ABP Future Focus
WHAT'S NewS Issue 4 April 1997
working relations
3
'Taking the trouble to get to know the customer, and understand
his needs and aims - this is one of the most important
characteristics of a professional partner in the financial services
market,' according to Paul Spijkers, Managing Director of Fixed J
X
Income investments for giant Dutch pension fund ABP (Algemeen f
O
Burgelijk Pensioenfonds),
capital market, Rabobank is an important
partner for us for our activities in a
number of sectors. In the first place, these
include place private loan placements, in
which Rabobank has a strong position
thanks to its extensive contacts in the
capital markets. These loans are an
important part of our fixed income
portfolio because of the premium interest
rates that they command, compared with
government and public-sector bond
ABP's Paul Spijkers: opportunities through
increasing international focus.
With almost USD 100 billion in fixed
income investments, out of a total
portfolio value of some USD 140 billion,
ABP rates as the world's second-largest
pension fund. The Heerlen based pension
fund's primary task is to ensure that long
term pension liabilities to over a million
public-sector employees will be met.
^ollowing its privatization two years ago,
the organization is gradually broadening
its traditionally conservative investment
approach, seeking to increase returns
while at the same time managing risk at
acceptable levels.
Paul Spijkers: 'Formerly we were
effectively restricted to operating on the
capital market in the Netherlands, with a
strong emphasis on government bonds
and other public-sector debt, virtually all
of it denominated in Dutch guilders. But
now we are in an active process of
diversification and internationalization,
which means a broadening not only in
terms of countries and currencies, but also
in terms of asset categories.'
MAJOR PLAYER
achieve these long-term objectives, it's
obvious that we need a broad cross-
section of financial services partners with
in-depth expertise in their specialist fields.
As one of the major players in the Dutch
DERIVATIVES
'Apart from that, Rabobank has a strong
position in instruments like swaps and
other derivatives. For example, they
recently helped us set up our own in-house
derivatives department.'
'Reliability, creditworthiness and size of
financial institutions are crucial issues for
us, because of the scale of our investment
transactions,' Spijkers emphasizes. 'That's
why these are our basic selection criteria,
which effectively leaves us with a short-list
of only the best-qualified banks with the
highest credit ratings. Without a doubt,
Rabobank's Triple-A rating is a strong
qualification. But we also have our own
credit analysis team to provide us with a
much deeper insight into the status of our
partners than those ratings and key
financial data alone.'
RESPONSIVENESS
'As well as these quantifiable selection
parameters, we use a number of other
indicators, some of which are more
subjective in nature. For example, the
profile and expertise of the team that
handles our business and their
responsiveness to our needs.'
'My experience of the Rabobank team is
that they take the trouble to understand
our strategy and objectives, and put that
knowledge into practice in our working
relationship. That means they have the
ability to come up with propositions that
are accurately focused on our investment
profile and aims, which saves us a lot of
time. In addition, lines of communication
are short and direct, which makes it easy
to get hold of the information we need.'
GLOBALIZATION
Looking towards the future, what
opportunities and developments does Paul
Spijkers see for ABP? 'Together with the
broadening investment profile I've already
referred to, we are seeing a globalization
of the world's investment markets. This
increases the liquidity of all kinds of
instruments, making them more attractive
for large-scale institutional investors like
ABP. While at present only some 2% of
our total fixed income portfolio is invested
outside the Netherlands, I expect this
proportion to increase significantly by
2000.'
'Plus of course the developments which
are taking place within Europe itself. As
we approach EMU, we will see a
tremendous enlargement of the potential
capital market which can be accessed
without foreign-currency exposure. And
there will also be a convergence of the
long-term interest rates - which at present
still vary considerably between the
individual countries. These factors will
open-up a much broader market without
increasing the overall risk.'
Because of these developments, an
increasing international focus will be an
even more important asset for our
partners in the future. Next to its leading
position in the Dutch capital market,
Rabobank undoubtedly has the critical
mass and professionalism to achieve a
stronger international profile as far as
ABP is concerned; perhaps that's one of
the directions in which the relationship
could develop in the future.'
ABP IN DE GROEI
Het Heerlense ABP is
inmiddels het op één na
grootste pensioenfonds
ter wereld. Directeur Paul Spijkers vertelt
over het proces van diversificatie en
internationalisatie waar het ABP nu al even
mee bezig is.'We verbreden niet alleen als
het gaat om landen en valuta's, maar ook in
termen van soorten activa. Rabobank is een
belangrijke en sterke partner.'
