Mary Pieterse-Bloem, Professor of Financial Markets at Erasmus School of Economics and Global Head Fixed Income at the Global Investment Center of the Private Bank of ABN AMRO, is asked about the fine that ABN AMRO has received due to the bank having done too little to prevent money laundering on BNR Newsradio. She also talks about the IPO of Coinbase, one of the largest online cryptocurrency exchanges that went public with a value of 85 billion dollar.
Surprising stock market response
ABN AMRO settled with the Public Prosecutor's Office for 480 million euros. The bank had allegedly done too little to prevent money laundering. For instance, they did not report structurally unusual transactions, or did not do so on time. ‘Speaking for myself, I think it's a pity that ABN AMRO is in the news like this,' says Pieterse-Bloem. ‘Mainly because the bank has done everything it could to support society during the crisis. On the other hand, I find it very courageous that our foreman has expressed his sincere regret. I also know that they are working very hard internally to get the money laundering issue under control.' Although one would have expected the bank's fine to have an effect on the ABN AMRO’s stock, the stock market reacted surprisingly positively to the news. ABN AMRO was even among the gainers.
Realistic or not?
The question is whether it is actually realistic that a bank should detect all criminal activity. One in five ABN AMRO employees is currently engaged in detecting fraud and money laundering. ‘We are all working on it at the moment,' says Pieterse-Bloem. ‘I also have to do gatekeeper courses. The bank very much wants all employees, in whatever place, to be aware of what money laundering is, how you can spot it and that you report it if you signal something.'
Pieterse-Bloem sees a lot of potential in a cooperation between the government, the central bank and banks to tackle the problem of money laundering, but also the problem of cybersecurity. ‘As banks you can certainly do something about it already, but I see a lot of benefit in cooperation.’
Coinbase: a wise investment?
Coinbase has had a successful IPO: the value of the company after its IPO was 85 billion dollars. This means that the company is in the top 85 of the most valuable companies in the US. Pieterse-Bloem says she is not in the crypto market herself. 'If I don't understand it, I'm not in it.'
Coinbase already indicated that if Bitcoin were to tumble, this would also have an effect on the stock. With this, they are already warning investors of a storm. ‘You have to be able to stand it,' Pieterse-Bloem says. ‘I read that Bitcoin's value fluctuation is even six times more volatile than gold. So you have to be able to handle volatility.’ According to Pieterse-Bloem, there are many drawbacks to the crypto market. ‘I always get a little wary when I see students investing part of their student loan in crypto coins. Then I think to myself: it's a speculative investment. I only see one advantage and that is the blockchain technology. But the coin is not always linked to the technology on a one-to-one basis. On the other side, I see five disadvantages: What is actually the underlying value of the crypto currency? Another big uncertainty is regulation: What will central banks do with this? Will they draw a line through it, will they introduce their own currency or will they embrace it? In addition, transaction costs are very high. Also, the currencies are not sustainable. The big mining fields are in China. And finally, there is the encryption and the fact that you have to set up a special wallet for it.’
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The full item from BNR Nieuwsradio, 20 April 2021, can be found here (in Dutch).
