'We <an grow as much
and as fast as we <an earn'
D.Baron van Slingelandt
3 International
Major contribution
Tough goals
Eorning growth
Growth in earnings
No piece of coke
Clear focus
ISSUE 24/13 DECEMBER 1993
As the 1994 budgets move through the process of approval, international division chief
Rik van Slingelandt talks about the year gone by and the new year to come.
>- Before going into the 1994 budgets, which
he describes as 'tough', Van Slingelandt first
wants to review this present year because an an-
nual budget is not something that stands alone,
it has a history and a future. 'At this time of the
year, it is only reasonable to talk about what has
happened in the preceding period, and to ask
ourselves if we have been successful in achiev-
ing what we set out to do this time last year,' he
says. 'Actually, we're delighted with the 1993
results. We, as the international division, have
really come a long way forward. Although the
year isn't over yet, and December is always the
lousiest month, I have a strong feeling that we
will really make a very good year.'
So good, in fact, that according to the figures,
the international division is currently contri-
buting over 10 percent to
the whole organization's
gross earnings. 'We've made
serious progress in creating
critical mass,' confirms Van
Slingelandt. 'This has been
done by diversifying our
product range, and creating
synergies throughout the
international division where we now have
1,200 people-1,100 abroad and 100 here in the
Netherlands. In addition, we have also im-
proved the quality of earnings.'
At present, the international division has NLG
1.8 billion in capital at its disposal. 'And we
have put that capital to very good use,' he con-
tinues. 'The numbers we are putting on the
table add up to a serious return on capital
requirement. As I said: we're delighted.'
So does that mean the foreign offices and
international's people in Holland can take a
International Division chief
Rik van Slingelandt - delighted and
pretty confident
breather? 'No way,' he laughs. 'We can't sit
back because we're not there yet. Many things
still have to improve. We could do with a
higher return on capital requirement, although
we are above capital market interest rates.
There are still unprofitable areas within the
organization that will have to be turned
around. And you have to remember that,
though we're doing well as a whole, we are still
a very young division. Many of our offices have
only just started and we're still growing.'
The bottom line for the international depart-
ment is that it can grow as much as it can earn.
'And that is a pretty reason
able point of departure,'
Van Slingelandt believes,
'but it also means that the
more mature offices will
have their responsibilities
for the new operations. For
example, we are going into
Malaysia and Thailand in
1994 and we will spend around NLG 1 million
without any return in the first year. That mil
lion has to come from somewhere and the
somewhere is the international division itself.
'Over the past fïve years,' he continues, 'we have
established a steep and serious growth track
record of around 20 percent. In the year to
come, I think we will grow faster in terms of
results than we will grow in capital require
ment.' Is that a sign of consolidation? 'It's more
a maturity matter than a consolidation,' he
says. 'If you take an office like New York, you
Everyone knows they are
going to have to work
like the devil to come to
grips with these budgets
see that it is still growing, substantially but at a
different pace than less mature operations. So,
if the mean is 20 percent and New York is grow
ing at, say, 8 percent (the figure is actually
higher), then that means others are growing at
well over 20. But because the degree of maturity
and the broader productrange, we have a
slower use of capital. And as long as the people
out there continue to make the returns rise,
we will get a better return on the capital em-
ployed.
'Now, our people abroad have done a mag-
nificent job in 1993,' Van Slingelandt continues.
'The division as a whole generated around 250
million in gross results. And on top of that 40
million was brought in by the people here in
Holland. We tend to forget them sometimes.
You know, 40 million is a considerable amount
of money when you realize that part of the di
vision is pure overhead. So it's down to the area
managers and the relationship managers for
banking institutions to get their act right so the
bank can pay all our salaries. They really did a
great job. And we realize they will have to work
very, very hard to meet the 1994 targets, but I
think they'11 make it.'
Which brings us neatly to the budgets for 1994.
Van Slingelandt admits they are tough. 'Every
one thinks they are too stiff,' he smiles confi-
dently, because he is 'pretty confident' the di
vision can actually achieve them. 'No one is
saying: Oh, that's a piece of cake, we'11 do it
standing on our heads. Everyone knows they
are going to have to work like the devil to come
to grips with these budgets, which are not only
high in terms of what we want out of the offices,
they are also high in the quality of earnings.
We will have to earn money in all the products
and market segments where we want to be.
Policies are pretty clear and everyone is work-
ing very hard to firm those policies, but in the
end, the product and cliënt returns are what
count. So there's not just a 'bottom line' and
that's it. Our profit and loss accounts comprise
a whole breakdown in terms of dients and
products, and all the areas and aspects we are
focussing on should produce returns.'
In view of its past record, the international
division will have more capital to work with in
the future. 'Because we are seriously bringing
money into the Rabobank organization now,'
says Van Slingelandt, 'and we're heading to-
wards a 12-percent contribution to overall
gross results, our capital requirement should
top the two-billion level next year.
'As a bank, we are in a unique position world-
wide. We have a clear focus on and indepth
expertise in what we do. We are a food and
agribank and we concentrate on four product
categories - lending, treasury, trade and cor-
porate fïnance. This is what we're good at.
People the world over invite us in because we
have knowledge and expertise in these areas.
A Chinese poultry plant will want to talk to us
because we know about the sector in France
and the US. And the same applies in all sectors
of this business. It makes us extremely strong
and if we maintain our focus, we'11 make
money.'
