the financial industry by storm. Can I be wrong? I can be wrong! But probably I am not!

I am certain that some fintech companies will do their amount of cherry picking with respect to some of the most lucrative parts of the banking industry. And I’m sure that they will be fierce competitors in their respective areas for the classic banks. I am also sure that these companies could become very successful in their new line of business and make a lot of money in the process. 

But will these companies make whole banks obsolete and push them out of business?! No way, José!

And now that the Dutch banks (and many other European banks too) have shrunk their personnel base to much smaller (sometimes even skeleton) levels, making their operation much cheaper and more efficient, they will be even harder to beat.

In the end, when you have inherited a large heritage of your parents or you earned the revenues of a large company stock sale and you want to invest that in order to put the money to good use. 

Would you then go to a company of which the experience lies in whole other terrains than banking and investing? Like a phone company, or a virtual book store, or even a payment service provider, like Paypal?!

Or would you still go to your trusted bank, as you have known them for ages and you know they were always careful with your money?!

To make a comparison: when your car breaks down and an expensive repair is looming. Would you go to the Walmart, because they just started a car repair and overhaul service? Or would you just visit your trusted dealer, because you know what he is doing and you know he won’t mess up your car even more? 

You can do the math! Also with respect to the emerging fintech companies that are not emerging so fast as you perhaps expected, you can do that!

Saturday, 4 February 2017

Rabobank now understands once more that “playing international bank successfully” is not without risks.

The Rabobank Groep in The Netherlands – a large, cooperative bank with a market capitalization of roughly €690 billion and mainly operating in the agricultural industry, as well as the (Dutch) mortgage market – was traditionally a very respectable bank with an ironclad reputation inside and outside The Netherlands.

The bank did not exist of a classic headoffice and a number of branches like ‘normal’ banks, but was built up around a few hundred independent bank cooperations all over The Netherlands, topped off by an initially service-oriented headoffice in Utrecht.

In recent years, the Dutch national bank DNB had been strongly restricting the independence of the local bank cooperations in The Netherlands, on behalf of the headoffice in Utrecht. This headoffice got a promoted legal status and was made much more responsible for the integral Dutch and worldwide operations (i.e. in the eyes of the DNB), leading to one ‘official’ headoffice for both the national and international operations.

In spite of these measures, the local and cooperative character of the bank, the personal way of doing business and its agricultural focus had been maintained mostly, leading to a generally spotless reputation on the national and international markets. 

Apart from being THE authority in the area of agricultural finance in The Netherlands, the bank exported its knowledge of agricultural financing to other countries, among others The United States, Hongkong, Australia and a number of European countries.

The first serious dent in the reputation of Rabobank’s international operations came in 2013, when a number of London-based, international traders of the bank were caught in the act of rigging the LIBOR interest rates, in cooperation with their peers at a.o. Barclays bank in the United Kingdom and UBS bank in Switzerland.

After this case had been settled with the international authorities (Europe and the United States) and the responsbible traders had been fired and penalized, it seemed to be business-as-usual again for this agricultural bank with its international ambitions.

However, little over two years later a case emerged in the United States of America that could have even more far-reaching consequences for this bank.

This case was that a local branch of Rabobank North-America had come under suspicion of widespread money-laundering for Mexican drugs kartels. 

In 2015 Bloomberg reported the following:

Among the Dutch bank’s 119 branches in California, the tiny outpost along Mexico’s border needed weekly armored truck visits -- sometimes more than one -- to haul away all the U.S. dollars being deposited.

The deluge, described by a person familiar with the bank’s operations who said it picked up after 2010, came from businesses just across the border in Mexicali. While other Rabobank branches needed currency to distribute to customers, Calexico was shipping it out.

The armored car trips, which persisted for years, offer a clue about what prosecutors may find in a widening investigation into whether Rabobank Groep was vigilant enough against money laundering. Rabobank shut the Calexico branch in January under a cloud as federal investigators sought to determine if the bank had ignored signs that its California operations may have been used by drug cartels to launder funds.

U.S. investigators now have evidence that some bank officials may have impeded internal efforts to scrutinize customer accounts and to report suspicious transactions, according to the person who described the armored car runs and another person familiar with the investigation. Furthermore, some bank officials may have tried to cover up the alleged activity by withholding documents from the Office of the Comptroller of the Currency, the people said. Federal authorities could view any such actions as obstruction of justice.

When these allegations are true, this is a serious situation for this Dutch bank that traditionally prides itself in doing business cleanly, transparently and responsibly. And it seems that the allegations came with a stockpile of circumstantial evidence, as it isn’t normal that a normal bank in the agricultural industry has to deal with (litterally) truckloads of cash money from suspicious sources coming in every week. On top of that the executives are seemingly hampering the investigation into the origin of this money.

As far as I know, the investigation did not lead to a court case yet. This makes sense, as such financial/administrative probes are always notoriously time consuming in the preparation phase, before they can even come to trial. And the more evidence is lying around to be collected and investigated, the more time it takes to inventorise it. This does not mean, however, that it will never come to a trial or a verdict in this case. Especially not as the American financial authorities are always extremely vigilant against foreign bank organizations.

During my search for more information on these events, I stumbled upon this article from May, 2016, of which I print a few snippets.

A federal grand jury is questioning former and current employees of Rabobank branches in San Luis Obispo County as part of an investigation into allegations of money laundering for Mexican drug cartels.

Beginning in about 2010, bank management would send armored trucks weekly to a branch in Calexico, a tiny town just across the border from Mexicali, to pick up truck loads of cash. Wire transfers were then sent from the Rabobank in Calexico to customers across the border, according to a former Rabobank insider.

The Bank Secrecy Act of 1970 requires banks in the United States to work with the government to detect and prevent money laundering. But, bank officials allegedly instructed employees at a Rabobank in San Luis Obispo County, where statewide compliance checks occurred, to ignore signs of money laundering, the insider said.

These orders, not only permitted the bank to increase profits, but also allegedly allowed tens of million of dollars in drug money to be funneled across the border, the insider said.

There you have it. Although one can’t totally trust news sources these days, in this time of fake news, it seems that the American government is building a rockhard case against the Rabobank when these allegations can indeed be proven in the court of law.

A case that – when proven beyond reasonable doubt – has the power to put Liborgate in the shadow and make an effective end to the East-American operation (i.e. Rabobank North America) of this Dutch bank, in my humble opinion. 

It could even affect other Rabobank operations in the United States, like the New York-based, Rabobank North-American Wholesale subsidiary (Rabobank NAW) and perhaps even the whole, global Rabobank organization, when the penalty exceeds a few billion dollars and therefore becomes life-threatening for the whole bank.

A group of Mexican human rights’ activists at least felt confident enough to run the gauntlet and file a complaint in The Netherlands with the Dutch Public Prosecution. These activists did this, based upon the allegations that the Rabobank helped the Mexian drugs mafia in their (extremely bloody and societally spraining) decades-long drugs wars, with this alleged massive 5-year long money laundering operation, thus having the blood of thousands of innocent victims on their hands.

The following snippets are from the Dutch newspaper Telegraaf:

The Duth Rabobank is co-responsible for the thousands of victims of the bloody drugs war in Mexico. This is stated by Mexican human rights’ activists. Their sollicitor Göran Sluiter, who is also professor in International Criminal Law, has filed a complaint against the bank at the Dutch Public Prosecution on their behalf.

These Mexican drugs cartels make an annual profit or roughly $8 billion in the United States alone, with drugs trades on the street and all this money [most of it is cash money – EL] has to go somewhere, according to Sluiter.

“In the period between 2010 and 2015 the bank laundered money on behalf of the Mexican drugs cartels. This handles a.o. about cash that street dealers made with the sale of Mexican drugs to American drugs users. That money has been deposited at a branch of Rabobank in the border city Calexico, lying in the deep south of the US. Afterwards the bank rotunded the money to a series of other accounts, thus making that the origin of the money was not easily visible anymore. By doing so the bank supported organizations, which are responsible for large-scale murder, torture and vanishings of (innocent) Mexican citizens”.

“This bank branch, of which it was a publicly known fact that there was a conspicuously high number of large cash deposits during the year, is part of Rabobank North America. This is a full subsidiary of the Rabobank Groep. This means that the Dutch executive management has the full authority regarding its activities in the US.

As the Rabobank officially states that the bank are an advocate of societally responsible and sustainable entrepreneurship, the headoffice cannot hide behind the statement that this all took place very far away and hence out of sight of the executive management. What we want is that a criminal investigation is started  into the role of the Rabobank Groep and its factual executives. All too often, financial institutions can escape a verdict with a settlement. We want to prevent that from happening again.

[…] We think that the Rabobank Groep should have asked itself the question, if they should be active in a region of the country, which is so dominated by extremely violent drugs cartels in the first place.”

The awkward part about this developing story is that it is probably true that the worldwide bank executives in Utrecht, The Netherlands, were clueless about the ongoing events near the border of Mexico.

The executive management of the Rabobank Groep gives most attention to the Dutch operation as it is by far the largest and most important operation of the bank. The foreign subsidiaries and branches had always been the domain of (formerly) Rabobank International, which was a separate part of the bank with a quite independent status until a few years ago. 

And even though these foreign subsidiaries came more on the retina of the executive management – due to the increasingly stringent finance and risk regulations and monthly (nowadays even daily) financial reporting required by the ECB – I suspect that most of these foreign subsidiaries  and especially their branches all over their countries of residence  are still black boxes for most Dutch executives.

As Liborgate already showed in 2013, it is deadly for internationally operating banks like the Rabobank to give their (independent) subsidiaries ‘too much leash’ by treating them as total black boxes, without wanting to know to a T what is going on in their daily business and keeping a keen eye on the corporate governance overthere.

In cases like these, it is too often true that “everybody and their sister already knew what was going on in such bank branches, except for the executive management in the local and global headoffice”. 

And it simply can’t be true that a bank branch receives two armoured trucks per week(!), shipping out stockpiles of cash money, without (executive) people within the bank noticing that: that is a conspicuous number of visits for a normal bank branch in the age of electronic payment and virtual/electronic money. Either executives know that or they don't want to know that! There is no other option.

We don’t know whether these “insiders” – within Rabobank Calexico and (perhaps) the headoffice of the Rabobank N.A. holding – were blackmailed or physically threatened by those drugs cartels or that they simply received “a slice of this huge pie”, consisting of billions of dollars per year.

What we do know, however, is that central bank organizations of such large multinational banks with loads of activities in foreign countries and especially in such suspected regions must be very alert for fraud and (involuntary) misconduct of their personnel.

Banks and other institutions where tons of money are going around at a very high pace are always extremely vulnerable for fraud and criminal activities, like money laundering, embezzlement and forgery of documents.

In such cases, the “ministerial responsibility” for the American and Dutch bank executives is very clear: even if you didn’t know such things, you should have known such things. You can’t run and you can’t hide for this obligation to know things going on in your bank. Simply blaming others for that is not enough.

Therefore it seems yet again that Rabobank – as a local Dutch champion of banking – is not ready for the international implications of doing massive business abroad, in unknown territories and opaque local situations.

Time will tell whether this was just a repairable mess up in Calexico, which the bank can handle quite easily by paying a substantial penalty in a settlement case with the American (and Dutch) authorities, or a fatal, deadly flaw for an overly ambitious, yet less experienced bank from The Netherlands. 

At least the Rabobank understands once more that “playing international business successfully bank” is not without risk.

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