When the Dutch state took over ABN Amro last year, at the height of the financial crisis, it was with the intention of selling it with a profit sooner rather than later. But a year later the initial investment of 16.8 billion euros has been almost doubled. Meanwhile, the bank's earnings are down and its losses are up. If ABN Amro was still listed its CEO would be in a lot of trouble now.

But under the current circumstances, Zalm reports to the Dutch finance minister Wouter Bos, and Zalm's troubles are also Bos' troubles. The two go way back: from 2000 until 2002, Bos served under Zalm. Right-wing liberal Zalm is the longest serving Dutch finance minister (1994-2007) and Bos (Labour) was his deputy minister for part of his tenure.

Now Bos is in charge at the finance ministry and in November 2008 he presented his predecessor as the man who would merge ABN Amro's Dutch activities with those of Fortis Bank Netherlands, while at the same time guide the bank through the financial storm. The latter involved not just ABN Amro's nationalised Dutch activities, but also the part of ABN Amro that should be merged with the British bank RBS next year.

3.7 billion euro loss

One year on, it is time to evaluate how the former finance minister is doing as a CEO. The quarterly results presented on Wednesday, the fourth under Zalm's management, do not bode well. While the other big Dutch financial institutions that were hit hard by the credit crunch managed to get out of the red in the last quarter, ABN Amro Netherlands' loss tripled to 32 million euros between July and September 2009. For the bank as a whole, including the RBS part, the third quarter losses stand at more than 1 billion euros. Over the first three quarters of 2009 ABN Amro has run up a total loss of 3.7 billion euros.

The Dutch parts alone are doing better: those made a profit of 45 million euros so far this year, thanks mostly to a first quarter profit of 87 million euros. But chances that even ABN Amro Netherlands will end the year in the black are non-existent. In the current quarter ABN Amro Netherlands has to absorb the write-offs resulting from the forced sale of HBU and a number of regional offices to Deutsche Bank, as demanded by the European Commission. That loss is estimated at 800 to 900 million euros.

Zalm can hardly be blamed for the HBU write off because it was a problem he inherited, and the negotiations with Deutsche bank were conducted not by him but by officials from the finance ministry. But the quarterly figures show Zalm is struggling with a number of other problems.

The DSB skeleton

First, ABN Amro Netherlands has suffered badly from the economic crisis. It has had to write-off 1.2 billion euros for expected losses on its credit portfolio since October 2008. "The financial crisis has now definitely hit the broader economy in the Netherlands," CFO David Cole said Wednesday during the presentation of the third quarter results. He said the exact same thing three months ago.

Another headache for Zalm is the cost of running his organisation. His predecessor Rijkman Groenink fought for years with the so-called efficiency ratio, the operational costs set off against the revenue. Over the past year the costs rose from 863 million euros in the first quarter to 904 million euros today, while revenue was down 10 percent.

And while Zalm is juggling all these issues at ABN Amro, the bankruptcy of another one has come back to haunt him. Between his position as finance minister and his current one, Zalm served as the CFO of DSB Bank. DSB went under last month after a run on the bank, triggered by allegations it had duped consumers by forcing them to buy expensive single-premium insurance policies with their loans and mortgages. Reports have come out since that Zalm was not only aware of those practices, but also condoned them.

Interviewed about Zalm's DSB past on Dutch television on Wednesday, Bos said the CEO of ABN Amro should have "an unblemished reputation". He promised Zalm's role at DSB Bank would be investigated. So with all the trouble ABN Amro is already in, the bank could now lose its CEO over his past errors, rather than his current problems.