ABN to shed 500 investment banking jobs

ABN Amro, the Netherlands biggest bank, is cutting up to 500 jobs after its chief executive, Rijkman Groenink, reported flat, half-year revenues yesterday and said he saw little prospect of economic recovery this year.

The jobs will go from the company's 2,500-strong equity and corporate finance desks, which have been hit by falling stock markets and a fall-off in mergers and acquisitions.

Locations of the job cuts have not been specified, but Mr Groenink indicated that London would see some job cuts but would remain a core business area. Its corporate finance division employs 800 people globally, 130 of whom are based in London where ABN has 4,000 staff.

About 1,600 people are employed in its equity team. The US equities business earlier this year was closed in order to focus on European equities. ABN has reduced staff by 3,000 in the past 18 months.

ABN's wholesale banking unit, which employs about 22,000 people in 45 countries, has been under pressure and reported a second-quarter loss of €125m (£75m). Provisions in wholesale banking for bad debts rose to €345m – more than treble the level in the first quarter of the year.

Mr Groenink said the cost-cutting measures would mean the equities and corporate finance business were profitable by 2003 regardless of a market recovery.

Despite concerns that exposure to WorldCom and problems in Brazil would mean a drop in earnings, Mr Groenink said ABN would maintain its 2002 forecast. Shares in ABN closed up 11 per cent at €16 on the news.

"We continue to be sceptical about the prospect of a meaningful economic recovery. However, we expect operating results for the year to be in line with our outlook," he said.

Total provisions for bad debt increased 87 per cent to €583m (£368m) due to several large corporate defaults. ABN has an €100m exposure to WorldCom. Revenues for the first six months were flat and operating profits were up 6.9 per cent. A stable dividend of €0.45 was declared.

There has been a raft of redundancies in investment banks over the past year as poorly performing markets take their toll on costs. More are expected unless conditions improve. Merrill Lynch, the largest US investment bank, cut 15,000 jobs last year. Credit Suisse First Boston has reduced its workforce by 9 per cent, or 2,800 people, in the past year.