CORPORATE FINANCE -
THE KEY TO HIGH FEES
7
SUPERDEALS
WHAT'S NewS Nummer 4 August 1995
international
As margins on credit are squeezed ever tighter, more and more banks are
looking for those lucrative corporate finance deals that can make all the
difference to a bottom line. Internationals Jaap Slotema looks at how cor
porate finance is defined within Rabobank and explains what the division
But it's also natural for people to want to
bump up their office's bottom line, so
sometimes account managers don't refer
their clients to other branches. We end up
competing against ourselves. And that de-
feats the whole object - we've got enough
competition from the outside competition.
This was a priority at the recent general
managers' conference. We've now come
up with a proposal for shadow accounting
so that everyone's contribution and effort
is shown somewhere.
is doing to promote these activities in the network through recruitment,
training and, most recently, a proposed shadow accounting system.
You talked about the right people
in the right place.
Yes. That's essential, too. We're recruiting
very seriously for a number of offices at
present.
You also mentioned the impor-
tance of regional trade finance
meetings.They are held in the
Americas and in the Far East.Why
not in Europe?
The operations we have in European
countries are very diversified. Just take
Luxembourg and Guernsey. They're both
private banking operations exclusively.
The type of business we do in Italy is very
different to the Belgian operation. If you
look at Latin America, then you
see all the offices there are pri-
marily involved in trade finance.
So it makes sense for them to
meet and talk. In fact, given the
diversity of our European oper
ations, it would make more
sense to bring London and New
York together rather than, say,
Italy and Belgium. But whatever
the activity or operation, we still
need networking throughout the
organization. A problem that
arises in one market and has
been solved creatively can be
useful for other co-workers in
other markets. We have to keep
talking to each other and using
all the tools we have to main-
tain and improve our lines of
Communications. That's the only
way we'11 get the type of business we need
to become a global player in our markets
- whether they're credit or corporate
finance.
in, and also real knowledge of fiscal and
general law. This is because many of these
products are fiscally driven. And if you
don't have the know-how yourself, you
need to know where to get it.
So what exactly is the division
doing to help create this
environment?
External training courses are important,
but these are usually product-oriented.
What you have to do is provide an en
vironment in which people can develop
Can you explain exactly what
corporate finance is?
In a nutshell, and I think the people in
•jiat division would agree, every product
hat is not traditional, such as straight
credit, would fall under corporate
finance. So, it would include Mergers
Acquisitions, project finance, structured
finance, and participations.
The reason it has become so
important is due to shrinking
margins on lending.
That's right. We need to gen-
erate more fee-based income
because the fees on traditional
products are not particularly
high. If I look at the foreign
network, then we find that doc-
umentary credits bring in a lot
of fees. That's wonderful, but
we're fortunate if we make US$
1,000 on a DC, whereas fees of
100,000 are not uncom-
mon in corporate finance. But
there are other reasons. We
want to be an international
player. That means you have to
provide this type of product, be
cause clients expect it from a
major global bank. Then there
is the competition - they're also
looking for this lucrative bus
iness.
How can we distinguish ourselves
from the competition?
Creativity. That is the most important in
grediënt in corporate finance. Every Tom,
Dick or Harry can lead a syndicate, but
creating or repackaging a product requires
creative thinking. The players who score
Tiighest in corporate finance are the cre-
Ptive people, the inventors, the ones who
did it first. 1 believe that everyone is bom
with some creativity and you can learn to
get the best out of it. But first you need an
indepth knowledge of the products avail-
able, particularly in the country you work
their creativity. The first step is to find
very creative guy or woman and he or she
will attract people who are either equally
creative or have the potential to become
that. It's all about networking.
How can you assist in promoting
that?
Events like regional trade conferences are
great opportunities for people to get to
gether and build their networks. That is
essential. We haven't opened up 50 inde
pendent banks around the world which
have their own show and are separate
from the rest. We have a network of units.
Waarom is corporate finance zo belang
rijk voor de bank? Volgens Jaap Slotema van
het directoraat Internationaal is dat omdat cor
porate finance hoge provisie-inkomsten kan
genereren in een wereld waar de marges op
leningen steeds verder krimpen. Hij licht zijn
visie op de positionering van het internatio
nale netwerk toe.