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ireland
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WHAT'S NEWS Issue 4 April 1996
TREASURY DEVELOPMENT
Treasury
The Dublin treasury was set up just over one year ago, with one dealer.
Today, it has a complement of 10. It has a crucial role to play.The
treasury agency service is, of course, an important one for corporates.
Yet it only represents part of Dublin's activities. 'At the end of the day,'
confirms head of treasury Fergus Murphy,'all of our assets.our liabilities,
all our loans, our deposits and all the foreign exchange we're doing for
the Group here and for the network pass through here. And that is a
pretty sizeable amount. If you look at the deals done by Lynda Carroll
and Paul Whooley in structured finance and banking, you see they're
dealing with big ticket deals - USD 50 to 100 million.We also run a very
large cash book for the assets put in by DLL business. So our balance
sheet has grown rapidly. In 1994, it was around NLG 1 billion, now its
increased five-fold.'The dealing room is still comparatively smalfbut it's
growing. The aim,' says chief dealer Malachy Taaffe, 'is to have around
15 dealers including the DLL people.That would bring us up to about
the size of the biggest international banks here. One of our main
focuses is domestic corporates. Even though we're not yet up to size,
we're already in the process of developing relationships with corporate
clients. Eileen O'Sullivan of treasury sales and corporate banker Deirdre
Hannigan are tackling that particular market and we hope that we will
be able to offer treasury products along with lending and other
services. While Taaffe and his co-workers are not involved in 'rocket-
scientist stuffwe dearly have a very interesting mix of products here.
We started from scratch with the team only a year ago, but we've
definitely come a long way in that time.'
The intensity of cooperation
between the three sister
companies is perhaps most
apparent when you speak to
Jan Frederix. 'There's a lot
more to it than just sharing a
building,' he says. 'The
managers - Arnold, Brendan
and myself - talk on a weekly
basis about cornmon issues,
such as personnel
development, pensions, even
staff outings. But again, there's
much more to it than that. The
very fact that three of our DLL
people work in the bank's
dealing room means our
relationship is already
extremely close. But we also
have a working agreement
whereby if one of the
operations identifies a cliënt
they want in their portfolio,
they would inform the others
prior to visiting that particular
prospect. That means we go in
as a group with a whole range
of options to offer.'
PRODUCT
DEVELOPMENT
The option Frederix and his
team would contrihute is cross
border leasing. 'We're
essentially a leasing team here,
that's our expertise,' he
explains. 'Although some of
our leasing activities actually
come close to factoring. When
we started up here in 1992 -
I'm proud to say DLL was the
first Group subsidiary to see the
advantages of the Republic -
our main activity was booking
transactions generated by our
colleagues elsewhere in the
Europe. Later, it was decided
that we could expand our
activities to develop
transactions and products of
our own which we could then
sell to top Rabobank corporate
clients, say in the Netherlands,
but also in the UK and other
markets.'
GROUP ADVANTAGE
As top corporates enjoy
excellent credit ratings, and are
not usually prepared to pay big
margins, the DLL team had to
come up with value added to
generate the kind of margins
they are looking for. The
solution we developed was to
insert into our structures the
tax capacity and benefits we
obtain from the third parties
who act as investors in lease
structures. Let me just give you
one example. We've recently
done a sale and lease-back
transaction for Dutch
Railways. We found an Irish
investor who operates in the
38-percent environment
[domestic tax rates]. They
bought the carriages from
Dutch Railways and passed
part of their tax advantage on
to us. That's one way you can
deploy our presence here to
advantage for the whole
Group.'
HIGH RETURNS
A further clear advantage,
specifically for DLL itself, is the
funding operation run out of
Rabobank's dealing room
upstairs. 'All of DLL's funding
requirements are sourced from
Dublin,' Frederix says. 'That
represents roughly NLG 3.7
billion per year and it is all
managed here by our own team
of three dealers in treasury.
Much of our funding comes
from Rabobank itself, simply
because as a Triple-A rated
source, it's cheaper. But we do
fund from other sources as
GROWING GRADUALLY
If DLL writes the kind of
business they forecast, will
three positions in Rabobank's
dealing room be sufficiënt?
'You know we're moving,'
Frederix confirms. 'I think
you'11 see our treasury staff
remain stable this year. But we
are looking for four new people
on the leasing side, bringing our
team up to 12. There's still a lot
to do out there.'
jan Frederix
DE LAGE LANDEN
Hoewel DLL zowel factoring als leasing kan aanbieden, ligt de nadruk op cross-border leasing en treasury-activteiten. General
manager Jan Frederix onderschrijft het grote voordeel van het gezamenlijk benaderen van klanten.
Het kantoor begon in 1992 met als belangrijkste taak het boeken van transacties voor de andere DLL vestigingen in Europa. In een"
later stadium werden de activiteiten uitgebreid met het zelf opzetten van speciale transacties en produkten bestemd voor grote corporate klanten
van de Rabobank. Vooral het fiscale voordeel voor buitenlandse ondernemingen biedt kansen. Voorbeeld hiervan is de sale en lease-back transactie
voor de Nederlandse Spoorwegen.