New status
for CBS?
Bank notes
WHAT'S NewS Issue 2 February 1996
cbs organization
15
In his traditional New Year address to the staff of Rabobank
Nederland (RN), chairman Herman Wijffels had a lot to say about
CBS, where we are, and importantly, where we're going. He
announced the bank is currently looking for ways to find a
corporate structure for CBS which reflects it activities.
'There appears to be a lot of speculation
on the position of CBS,' Wijffels began.
'People are talking about independence,
but that is the wrong word. I'll say
something about that in a moment. But
Hjrst let's look at how CBS is doing.' He
Tnen talked personnel through the results,
describing 1995 as a good year.
THREE TO ONE
Wijffels pointed out we had not yet
achieved the famous 1 O-percent target.
'But 8 percent is certainly a major step
forwards compared to the previous year.
The number of staff has also grown,' he
noted. 'Especially abroad. There are now
2,500 employees in CBS: 900 in Holland;
1,600 outside the country. And that is
shifting fast. We will soon be in a situation
where for every domestic employee, there
are three abroad. This means CBS will
increasingly take on a very strong
international character. It is primarily an
international operation also with an
^peration in Utrecht.'
UNRAVELLING PROCESS
'lt is partly against this backdrop that we
have begun to think about the role and
position of this part of our organization
within Rabobank Nederland as a whole.
We call this the unravelling of the various
functions of our various activities within
Rabobank Nederland. You could say that
in recent years Rabobank Nederland has
developed into a cluster of strongly diverse
activities. Each has its own specific focus
and also the specific professionalism
necessary to do their jobs well. Given this
perception, it is time to differentiate those
various functions more appropriately and
thus define them more accurately.
PROFIT-DRIVEN GOAL
IJCijffels explained that a similar process
rad already taken place in the support
units. An internal "differentiation" was
carried out and Rabofacet was created.
'Something along those lines is being
considered for CBS,' he said. 'The figures
show CBS is on its way to maturity. It has
gradually grown into a position whereby
it can generate many of its own solvency
requirements. It has also achieved such a
level of activity that this should be
expressed in the its structure. For
example, in contrast to the member banks,
CBS is profit-driven. Although clearly this
remains within the strategie policy
guidelines of the organization as a whole.'
STILL IN THE FAMILY
'So we are looking to see if there is a
corporate structure which would clarify
and facilitate the "differentiation" of CBS.
Initial examination shows this will not be
easy. For example, it appears that many
contracts could be terminated if the legal
partner changes. We, as CBS, have
numerous contracts around the world. If
that should change, we could encounter
problems. In short, there are a number of
practical matters here. But the basic idea
remains a "differentiation" of CBS
activities, if possible also through a legal
body, but clearly still in the family. It
cannot be done any other way, because
matters such as the Triple-A rating could
be seen in a very different light by the
rating agencies. So the message is: stay
close to the parent, but in a
"differentiated" position.'
Lackof space in the New Year issue meant
Bank Notes skipped a month, but we're back
on track now. Last time, we looked at the role
of the member Rabobanks in defining policy
and goals for the whole organization. We'll
expand here on what that role has meant for
CBS.
Rabobank Nederland is the central
organization originally established to provide
both services and expertise to member banks.
CBS is one part of Rabobank Nederland, the
others are the so-called Work area member
banks (it loses a lot in translation), Interpolis,
and the combined support units. In fact, when
Rabobank went international CBS as such
didn't actually exist.The strategy behind
opening presences outside the Netherlands
was aimed almost exclusively at providing the
bank's Dutch clients with services abroad and
to strengthen trade finance activities. The
Dutch have always been a big trading nation;
they export around 70 percent of GDP and
import a similar percentage. So clearly a lot of
Dutch companies were out there doing cross
border business. I n other words, the
international expansion stragegy of the early
1980s was defined mainly by member-bank
needs and requirements.
Because of the trade finance focus, the initial
thinking was to open presences in major ports
and financial centres - New York, London,
Singapore. In Europe, the network of strategie
alliances with major banks was built up with
the sole aim of providing member-bank
clients with similar services in countries such
as France, the UK, Spain and so on.lf you're a
recent arrival in the bank, no one could blame
you for thinking that strategy has been
redefined out of all existence.The
international offices generate considerable
contributions to the bank's total bottom line.
They fund themselves.and even work on
funding for other offices.
They do major deals.They have their own
specific markets and areas of expertise. Yet
even though we may have moved a very long
way in the brief period since the first 'foreign'
office was opened,the reminder of where
Rabobank's international expansion came
from is usually still there - the Dutch Desk.
And even if, or rather when, the developments
sketched by Herman Wijffels in his New Year
address come to fruition.the Dutch Desk will
certainly still bean integral part of CBS
operations. Not least because Dutch
companies will always be high in the cross
border trade stakes and need the services of a
top bank abroad.
Look out for an iniation into the mysteries of
the Centrale Kringvergadering (literally:
central cirde meeting, again it loses a lot in
translation) next month.
