Fortis CFO focusing in an uncertain economy.

• Author: Heffes, Ellen M.
• Position: CFO International - Gilbert Mittler discussed his insights on global business

Gilbert Mittler began his career in 1974 as an accountant with Arthur Andersen in Brussels, and by 1988 was in charge of corporate development for Belgian-based AG Group, which merged in 1991 with what is now Fortis SA/NV. Thus, he began his career with Fortis managing the merger -- from the other side.

Since 1991, he's managed a large number of mergers, acquisitions and sales of non-core businesses from inside Fortis. And, besides his CFO post, he now holds several executive committee and director positions at Fords companies.

Mittler discussed his insights on global business, European and U.S. cultural differences, accounting standards convergence and growth strategies in an uncertain economy in a telephone interview with Financial Executive's Managing Editor, Ellen M. Heffes. He stressed that English is his third language (having been educated in French and schooled in Dutch), and that he may not always use the correct English word.

Let's start by talking about Fortis -- its current business challenges, what differentiates it from competitors, and generally about the industry.

GM: The biggest business challenge today is the kind of negative mood in the financial markets; everything is going down -- [in U.S.-speak] going south. On top of that, things are very volatile. The stock markets, and all activities for insurance or banking, are largely related to the investment spirit and mindset of people.

We have huge activities in private banking, and customers are hesitating; they don't know what to do. They became quite rich between 1994 and '99, [and] still have huge cash flows coming in, but are unable to decide what they should do. Do they buy some art? Invest in savings accounts? Buy shares, buy bonds? There is that link between the real economy and the perception of the market, and this uncertainty for banks and for insurance companies is the worst thing that can happen.

To cope with that high volatility and uncertainty, [as a business] you have to prepare to be flexible in terms of costs -- to adjust to a moving market -- and also prepare in order to be ready if, and when, a recovery will appear. I think that sometimes you have to be lucky, also.

The fact that we created our company [by] merging companies, created the opportunity to reduce costs by integrating a number of banks in Belgium, Holland and Luxembourg and a number of different activities in the U.S. Over the last four years [alone], Fortis has merged with the number one Belgium bank, the number five Belgium bank, the numbers four and five in The Netherlands, [and] the numbers one and seven in Luxembourg. In doing that type of inbound merger, you create the possibility of substantially reducing costs, keeping the same customer bases and better serving your customers at acceptable and profitable levels of product design, as well as prices.

While much of Fortis' growth over the past 12 years has come through mergers and acquisitions, you've also sold off some units. What is your strategy and your current approach to growth?

GM: When you decide to create a diversified financial institution, you can't do that by just basing your strategy on your existing customer bases -- you have to enlarge your customer bases. If you decide to be strong in retail banking, private banking, asset management, merchant banking, life insurance -- it's obvious that whenever you buy something it's never a perfect fit. If you buy a...