Curagao:
The oldest
Rabobank
outside the
Netherlands
Raho
band Issue 8/December 17, 1990
The island of Curagao in the
Caribbean, a little bit of Holland
in the tropics. On the island is
the Rabobank Group's oldest
branch outside the Netherlands.
Rabobank's activities in this
part of the Kingdom started in
1978. Because of its situation
with respect to North, South
and Central America, Curagao
has traditionally been an impor
tant financial centre. In addi
tion, the profit tax regulations
for non-residents of the Nether
lands Antilles are attractive
there. An interview with Deputy
General Manager Jan van Hu
nen: 'Here we have to pay less
than one-tenth of the rates in
the Netherlands.'
Rabobank Curagao is
an offshore bank
The government of the Netherlands An-
tilles imposes a number of require-
ments on companies intending to set
up in business on one of the islands. Van
Hunen: 'As Rabobank Curagao, we are one
of the so-called offshore businesses. These
are firms which concentrate on companies
that do not operate within the Antilles.
These are, of course, foreign legai entities,
but they may aiso be legai entities located
on the Antilles to whom the authorities have
granted offshore status. On the Antilles, the
business must have an office with a build
ing and employees. In other words, not so-
called mailbox firms which do offshore busi
ness from the island. You must aiso contri-
bute to the local economy. In 1978, for-
example, we were obliged to provide work
for at least ten people.'
Two companies Rabobank has two
companies on Curagao: Rabobank Curagao
NV and Rabobank Trustmaatschappij Cura
gao NV. Rabobank Curagao is an offshore
bank which is only allowed to do business
with people and firms not established on
the Antilles. In addition, the bank cannot
operate on the local banking market.
'Sometimes we have to disappoint Dutch
people who visit the island because we
must not, and therefore cannot, supply all
the services people are used to receiving
from Rabobank in the Netherlands. For
example, we cannot pay out on Eurocheques
and settle the damages for a travel insur-
ance', says Van Hunen. 'We do, of course,
help the customer if disasters occur.' The
second company - the trust company - is a
local NV which acts as a manager or admin
istrator for companies or of private assets.
The Rabobank Group aiso has a third activ-
ity on Curagao. That is the NS Finance Cor
poration, a subsidiary of the NedShip Bank,
formerly the Nederlandse Scheepshypo-
theekbank. The NS Finance Corporation
acts as a finance company. All three enter-
prises are accommodated in the same pre-
mises.
Offshore and onshore 'Sometimes we
receive a request from the Netherlands
asking if we will pay Dfl. 1,000 to Mr. X
here on Curagao. The amount would then
be debited to the customer's account at
the local bank in the Netherlands', says
g® i
Van Hunen. 'That is not permitted, other-
wise we would be engaging in currency con
version and only an onshore bank is al
lowed to do that. Only 18 banks are al
lowed to do business locally, and can and
may handle all banking business locally.
These banks have what is called an on
shore licence. At present there are a total
of 72 banks on Curagao, both domestic
and foreign. So 54 of these are offshore
banks. We are one of them.'
Syndicated loans 'As a financial centre,
Curagao is particularly important for funding
and concluding syndicated loans', Van
Hunen explains. 'These are loans which we
grant to multinationals, governments, the
World Bank or other major institutions. Then
you join in a syndicate of various banks
which together provide a large amount of
money. That generally involves hundreds
of millions of guilders. Working through
agents, a number of banks are found in the
world who are prepared to take responsibil-
ity for part of the amount loaned. We often
take part in that. in view of the wafer-thin
margin on these ioans, participation for our
organization only remains attractive if the
tax levy is limited. On Curagao, the interest
margin is taxed at 3 per cent instead of 35
per cent as in the Netherlands!'
Jan van Hunen: 'On Curagao we have so many plans that our staff will doublé in a fewyears' time.
Changes The banking activities, which
were originally mainly in the field of syndi
cated loans, are expanding. 'The margins
you can achieve on syndicated loans have
declined sharply. The lending market is so
flooded with money, particularly from the
Japanese banks, that margins have increas-
ingly come under pressure.'
Latin America Van Hunen: 'Now we
concentrate on South America. There we
buy loans which Latin American countries
have with banks in the developed countries.
We buy them at a substantial discount.
Let's suppose a bank has an outstanding
loan of Dfl. 10 million, then we buy it for
Dfl. 3 million. It still remains a normal claim
of Dfl. 10 million on that country. For that
Dfl. 10 million, which we buy cash for Dfl. 3
million, we can then make investments
through the central bank in the country con-
cerned. The country is struggiing with a
shortage of foreign currency and converts
the debt in foreign currency into a debt in lo
cal currency to be invested in the country it-
self. Hence the money need not leave the
country and is made to work profitably
there.'
Shareholder 'In this way, we are in
direct co-owners in various Latin American
countries of a salmon farm, orchards, chicken
farms, a citrus plantation and a tomato pu-
rée factory', Van Hunen continues. 'We
have invested substantially in businesses
of this type. In this way you have some say
in a company like that. You are a share
holder and receive part of the profit. To keep a
close eye on things, we set up an intermedi-
ate holding company in every country in
which we invest. We put capital into that
and representatives of our organization
hold positions at decision-making level.
