Pfäffikon SZ, Switzerland – It’s been a long time coming but finally the die has been cast, NIBC will take over SNS Securities. SNS Securities is known by many expert stockbrokers to be a decent trading house. No one could have predicted that the securities division of the plagued SNS Bank would be hit, to extent it has, by all the misery in the housing market while, in actuality, they were on the sidelines. In that sense the takeover by NIBC will feel as a relief. The key question is whether this feeling and the intended cooperation are sustainable.
Allow me to take you back to the nineties. Then “Nationale Investeringsbank” – now NIBC – was a small-time (government) bank with high ambitions and deep pockets. The bank’s business model at the time was brilliant. The Parnib (the bank’s venture capital company), the dirt cheap Japanese money that flowed through the bank’s arteries, in combination with the Dutch state as major shareholder, was a strong and formidable combination. Measured by the amount of employees, the results were impressive. Still, NIBC at the time, had to hold its own against established names such as AbnAmro, Aegon and ING. Access to capital markets through a specialised broker would have fit perfectly into NIBC’s picture of going with the tide. “Strating Effecten” was incorporated in its entirety and renamed as NIB Securities.
However, things did not unfold as expected. Having had experience with Amsterdam traders and their cooperation with the bankers of the Hague, I will spare you the details involved. However, from the very beginning – and before the outbreak of fraud – the relations were tepid at best. The Hague viewed the securities division in Amsterdam as a group of lawless cowboys. Incidentally, I think few people know that NIBC was one of the frontrunners in terms of packaging and listing mortgages (Dutch MBS), the system that would ultimately cause the current economic crisis. Amsterdam would help with the listing and the Hague would package the mortgages expertly with a pretty red ribbon wrapped around it. I still ask myself who, in this situation, were the real cowboys. Ray Dalio, founder of the legendary firm Bridgewater, keeps repeating that it’s all about the people and the culture within an organisation.
In the meantime a lot has changed. NIBC too has stood at the edge of the abyss in 2008, but miraculously survived. Now, the bank is looking ahead once again and sees a lot of opportunities together with SNS Securities, which was probably incorporated for next to nothing. What’s remarkable is that I haven’t read anything new compared to the considerations made more than twenty years ago. “Our clients will now receive a greater choice in bespoke investment and banking solutions,” said Paulus de Wilt, CEO of NIBC. “This is unequaled in the Dutch midcap market.” At the time the Dutch stock market had much stronger representation worldwide than it does today. In this context, take a look at the development of the stock market in Zurich compared to the oldest stock market of the world. Beursplein 5 has been foolishly lost to the French and the new Dutch initiatives are consistently being crushed or hindered. The politicians in the Hague are not interested in a strong Dutch financial sector and continue to live under the yoke of Brussels. The fact that Dutch Finance Minister – Jeroen Dijsselbloem – has been sweeping loss after loss under the carpet does not seem to bother anyone.
NIBC’s initiative to incorporate SNS Securities is courageous, but also risky. When NIBC dusts off its own archive, they will likely come to the conclusion that achieving success with this dirt cheap acquisition won’t be self-evident. After all, combining two completely different blood types is a recipe for disaster. I’ve come to the understanding that the acquisition has been a long time coming due to hassle surrounding the bonus policy at SNS Securities. This too is not new. History seems to be repeating itself.
It remains for me to wish you a good weekend.
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 mentioned shares and has no intention of doing so in the next 72 hours.