Presidential
PREROGATIVE
GRANTS RAIBO
BANKING LICENCE
16
international
WHAT'S NewS Issue 1 January 1996
Since Brazil changed its constitution in 1988, no
foreign bank has been granted a banking licence.
Raibo do Brasil is now the exception. General
manager Latin America, Teun de Boon sketches the
current situation and explains why Raibo has been
singled out for presidential favour.
'I think the whole banking community
here in Brazil was just as surprised as we
were when the president made an
exception and gave us a licence,' he says.
'This is a very exceptional move because
the regulations established by the 1988-
constitution were essentially protectionist.
Now, the government is looking at
modifications and I believe they are
actually using us as a test case. If we do
well, then possibly they will start opening
up the economy in general and the
banking sector in particular.'
BYTHE BOOK
The Raibo CAN DO team is more than
aware of the pressure this places on them.
'That we'11 do everything exactly by the
book goes without saying,' confirms De
Boon, 'but we're strongly in the limelight
now and we have to make very sure that
having received this preferential treatment,
we do it even better than by the book. You
know, there are always ways to get round
regulations. A long time ago, we made a
conscious choice not to use those routes
because we knew they were frowned on
by the Brazilian Central Bank. The result
is that the BCB sees us as an above-board
operation. And as a Triple-A rated bank,
that's almost noblesse oblige.'
SOUND TRACK RECORD
De Boon says Raibo has always pursued a
consultative relationship with the
Brazilian financial authorities. 'Every time
we want to do something, we talk to them
first. They feel very comfortable with that.
Apparently, we are the only bank,
including domestic banks, which does
that. We also have a sound track record
here in Brazil. And I think the final factor
in being granted a licence is that we're a
cooperative bank. That's very much in
vogue here, partly because an institution
like ours is badly needed - as agriculture
in Brazil is going through a terrible time
right now.'
TOUGH TIMES
There are two major factors involved here.
One is the Plano-Real, the bold economie
RAIBOBANK DO BRASIL LTD.
Av.das Nacöes Unidas 12.995
Edificio Plaza Centenario-9 andar
Brooklyn Novo
04578-000 Sao Paulo-SP
Caixa Postal (P.O. Box) 21.365
Tel: +55.11.505.2700
Fax:+55.11.505.2823
restructuring plan launched in July of
1994. 'It has had a major impact on
agribusiness,' De Boon says. 'Subsidies
were removed and the cost of credit has
gone through the roof. We have the
highest real interest rates in the world.
People simply can't afford to operate.
What must happen here is a total
readjustment to approaching business
without the support of government
subsidies. It will take time and we can
play a real role here.'
ECONOMIC MIRACLE
In spite of these problems, Plano-Real is
working very well at general macro-
economic levels. 'We've seen inflation fall
from a massive 50 percent a month to a
deflation of-0.8 percent last month and
the year average for 1995 is around 1
percent per month. Getting inflation down
was a major priority for the government
and they've succeeded there. But we've
also had to contend with the spill-over
effect of the Mexican crisis. That has had
some negative influences on the whole
situation here in Brazil.'
PRODUCT RANGE
Given this backdrop, Raibo feels it is
ideally placed to assist F&A corporates to
get back on track. Officially, the Sao
Paulo operation was a loan production
office - albeit a very large one. Raibo has
done close to USD 1 billion in trade
finance business alone this year. 'The
great thing about having the licence is
that we can now offer clients a full range
of products and services,' says De Boon.
'Our staffing levels will go up to around
50 by year-end. We're currently recruiting
for treasury which also means we'11 have
to beef up the back office. We'11 be
entering the corporate finance, structured
trade finance and M&A markets in a big
way.'
RAIBO ON THE MOVE
To accommodate this expansion activity,
Raibo do Brasil has also moved into new
premises. The new address and contact
numbers are noted above.
■■I BANKLICENTIE BRAZILIË
Sinds de wijziging van de Braziliaanse
grondwet in 1988 is geen enkele bank er in
geslaagd een banklicentie te verkrijgen.
Raibo do Brasil is de grote uitzondering
hierop. Dit dankzij de goede contacten met
de financiële autoriteiten, de coöperatieve
structuur en de tripple A-status.
