Construction
IT Update
for SUCCESS
6
working relations
What'S NewS Issue 2 February 1996
Continued from page
'Owning Cementbouw, NBM-
Amstelland has a much better cyclical
profile and will likely earn consistently
higher earnings per share/ says
Dominique Bech, executive director of E
IQ
P
Equity Capital Markets, explaining
why the issue was so well
O
O
oversubscribed.
TAX DEDUCTIBLE DIVIDENDS
But there was another important
dimension to its success, says Bech, who
worked together with colleague Marianne
Schoemaker to organize the equity aspects
of this deal. The new issue marks the first
time that Rabobank has mobilized an
innovative structure under which the cost
of NBM-Amstelland's dividend payments
to shareholders has been rendered
deductible for the purposes of tax.
HYBRID PRODUCT
This hitherto unknown device was
engineered by Structured Finance in
conjunction with an outside tax partner,
the international audit and tax firm
Moret, Ernst Young. It was a hybrid
product that essentially works by offsetting
the higher relative cost of a company's
after-tax dividend payments with a pre-tax
interest rate deduction. An added benefit
of this instrument, unlike a conventional
loan, is that it simultaneously enhances the
balance sheet. Notes Hem Mulders - a
member of the Structured Finance team
NBM-AMSTELLAND -
CONSTRUCTIEVE
0^ INNOVATIE
De Rabobank is co-leadmanager in de
aandelenemissie van NLG 234 miljoen voor
de overname van Cementbouw. Daarnaast
heeft de bank een structuur opgezet,
waarbij de kosten van NBM-Amstelland's
dividendbetalingen aan aandeelhouders
fiscaal aftrekbaar zijn gemaakt. Deze
structuur is tot op heden nog niet eerder op
de markt gebracht. Het is met name aan
deze constructie te danken dat de
Rabobank concurrent ING, die in 1994
samen met ABN Amro een convertibele
obligatie-emissie deed, kon passeren.
that also includes Wilfried Mulder - 'this
product has never been seen on the market
before.' Bech is convinced that it played
the decisive role in securing Rabobank its
leading role in the deal. 'There's no doubt
this was what put us at the top table as co-
lead manager,' she says.
BOARD SUPPORT
Looking back, the NBM-Amstelland co-
lead managership provides a good example
of how the bank's resources can be
creatively synergized. 'I happened to know
that NBM were planning this major
takeover and so we geared up to advise
them on ways to organize the financing
from the start,' explains Bech. 'At the same
time, I received word that Hem and
Wilfried within Structured Finance were
working up a special product on their side.
So, we put our heads together and decided
this would be a perfect place to put it to
work. We had firm support from the board
from the start. We could piek up the phone
and get a green light on the spot.'
MULTI-DIVISIONAL COOPERATION
At the end of the duy, all the participants
agree that in-house communication and
multi-divisional cooperation of this kind
will play an increasingly important role at a
time when the bank is aggressively breaking
into already crowded and competitive
fields. The result of these open
communication lines in this case has been
an important step forward for Rabobanks'
thrust into investment banking, a well-
guarded territory that has been enjoyed by
the biggest players for many years as if it
were their own, exclusive domain. History
has taught warriors a lesson. For those who
are intent on penetrating the well-fortified
castle of a powerful adversary, a well
engineered secret weapon can sometimes
do just as well as brute force.
Information technology (IT) is becoming an
increasingly important part of the Rabobank
organization, but has hitherto received little
coverage in What's NewS.This month marks
the start of an IT column dedicated to
reporting the main points of IT development.
In the attempt to fully convert Singapore
to the Atlas system, a very sizable job
involving enormous effort on the part of the
teams in Singapore and in Utrecht,
management was alerted to software
deficiencies in the Atlas Branch Model that
needed to be solved before the project
could move ahead.These problems have
now been debugged. In the meantime,
Singapore has also successfully upgraded to
release 1.12 ofTrade Atlas, which supports
the front office in forex and money market
activities.
Last year.the Zurich office completed a
successful implementation of the Olympic
system with great assistance from IT experts
at the International Private Banking (IPB)
centre in Luxembourg.
A more robust Atlas has also now been
implemented in Dublin. Reporting
difficulties associated with the new system
in Madrid were identified and are being
addressed as well. Paris is slated for
implementation next.
Devon was successfully implemented in
the Singapore office during the last quarter
of 1995 and went live on 1 January 1996.
The first two phases of the Eximbills
system (collections and import letter of
credits), have been successfully
implemented in the Hamburg office in
Germany
A Business Impact Analysis has been
conducted in Brazil to identify the extent to
which the Atlas concept might be suitable to
the local environment.The Business Impact
Analysis showed that the Atlas system was
in fact unsuitable in the Brazilian context
due to extreme local requirements, which
include inflation and general accounting
principles. In view of this situation, an
alternative local software solution will be
found in the next few months.
As part of the effort to coordinate
international IT activities, several members
of the international division have been
seconded to Holland to form a team that will
workon implementation of the MIS/Sybase
project.They include Eelco Kaan and Patty
Liu from Hong Kong and Lopez Ramirez
Robertofrom Curagao. Jesse Brewster has
been transferred from Curagao to the
International Private Banking IT centre in
Luxembourg.
