Correspondent
RELATIONS
8
networking
WHAT'S News Issue 9 September 1996
The arrival of the Euro, the single European currency, is just around the corner,
and Rabobank's correspondent banking operations are gearing up to meet the
challenge and extend their global markets.
Worldwide correspondent banking partners
are entwined with a growing number of
products and services, ranging from forex
to deposits to off-balance sheet
instruments. However, the majority of the
business still revolves around the process of
banks managing and clearing payments for
each other, explains Correspondent
Banking's Elisabeth Noot.
BIG IN GUILDERS
Rabobank came into this international
clearing market - long dominated by ABN
Amro - comparatively recently. Once it
decided to make its move, in 1993, it found
that the experience of managing its own
complex cooperative structure, combined
with an attractive Triple-A credit rating,
made for a surprisingly smooth entree.
'Volume-wise, we are actually the biggest
bank in guilder-denominated transactions
worldwide,' says Huib van der Burg, who
handles Financial Institutions. 'Banks in
Germany, the US, as well as most other
non-European players regard our
correspondent banking people as partners
rather than competitors. Already, seven out
of the top 10 US banks organize their
guilder payments via Rabobank. The
reasons include the high priority that we
put on quality service, and the fact that we
are backed by one of the most advanced
payments systems in the world.'
Huib van der Burg
CORRESPONDING CLIENTS
With the advent of the single EU currency,
the competitive situation will radically
intensify. Rabobank's key competitors will
no longer be domestic but European
players. And although there will be fewer
interbank payments within Europe, there
will also be a larger potential market
serving as a clearing house for non-EU
clients. 'All the Dutch banks as well as their
foreign counterparts will be offering
Euroservices,' says van der Burg. 'To win a
share of this bigger market, our system, our
pricing, and our product will have to be the
best on offer.' Van der Burg's wording
signals an important point: that clearing is
seen as a product in its own right - one that
potentially generates other business
including liquidity support and forex for
correspondent banks. This is why these
banks are treated as clients - just as
corporate customers are - whose needs
must be understood and met. For example,
Rabobank has pioneered a fee-based
clearing product under which
correspondent banks receive interest on
balances in their Dutch guilder accounts.
(Previously, there were no fees but their
balances went interest-free.)
WINNING REPUTATION
Spurred by the swelling volume of guilder
payments traffic, Rabobank has also
invested heavily in efficiënt, state-of-the-art
systems which have enabled it to operate
on a lower cost base, and thus to offer
lower fees to corporate, banking, and retail
customers. The result of all of this
innovation is that the payments clearing
system, which was operating on a break
even basis when it began, reported a tidy
profit of NLG 2.8 million last year and will
probably earn doublé that in 1997. More
importantly, it is making progress in
winning over influential non-EU clients.
Both Noot and Van der Burg point to a
recent deal under which Rabobank won a
mandate to handle all of the guilder-
denominated payments transactions for
Bankers' Trust, the large US bank which
was a traditional ABN Amro cliënt. 'We
want to do more of this kind of business,'
says Noot. 'The fact that we were chosen
by Bankers' Trust - an institution which is
globally seen as the ultimate 'bankers'
bank' - is an indication of the kind of
recognition we are winning on a wider
market.'
NEW STRUCTURE
Meanwhile, as part of the bank's overall
strategie restructuring, the sales
management Correspondent Banking unit
is being shifted over to Rabobank
Elisabeth Noot with colleague Kees van de
Beek.
Nederland, where they will become part of
a new, integrated international payments
directorate. Meanwhile, the account
management team for financial institutions
will move over to become part of the
investment banking arm within Rabobank
International, reflecting the higher profile
of those activities. 'One of the reasons for
shifting the payments is that it will be
closer to the operations side of the bank,
which is responsible for product
development and efficiënt payment
execution,' explains Noot. 'Customers are
increasingly demanding tailor-made
products which require that we be able to
quickly and smoothly adapt our automatic
systems to accommodate them. This makes
close ties to the operations side essential.'
INTERNATIONAL INTERACTION
Correspondent Banking will continue to
work with the branches within the
international network and leverage the
power of the entire organization to obtain
better service and lower pricing for such
necessary services as, for example US
dollar accounts with another corresponden^^
bank. Despite the reorganization, the
strong overlap between credit management
and payments systems mean that there will
still be continuous contacts maintained
between correspondent banking and the
international account managers, Van der
Burg says.
CORRESPONDENT
BANKING
Correspondent Banking
onderhoudt wereldwijd
contacten met andere banken voor de
afwikkeling van financiële transacties. Op dit
moment zijn wij de grootste bank op het
gebied van de clearing van NLG-transacties.
Naast onze triple A-rating spelen onze zeer
geavanceerde systemen en de hoge service
een cruciale rol. De komst van de Euro zal
aan de NLG-clearing een einde maken. Naar
verwachting zal echter een behoorlijk
marktaandeel bereikt kunnen worden in de
Euro-clearing voor niet EU-landen.