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Discuss ABN AMBRO BANK-All news related to this company within the Company Profiles & News !! forums, part of the Mirror View - Ebooks Links & Miscellenous Reading Material category; A leap of faith in outsourcing TIMES NEWS NETWORK[ SATURDAY, SEPTEMBER 03, 2005 01:17:11 AM] The ABN Amro outsourcing deal ...



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ABN AMBRO BANK-All news related to this company - September 5th, 2005

A leap of faith in outsourcing
The ABN Amro outsourcing deal offers a sizeable and committed revenue stream for TCS and Infosys. The commitment part is crucial because annual revenues are not very huge, but a client like ABN Amro linking with these vendors for five years is a huge leap of faith.
The deal takes TCS and Infosys higher up the ladder in the global IT services arena, giving them the platform to bid for more such deals. The deal also highlights the increasing prominence of Europe in India’s IT revenues.
Infosys and TCS stand to gain $140m and $260m respectively in revenues from the deal over the next five years. Sales and net profit of these companies would gain by about 1% next year.
For Infosys, the contract would result in $28m of revenues in each of the next five years, whereas TCS would make $52m by way of revenues annually from the contract.
Infosys has more than 20 clients offering revenues in excess of $20m annually. On the other hand, TCS has five $50m clients.
But this is the largest committed revenue deal for the two companies.
Indian IT companies are generally known to get $25-30m contracts, and if the client is satisfied, then the work outsourced to them is increased and the period extended. It is the first time that either Infosys or TCS have won $140m or $260m, respectively, of committed revenues from a single client.
For Infosys, assuming the current margin structure, revenue and EPS would grow by 1.4% and 1%, respectively, in ’06, given that the rest of the business would grow as per guidance.
For TCS, due to higher revenues from the contract, the impact is higher. The company’s revenues as well as EPS could increase by about 1.5% each in ’06, assuming sales and net profit of the company grew by 36% and 25% respectively.
Numbers apart, they have earned the right to be counted among global IT stalwarts.

ABN to complete takeover of Italian bank shortly
REUTERS[ FRIDAY, AUGUST 26, 2005 01:00:41 AM]
AMSTERDAM: ABN AMRO NV could acquire Banca Antonveneta within weeks after rival bidder Banca Popolare Italiana offered to sell the Dutch bank its stake, sources close to the board told a Dutch newspaper. Business daily Het Financieele Dagblad reported on Thursday that ABN board sources said Banca Popolare Italiana had approached ABN AMRO to sell the nearly 30% it had built up in recent months.
ABN AMRO’s bid for Antonveneta failed last month but it, too, has accumulated nearly 30 percent of the bank’s shares and has said it is still interested in taking it over.
An ABN spokesman declined to comment on the report that Pop Italiana had approached ABN about selling its stake and said it is too early to say if the Dutch bank would relaunch its bid. “We have defended our interests and we will continue to do so. We are interested in being part of the solution of the situation if the conditions are reasonable,” the spokesman said. Shares in ABN were down 1.2% to e19.24 at 0805 GMT, but outperformed the benchmark DJ Stoxx Bank index, which was down almost 3%. “We would applaud a breakthrough in the Antonveneta saga, as at the moment ABN AMRO’s war chest is diluting EPS,” SNS Securities analyst Jacob Bosscha said in a research note.
Italian regulators suspended Pop Italiana’s takeover offers for Antonveneta last month amid doubts about financial guarantees for its takeover plan. Analysts expect the regulators to scrap the offers and force the bank to sell its stake.
Magistrates have seized Pop Italiana’s stake in Antonveneta and stripped its chief executive of his functions, while police are poring over company documents in search of possible financial crimes committed during the bid battle. The bank’s board is scheduled to meet on Thursday to discuss its options.
Pop Italiana has asked advisers Lazard and Dresdner Bank to seek alternatives to its original buyout plan. Sources familiar with the situation do not rule out Pop Italiana trying to sell its Antonveneta stake to a third party.
But legal sources said last week that ABN was threatening legal action against Italian regulators if Pop Italiana is allowed to sell its Antonveneta shares to a bank other than ABN. ABN’s cash offer of e26.50 per share valued Antonveneta at about e7.6bn ($9.26bn).
Pop Italiana launched a mandatory cash bid at e24.47 a share and a mostly paper bid that it said valued Antonveneta at e27.50 a share.
ABN chief executive Rijkman Groenink said earlier this month the Dutch bank’s chances of gaining a majority stake in Antonveneta had increased because of the legal wrangles surrounding Pop Italiana, but said it would not bid higher than e26.50.
He said then that ABN would sell its stake if it could not win control and would return to shareholders the roughly e3bn it raised in a capital increase to part-fund the bid.

ABN Amro net flat at Rs 195 crore
MUMBAI: The Indian operations of ABN Amro Bank have reported a flat growth in net profit at Rs 195.3 crore as against Rs 194.8 crore in the previous fiscal due to rising provisions and contingencies.
The total income of the bank for the year ended March 31, ’05 grew by 17.7% to Rs 1,342.7 crore from Rs 1,140.8 crore the previous fiscal on the back of higher interest income. Interest income rose by 19.2% to Rs 907.4 crore from Rs 761.4 crore the previous fiscal while other income rose 14.7% to Rs 435.3 crore from Rs 379.4 crore. The bank recorded a loss on sale of investments of Rs 71.9 crore from a profit of Rs 67.7 crore the previous fiscal. The bank posted a 75.3% rise in commissions ,exchange and brokerage to Rs 315.3 crore from Rs 179.8 crore while it posted a 12.3% increase in the net profit on exchange transactions to Rs 147.6 crore from Rs 131.5 crore.
During the fiscal, the bank had sold its custody business to Citibank for which it received Rs 43.2 crore. This represented part proceeds for the sale and the balance consideration is contingent, subject to certain conditions set out in the sales agreement being achieved.
Interest expenses for ABN Amro Bank grew marginally by Rs 333.8 crore from Rs 312.2 crore while operating expenses grew 20.5% to Rs 566.8 crore from Rs 470.3 crore the previous fiscal. Provisions and contingencies grew 51% to Rs 246.8 crore from Rs 163.5 crore the previous fiscal.
The capital adequacy ratio of the bank for the year ended March 31, ’05 was at 10.6% as against 13.5% the previous fiscal. The net non-performing assets of the bank was at Rs 34.6 crore (0.4%) as compared to Rs 59.2 crore (0.9%) the previous fiscal.
Deposits of the bank grew 20.8% to Rs 7,076.8 crore from Rs 5,856.4 crore while advances grew by 46.9% to Rs 9,836.4 crore from Rs 6,696.6 crore.
The balance sheet size of the bank increased by 45.1% to Rs 15,395.3 crore to Rs 10,609.8 crore the previous fiscal.

Infy, TCS, Patni in race for ABN Amro contract
MUMBAI: European banking major ABN Amro is in the finals stages of selecting its IT vendors for a multi-year, multi-billion-dollar contract. For the first time, Indian vendors have emerged as front-runners for a large portion of the contract.
The domestic vendors being considered for various components of the deal are Infosys, TCS and Patni. The local operations of IBM and Accenture could play a major role if these companies are selected.
The mega deal is said to be one of the largest in Europe as European banks, unlike their American counterparts, are not used to outsourcing. The deal also has a large offshore outsourcing component of more than $500m spread over five years.
The final negotiations are being carried out and the share of individual vendors is expected to be announced in a couple of weeks, according to a spokesman for the bank in Amsterdam.
The bank had invited bids for three areas within its IT department almost a year ago. The final vendors for each of these three areas — IT infrastructure, application support & enhancement and application development outsourcing — have been finalised.
IT infrastructure will involve the basic network, servers and other hardware within the company. ABN has finalised IBM and HP for this portion of the deal. In software application support & enhancement, ABN has identified Indian vendors, TCS and Infosys.
In application development outsourcing, which will have an offshore component, more than five vendors have been finalised, namely Patni Computers, TCS, Infosys, IBM and Accenture.
The domestic software services industry is seeing this as a major stage since Indian vendors, for the first time, are competing evenly in a large outsourcing deal. The overall deal involves a fairly important and large onsite presence and Indian vendors have emerged as front-runners.
Moreover, shortlisting IBM and Accenture for application development outsourcing in a category dominated by Indian vendors is seen as a sign of the times. The development centres of IBM and Accenture in India are seen as much bigger competition than their capabilities in Europe or the US.
Accenture’s operations in India have been ramped up, with aggressive recruitment and hiring. Its local operations already employ more than 11,000 people after less than four years of operations. IBM acquired more than 6,000 people through its acquisition of Daksh last year.
The capabilities that these two companies have acquired or built are now being used to pitch for the outsourcing deals.

ABN may be first foreign bank to convert into arm
MUMBAI: Dutch bank ABN Amro could emerge as the first to take advantage of the Reserve Bank of India’s new norms on foreign banks’ presence in India.
The bank is likely to convert its branch network in India into a wholly-owned subsidiary. ABN Amro is expected to take up the matter with the financial regulator soon.
Says Romesh Sobti, EVP & country representative, India, ABN Amro Bank, ”There are definitely some tax advantages in a subsidiary. However, we need to see the obligation of subsidiaries in case of directed lending and in terms of opening new branches. Against these obligations, we would weigh the advantages of taxes and opening branches in unbanked areas.”
The other advantage of a subsidiary is that a foreign company will not have to bring in fresh funds from the parent each time it opens a branch. StanChart has not yet firmed up its plans, while Citi, which was keen on a subsidiary at one point, is not enthused by the new norms. u Related report on P 8
Among other big players, HSBC will get six months to either pare its stake in UTI Bank or propose an alternative to RBI.
The new norms would allow private equity players to take a maximum of 10% stake in private banks. Interestingly, it may not be a cakewalk for ING to raise its holding in ING Vysya to over 51%, since ING Vysya is not considered to be a weak bank or one in need of restructuring, where up to 74% foreign holding is allowed in Phase I (‘05-09).
Citi clearly had a change of plan after the roadmap. “On first impression, the announcement does not trigger an immediate review of Citgroup’s strategy and plan for India. We will continue to build our growth strategy organically, and continue to look for incremental branches and expansion under the existing framework as we remain highly committed and enthusiastic about the India opportunity.
On the wholly-owned subsidiary route, we are studying the guidelines in greater detail, but they don’t seem to be at par with Indian private banks. The guidelines on corporate governance and ownership of private sector banks are consistent and welcome,” says Sanjay Nayar, CEO, Citigroup India and area head Bangladesh, Srilanka and Nepal.
StanChart is however, taking a wait-and-watch approach. Says Jaspal Bindra, GM South Asia, StanChart, “There is nothing in the guidelines which is providing an obvious benefit for the subsidiary route. It seems that at some stage it could be a potential route. It’s an option if there is a private sector bank which is attractive, economically or strategically.”
“StanChart is different from other foreign banks, as we already have a presence in 28 cities. For banks which do not have an operation in India, some of the weak banks might be very attractive. We are absolutely committed and determined to grow in the market and we will do whatever it takes. If we do not take the first step it does not mean we have backed off.”
Currently, private sector banks have a higher priority sector target of 52%, including 12% export financing, as against 32% for foreign bank branches, which includes export financing. Also, one in four branches of Indian banks need to be rural branches.
The RBI has said, “The WOS will be treated on par with existing branches of foreign banks for branch expansion in India. The RBI may prescribe market access and national treatment limitation consistent with WTO, as well as other appropriate limitations to the operations of WOS, consistent with international practices and the country’s requirements,”
There is also confusion among bankers on how liberal the branch network would be. “For new and existing foreign banks, it is proposed to go beyond the existing WTO commitment of 12 branches a year. The number of branches permitted each year is already higher than WTO commitments. A more liberal policy for under-banked areas will be followed. The branch licensing procedure will continue to be as per current practice,” the RBI said.
The RBI, along with the finance ministry, gave approval for only 12 new branches to be opened by foreign banks in this calendar year. However, it has not given any timeline.
Also, for WOS, depending on the country of origin they have a huge advantage as far as taxes are concerned. Currently, foreign banks have to pay around 42% taxes and according to the new regime under WOS, they would have to pay only around 32%, which makes a significant difference.

Citi acquires ABN Amro's custody business for around $50 mn
MUMBAI: Citigroup, the world’s largest financial services entity, on Tuesday announced that it is acquiring ABN Amro’s direct custody, securities clearing and fund services businesses in eight countries across select European and Asian markets, including India.
According to sources, Citi is likely to pay below $50m for the transaction. In these markets, ABN Amro has assets under custody of $240bn which will be added to Citi’s Global Transaction Services (GTS) unit’s $7 trillion custody portfolio.
The transaction includes ABN Amro’s domestic custody business in the Netherlands and its network domestic custody business in Russia, Greece, India, Indonesia, South Korea, Poland and Taiwan, servicing approximately 550 financial institutions and corporate accounts. The Netherlands business will be the biggest chunk in the deal.
Sanjay Nayar, CEO India and area head, Bangladesh, Srilanka and Nepal said, “This transaction strengthens Citigroup’s market leadership in the custody and securities clearing business in India.
It further expands our transaction banking offering to the domestic mutual funds industry. We intend to build on this acquisition to better satisfy our clients’ needs and further grow our market share in the GTS business.”

ABN Amro AMC strikes gold, IPO raises Rs 2,050 cr
MUMBAI: ABN Amro AMC, which recently entered the asset management business in India, has mobilised Rs 2,050 crore through its initial public offering (IPO), consisting of four schemes.
This is the largest mobilisation by any domestic MF during its maiden IPO.

The IPO of four new funds — ABN Amro Equity Fund, ABN Amro Monthly Income Plan, ABN Amro Flexi Debt Fund and ABN Amro Floating Rate Fund — opened on August 9, ‘04 and closed on September 3. It has mopped up funds from 20,000 investors, including both retail and institutional.
While ABN Amro Equity Fund has collected Rs 400 crore, the liquid fund raised Rs 1,123 crore during the IPO and the ABN Amro Flexi Debt Fund mopped up Rs 250 crore.
“We had set an ambitious target, but the mobilisation exceeded our expectation by about 20-25%,” says Romesh Sobti, executive vice president and country representative, India, ABN Amro.

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