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 Clean 800 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

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