ABN Amro: Benefits From the Oligopolistic Nature of the Dutch Banking Sector

After emerging from outright government ownership, ABN Amro is one of the simplest banks in Europe. It is essentially a retail and commercial bank with limited capital markets activities. Its strong retail deposit base supported above-average profitability until negative interest rates started to bite. Having a lending book dominated by fixed-rate mortgages did not help either. The long-duration lending book forces ABN Amro to use more expensive long-term funding to manage liquidity risk, which compounds margin pressure in a declining interest-rate environment.