Hessel Lindenbergh hasn't slept much the last year. His employer, Dutch banking and insurance giant Internationale Nederlanden Groep, took over bankrupt Barings PLC in March of 1995 after Singapore trader Nicholas Leeson stuck the company with $1.4 billion in losses. It fell to Lindenbergh, then head of ING's international operations, to integrate the two staffs and get Barings back on its feet.
By most accounts, Lindenbergh, 53, has done a great job even though ING Barings' 1995 results are likely to be disappointing when its parent announces earnings on Mar. 28. But with emerging markets on the mend lately, the Anglo-Dutch investment bank is expected to show a profit for '96. Says Frederic Haller, head of rival Deutsche Morgan Grenfell's emerging-markets division: "The Barings name has been restored."
TURNING TIDE. The renaissance took place in the toughest of environments. Throughout 1995, much of ING Barings' highly paid securities staff sat idle as emerging-market bourses suffered the "Tequila effect" of the Mexican peso devaluation. At the same time, Lindenbergh slapped tight controls on traders in Asia in the wake of Leeson's crime. But Lindenbergh always kept thinking recovery. He even kept 180 research analysts busy pumping out reports on everything from East Asia's export prospects to Central Europe's manufacturing prowess in hopes of generating some trades.
Then the tide turned. As global interest rates started falling, investors returned to emerging markets, where both ING and Barings traditionally have been strong. At the same time, the London-based Baring Brothers corporate finance team made an astonishing comeback in Britain's red-hot takeover market. Baring Brothers took leading roles in the country's two biggest mergers of the year: the marriage of drug-makers Glaxo and Wellcome and the pairing of TSB Group and Lloyds Bank. Altogether, the Barings bankers gave advice on $30 billion worth of deals (table). And "looking forward," says Lindenbergh, "all the signals are positive."
NO HURRY. ING Barings is pulling ahead of competitors in other areas. Drawing on the parent bank's expertise in debt markets, ING Barings is now one of the top 10 traders of emerging-market debt worldwide. And despite a slow year in Asian stock markets, the bank managed 39 equity issues last year. Now, Lindenbergh has even bigger plans. He will attempt to use existing relationships with corporate clients and large pension funds to win new business. The parent company injected $270 million into its subsidiary's capital base last year and opened three new trading floors in Mexico City, London, and New York. Lindenbergh may also expand further in the U.S., where ING Barings lacks a strong presence. ING came close to acquiring Oppenheimer & Co. before Barings fell into its lap. He won't say if he is still interested. But U.S. expansion "will be the next phase," he adds.
Lindenbergh is also holding ING Barings to the same profitability standard imposed on the rest of the company--an 11% return on equity. Some analysts consider that modest for a high-risk, emerging-markets business and predict that ING Barings will have little trouble meeting it if emerging markets remain robust. If not, the company can afford to wait. With assets of $245 billion, the group is No.3 among European insurers, while its ING Bank unit is No.5 in Europe. At home in the Netherlands, it has about a 25% market share of the domestic life insurance, consumer credit, and home-mortgage business. In 1995's first nine months, ING reported pretax profits of $1.7 billion, up 17% from the same period in 1994. Analysts are forecasting full-year pretax profits of $2.4 billion.
With ING Barings gaining momentum, Lindenbergh clearly has reason to sleep better. Considering Barings' plight just recently, its recovery is little short of miraculous.