Cees Vermaas: the pitfalls and opportunities of the downturn

Cees Vermaas is CEO of NYSE Euronext Amsterdam and a speaker on financial and trading matters. We asked him for his outlook on the economy in the Netherlands and about the pitfalls and opportunities that lie ahead for Dutch companies.

How have Dutch companies been coping in the aftermath of the financial crisis and economic recession?
The situation is extremely challenging. Companies in the Netherlands are open minded and competitive, but I think that many are feeling a bit disoriented at the moment. There are external factors, such as the slow growth affecting many of their overseas markets, but there are also local problems, such as those affecting the Dutch banking sector and the funding they are willing to provide. This is making the environment pretty difficult for some of them.

You mean they cannot find the capital to fund investments that would help them position themselves more effectively?
Broadly speaking, yes, but it depends on the type of company. Many of the large-cap listed multinationals we all know well, have been able to find alternatives from non-domestic sources. Many of them already enjoy relationships with these institutions.

However, for the next tier of companies, who may be seeing clear opportunities to expand into fast-growing markets in Latin America, Asia or the Middle East, the situation is less clear cut. They’re realising that they are of more interest to capital providers outside of Europe. Prioritising the business, whereby the company’s domestic links appear to be less important, is part of the Dutch culture. In the end this could be less beneficial for the Dutch economy.

What about the small and medium-sized segment? Isn’t it even harder for them at the moment?
Absolutely, these companies, which are the foundation of our economy, used to rely on their relationships with their house banks and to a lesser extent, on private equity. But with our biggest banks working hard to get themselves out of government ownership, this has changed.

However, I see a growing acknowledgement of this problem and the sense that the financial link with the small and mid cap segment must be quickly re-established. Our banks cannot afford to delay this, we are already seeing some ambitious European banks opening regional offices in the Netherlands, aiming to fill the market gap that our own banks left wide open. This has never happened before. There are also Chinese banks that are planning to set up locally. They will mainly provide trade finance services to begin with, but it is clear that they see the opportunities available to them in this market and may offer other lending products in the future. While funding issues for the medium-sized segment continue to exist, we aim to reposition our exchange closer to this segment, together with (new) partners, in order to provide capital raising opportunities that facilitate future growth.

So from a funding perspective Dutch companies are under a lot of pressure to become more globalised than they already are.
Yes, and this will have a profound impact on our business community. Dutch companies are used to competing globally, but in this restrictive environment they must be careful not to sell their own skin and lose their Dutch heritage in the process. It’s important that we work hard to keep our marketplace healthy. Growth in the Netherlands is instigated by entrepreneurship and sadly we are seeing too much of that flair disappearing abroad.

What is the role that local professional business service providers and financial institutions can play in helping companies through this tough period?
There is enough common ground for all Dutch organisations to work together, law firms, banks, regulators, the government and accountancy firms. We’ve seen Deloitte already taking a proactive role in driving these kinds of initiatives forward, such as in its partnership with the Holland Financial Centre. This initiative, in which we are also involved, aims to ascertain how we as a country can be better positioned and more efficient to gain capital and smooth the path for the benefit of all companies. There is a very widespread awareness and genuine commitment to working together to stabilise the situation and better prepare for the opportunities in the upturn.

Do you have any final words of advice to Dutch companies facing today’s uncertain outlook?
I would say that there are clearly business opportunities emerging, but that we are in a position as a country where we must choose our directions wisely. Dutch companies should open up to each other and see what can be done together before competing as we should be careful not to lose our jewels. Furthermore, we should try to close the gap between the government and the companies. I say this slightly with a Dutch heart, as our Dutchness is something that has brought many of our organisations success in the past, and because I know that the decisions we make today about funding, investment and costs will have long-term consequences.

Biography

Cees Vermaas is CEO of NYSE Euronext Amsterdam. A member of the Managing Board of Euronext N.V. and the Management Committee of NYSE Euronext, he also has global responsibility for International Business Development of the Cash Market.

He graduated in technical business administration at the Institute of Technology in Rijswijk, and was appointed Head of IT in 1992 at a well-known Dutch franchise company within the Philips Group. Between 1995 and 2001, he held positions ranging from Commercial Director of IT firm IMC Business Applications to Management Consultant for both Getronics and CMG Finance. He was appointed as Head of Cash Market Netherlands of Euronext Amsterdam in December 2001, before becoming Executive Vice President, Head of European Cash Markets in May 2009.