Rabobank - Past and Present
4 International
Central cooperation
Australia - banking
on growth
ISSUE 23/15 NOVEMBER 1993
In the previous issue of
Raboband International, we
described how both
cooperative banking
organizations began growing
towards merger. Although the
central organizations feit there
were great differences in
culture and approach, it
turned out that the grassroots
membership was of a very
different opinion.
If the boards of the Cooperative
Farmers' and Raiffeisen banks
had been inclined to grow to-
gether slowly over time, the re-
ponse of the annual general meet
ings of representatives from the
local member banks told a differ
ent story. The Boards reported
that when these assemblies had
voted virtually unanimously on
the handling of a binding ruling
on the location of new offices (see
RI, issue 21) 'it emerged that the
ranks of both organizations were
also convinced of the advisability
of the two organizations merging
in the future'.
This grassroots feeling led both
central banks to speed up the
merger process, although the
main aim was to unite these cen
tral orgnaizations. Mergers be-
tween local Raiffeissen and
Farmers' Credit banks which
were located in the same town or
area were of secondary import-
ance at this time. However, the
local banks were encouraged to
increase their mutual contacts
and to work on harmonizing
their policies where possible.
For historie reasons, the two cen
tral organizations chose to estab-
lish the combined 'headoffice'
provided for in the Green Paper
in a 'neutral' location. Amster
dam, the Dutch capital, was and
the first 'Rabo' staff set up offices
on one floor of an Amsterdam
canal house on December 22,
1970. Within ayear, they were on
the move, this time to suburban
Amstelveen on the outskirts of
the capital. Although the Amster
dam location had been political-
ly sound, the capital's geographic
distance from both Utrecht and
Eindhoven proved a major dis-
advantage and within a second
year external advisors recom-
mended another move, this time
to Utrecht.
The two banks may have been
working together, but they still
hadn't merged officially at this
time. Both annual general meet
ings had given the go-ahead for
the merger in May, 1971. How
ever, in both cases the banks
wanted safeguards to ensure their
different identities remained in
tact. Utrecht wanted to see the
'autonomy of the local banks be-
ing maintained as far as possible',
while Eindhoven stressed 'both
the possibility of adequate parti-
cipation by the member banks as
well as suitable guidance by the
central bank'.
The move towards an acceptable
basis for full merger was fostered
by the creation of a parity-based
Joint Committee on Organiz-
ational Structure. lts 18 members
were chosen from the two banks'
consultative bodies and they
drew up the Articles of Associa-
tion for the new central bank.
The structure they developed care-
fully defined the reposibilities of
the various governing bodies,
and as a result, created a workable
balance between local autonomy
and central guidance. The results
of this work were then presented
to the 1972 general meetings
(again both held in May that
year) and these were accepted by
an overwhelming majority in
Utrecht and unanimously in
Eindhoven. At the new bank's
first press conference, both chair-
men announced not only the fact
that all assets and liabilities of the
two cooperative banks had now
been transfered to the merged en-
tity, but also launched the new
name - Central Rabobank. With
in a couple of years most local
member banks had also begun
using the shortened form of
Cooperative Central Raiffeisen-
Farmers' Credit Bank and 'Rabo'
had become a household name
in the Netherlands.
The past few months have
seen Rabobank Australia take
off. Originally a representative
office, the Sydney operation
was upgraded in the summer
and now has the official
government licences it needs
to grow.
The first step towards consoli-
dating the preparatory work which
has been done down under over
the past few years was taken
when Rabobank applied to the
Australian authorities for regis-
tration as a Money Market Cor
poration, or a merchant bank as
it is known there. The advantages
of this registration is that it is bet
ter for growth and profitability.
'Until we had this status,' says
Jos van Boxel, who has been in
Australia for almost five years
and is currently in the process of
handing over operations to GM-
designate Chris Abbenhuis, 'we
were obliged to cooperate with a
local bank if we wanted to gen-
erate funding. And that costs
money. We are now in a position
to fund ourselves, as the recent
CP issue proves.'
In addition, Sydney's new status
also means Rabobank can parti-
cipate in trade finance there whe-
reas it was excluded previously.
'We're looking for growth in
Australia,' Van Boxel explains,
'and we're looking for it in me-
dium-sized companies. They
tend to need Australian-dollar
funding, so we need the capacity
to provide it.'
The bank has recently negotiated
two major local deals. 'These
were both existing clients,' says
van Boxel. 'We have arranged an
Australian-dollar credit facility
for the dairy cooperative, Mur-
ray Goulburn, and also a NLG
deal for Goodman-Fielder. The
latter is the largest food-proces-
sing company in Australia and it
was looking for funding to refi-
nance a bond issue they used to
take over the Dutch Meneba
company five years ago.'
This particular deal was engin-
eered by Sydney to take advan-
tage of Rabobank's recently
granted offshore banking licence
which enables the bank to book
all non-Australian business at a
concessional tax rate.
Sydney is also developing the
treasury side of its operation now
the authorities have granted a
foreign exchange dealers licence
to the bank. 'But this will be a
very modest operation,' Van
Boxel stresses.
j Having been the bank's man in
Sydney for almost five years, Van
Boxel is now preparing for new
challenges. From February 1, he
will be examining opportunities
on the Canadian market -
leaving the Sydney operation in
the capable hands of his succes-
sor Chris Abbenhuis.
