Risk management

Deals which involved placing shares and bonds with investors do not appear to have carried much risk during this period. In the majority of cases the branch was part of a syndicate made up of reputable firms, all of whom knew the Amsterdam market very well.

Meanwhile practically all loans were granted on a short term basis, nearly always covered by collateral in the form of securities or else by a company guarantee.

Some specific deals for large amounts were however subject to complex arrangements in order to ensure a successful outcome. In 1933, the branch financed imports of Romanian wheat to the Netherlands. In this transaction, which was worth 15 million francs, the beneficiary of the loan was the grain dealer Nederlandsche Graanhandelmaatschappij, the Dutch subsidiary of the German cereals trader Getreide und Industrie & Commissien. In addition to the wheat itself, which stood as guarantee with a 20% cover margin, the branch received an additional firm guarantee from German chemicals conglomerate IG Farbenindustrie, backed by collateral of 4 million Swiss Francs in IG Chemie shares. IG Farben was also asked to provide letters from the German government and German Central Bank confirming that there would not be any problem transferring currency from Germany to the Netherlands if the wheat could not be sold prior to the repayment date. This was certainly what one might call a well-secured deal!

When Mendelssohn & Co., whose Amsterdam subsidiary had ongoing business relations with the Banque de Paris et des Pays-Bas branch, went bankrupt in 1939, the Bank succeeded in recovering the entire amount of its loan by calling in the guarantees it had arranged.

The minutes of the Board meetings do not note any particular failed operations during this period. It is likely however that there were occasionally some losses, but for relatively small amounts.

Results

Given the lack of detailed information on end-year results during this period, it is difficult to assess just how profitable the Amsterdam branch was. However the reports drawn up for the Banque de Paris et des Pays-Bas Annual General Meetings give some idea.

The 1921 financial results appear to have been satisfactory: Despite the economic crisis which Switzerland and the Netherlands are going through due to their strong currencies, which have hampered industry and trade and reduced exports, our Amsterdam and Geneva branches and our office in Rotterdam have achieved better figures than last year. 83

83. Annual report 1921.

91F R O M B A N Q U E D E PA R I S E T D E S PAY S - B A S T O PA R I B A S , 1 8 7 2-1 9 9 7