Partnership for progress
down ander
6 International
Australian agricultural commodity prices (Source ABARE)
International recognition
Lengthy consideration
Growth potential
Low-cost producers
Specialist activities
ISSUE 35/14 NOVEMBER 1994
PriiTiA"
Wheat
Beef (Aver
Move with a view - Dick Schijf and
Cor Broekhuyse for Rabobank sign up
with PIBA chairman Ross Garnaut and
Ray Chadwick.
to depart from policy and acquire this bank.
Then, we had to evaluate whether the bank's
quality was adequate to meet our standards.
Both were elements in deciding if the acqui-
sition would fit into Rabobank's overall F&A
policy.'
JASOND) FMAMJ JASONOJ F M A M J JASON
1991 1992 1993
ASW IO (Nomina] FOB)
Cl Kg
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In a major deparlure from Standard policy, Rabobank has taken over a bank which
services primary agriculture in Australia and New Zealand. What is the motivation
behind the move, and who is PIBA? Raboband International reports.
lower and will be even lower in the future.
Traditionally, Australian and New Zealand
agri-production were not subsidized, and the
low-subsidy producers in this world are
going to be at a distinct advantage. So, we
anticipate this sector will grow in both these
countries.'
because it no longer meshed with its parent's
core activities.'
The fact that Rabobank was offered PIBA is an
indication of just how well the bank has pos-
itioned itself internationally as a top, global
food and agribusiness specialist. 'Clearly, we
are perceived as a major player in this indus-
try, even on the other side of the world,' says
Broekhuyse, 'and that is why it was thought we
may be interested in acquiring an asset like
PIBA.' But the decision was not taken lightly.
'We actually did two due diligences. The first
was fairly limited - two Rabobankers went to
Australia and the initial findings were that this
acquisition could certainly help us develop
our presence there in a much more rapid way
than if we approached expansion indepen-
dently.'
However, it was quite some time before
Rabobank initiated a second, more indepth
due diligence. 'First,' Broekhuyse continues,
'we had to decide whether it was a sound move
PIBA in the field - the new acquisition
shares a common culture with Rabobank.
From extensive press coverage, we all
know the Primary Industry Bank of Australia
is a more than viable, going concern. With a
balance sheet total of AUS$1.9 billion, 1994-
interim net profits of 9.2 million, more than
150 staff and nine offices throughout Australia
and New Zealand, PIBA looks very, very good
indeed in anyone's book. But Rabobank does
not buy banks. So why this change of policy?
'There are a number of reasons,' says Cor
Broekhuyse, who will head up the new, com-
bined Rabo Australia/PIBA operation. 'First,
the bank itself is a Iender to the top segment
of the Australian farming industry. Second,
PIBA has a network of offices throughout the
region. We're talking about an enormous
country and if you really want to cover the in
dustry there, you have to have a network. So,
by acquiring this bank, we won't have to in-
vest in a network of our own, we have a ready
made, nation-wide operation.'
Other, equally important reasons are, ofcourse,
the fact that Australia is particularly interest-
ing because of changes in world agricultural
development policies. Until GATT, agri-pro
duction was often subsidized. 'But,' Broek
huyse continues, 'subsidies are already much
A fourth aspect is fast-growing, neighbouring
(in relative terms) South-east Asia. 'Being near
these growth markets, Australia is particularly
well-placed to play an increasingly important
role in exporting agri-products,' Broekhuyse
believes. 'In the past, dairy products were ex-
ported from, say, Holland. But today, they are
coming from Australia and New Zealand, and
Europe and the US can no longer compete
with these low-subsidy producers. These trade
flows are very important for Rabobank be
cause we would very much like to flnance
them.'
All of these factors were taken into account
when the idea of acquiring PIBA was first sug-
gested to Rabobank. 'Henk Visser was in Aus
tralia earlier this year to launch our merchant
bank activities there,' says Broekhuyse, 'and he
was approached by an intermediary who
offered us PIBA. We certainly weren't in the
market because normally speaking, we don't
buy banks. But PIBA was on offer for very
good reasons.' Previous owners, Bank West,
a public institution, will be privatized next
year and wanted to float itself as a regional,
broad-based, Western-Australian bank. 'PIBA
simply didn't fit that profile,' says Broekhuy
se. 'It is nation-wide and even international,
and it is a specialist bank. So it was on offer
not because it wasn't a good bank, or a
profitable one - actually, it is both - but