Dutch bank ABN AMRO announced plans to cut approximately 5,200 jobs, representing over 20% of its workforce, as part of a long-term strategy to improve efficiency and increase profitability.

The bank aims to achieve a return on equity of at least 12% and generate annual income above €10 billion by 2028, focusing on core operations while exiting non-strategic businesses, including the recent sale of its personal-loan unit Alfam to Rabobank.

Management stated that the restructuring is designed to optimize costs, streamline operations, and better allocate capital to higher-return business areas.

Analysts noted that while the plan is ambitious, it reflects the ongoing pressure on European banks to improve margins amid low interest rates, regulatory requirements, and heightened competition from both global and fintech players.

Investors reacted positively, sending ABN AMRO shares higher, signaling confidence in the clarity and direction of the plan.

Nevertheless, execution risks remain significant, as workforce reductions of this scale can affect customer service, morale, and operational continuity if not managed carefully.

The bank stressed that voluntary departure schemes and retraining programs would be used to mitigate social impact.

The move also signals a broader trend among legacy European banks: a shift toward leaner, more focused institutions that prioritize efficiency, digital innovation, and selective expansion over sheer size.

Observers suggest that this trend will influence competitive dynamics in Europe’s banking sector, particularly regarding technology investment, product innovation, and customer retention.

Overall, ABN AMRO’s restructuring highlights the challenges facing traditional banks in Europe and the strategies required to remain competitive in a complex financial landscape.

Firms that manage to combine cost discipline with targeted growth initiatives may outperform peers in the long term.

Source: Reuters.