Privatisation is a Flop
Pfäffikon SZ, Switzerland – It’s a good thing ABN AMRO’s IPO has been postponed. The decision was motivated by the squabbling over the bank’s executives salary increases. It has become painfully clear that the management skills of chairman Gerrit Zalm can – at the very least – be put into question. Moreover, as far as I’m concerned, Gerrit Zalm should be allowed to go on a compliance for dummies course. Meanwhile, the headstrong ABN AMRO commissioner Peter Wakkie has drawn his own conclusions and has – understandably – left the bank in a solo effort. With this the chaos is complete and an IPO seems further away than ever. These developments however are, as far as I’m concerned, not the reason the bank should refrain from entering the stock market.
Significant losses
Some market researchers are finding this to be the perfect timing to pursue a stock exchange listing for the bank. Apparently people have forgotten that it is the taxpayer that would be paying for the losses incurred at an IPO. Moreover the Dutch state shouldn’t blink twice at the prospect of a drop in prices. The core of the matter is, however, that the Netherlands long ago embraced the idea of privatisation – the supposed key to success. Prices would decrease and quality would increase, it all sounds too good to be true.
Critically ill
The reality, however, is less easily managed. Recently the Netherlands was startled by a power failure whereby a large part of the country was blacked out. Even the national airport Schiphol suffered under the circumstances and the Netherlands looked foolish on the international stage. For the insiders of this type of energy supply this acute failure did not come as a surprise. For years the energy companies have shown contempt towards the maintenance of the network in order to optimize profits. Healthcare is another great example where the patient gets squeezed financially. Everyone gains from the privatisation of healthcare, except for the patient who, in the mean time, becomes critically ill.
Derailed
I am of the opinion that basal issues such as utilities, public transport and healthcare should once again return to government hands. A bank also belongs in that list, one that treats the citizen and SMB in an orderly fashion. The urge to privatise has completely derailed and has led citizens to incur unknown (hidden) costs in a range of fields. It’s about time that that comes to an end. How much money do we want to pay for this lesson? Luck would have it that the Dutch state in today’s financial markets gets paid when it attracts funding. That’s what I call a good time to aggressively put a halt to the derailed urge to privatise.
It remains for me to wish you a happy Easter.
Jan Dwarshuis is a senior asset manager at Thirteen Asset Management AG, where he is responsible for the Thirteen Diversified Fund. Dwarshuis writes his columns in a personal capacity and is not paid for them. Nor is he paying for his columns to be placed. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in the above shares and has no intention of doing so in the next 72 hours.
