Broker takes sting out of ABN exit

The expansion of ABN Amro Craigs should take some of the sting out of Dutch investment banking giant ABN Amro's withdrawal from the New Zealand market as the Tauranga-based broker takes on staff and various operations from the departing company.

The stricken Royal Bank of Scotland has confirmed it is exiting its New Zealand ABN Amro-branded businesses. It will sell its 50 per cent stake in retail business ABN Amro Craigs back to the company's senior employees, including founder Neil Craig.

Craigs will also take over much of ABN Amro's wholesale Australasian equities, debt market and corporate finance services in a "strategic alliance" with Royal Bank of Scotland.

ABN Amro has just over 50 employees and some will be offered employment and shares in ABN Amro Craigs.

Although ABN Amro boss and former NZX chairman Simon Allen was unavailable for comment with staff being instructed by RBS not to speak to media, sources said other ABN Amro employees had been offered positions in Australia and the company's New Zealand investment banking operations would be run out of Sydney.

The withdrawal process will take about six months and is part of a reduction in RBS's global presence.

ABN Amro Craigs chief executive Frank Aldridge was unable to say exactly how many jobs would go to his company but some indication was likely over coming weeks.

Aldridge said ABN Amro's withdrawal was part of the general contraction in the financial services industry resulting from the credit crunch but his company saw local opportunities.

Although the New Zealand sharemarket was struggling in terms of size and liquidity, "as we come out of the recession we've got at the moment I think we've got some good opportunities coming along".

It will expand into mergers and acquisitions, and capital and debt raising for larger clients, competing with the likes of Deutsche Bank, Goldman Sachs JBWere and First NZ Capital.

ABN Amro Craigs is the largest retail broker in the country and has just over 200 staff in 17 branches.

It was formed when ABN Amro purchased a half share in Craig and Co seven years ago.

Aldridge said he was "very comfortable" with the price his company was paying to repurchase ABN Amro's half share. Aldridge said his company had been in discussions with ABN Amro for some time after Commonwealth Bank baulked at acquiring ABN Amro's Australasian businesses last year.

Market commentator Arthur Lim noted ABN Amro's New Zealand investment banking team had been shrinking for some time, so the remaining headcount would not be a big number.

"The whole financial services sector is shrinking, we're seeing retrenchment and reduction rather than growth."