Full-speed ahead for
Budget 1998
L
12
future plans
WHAT'S NewS Issue 8 August/September 1997
The international network is now laying its groundwork for the opening phase
in what will be an unusually dynamic process of formulating the 1998 budget.
Already, the offices are submitting their bids for the bank's scarce liquidity in a
preliminary attempt to match their recent and forecast performance with the
bank's newly-defined objectives under the 'Customer Focus Strategy 1996-
2000.' What's NewS on current state of play.
Bert Bruggink: taking important decisions.
Efforts of the international network were
somewhat complicated by the fact that
the detailed strategie business plans of
the various Management Teams and
Policy Committees - for example F&A,
Health Care, Investment Banking,
International Corporates, Private
Banking and all the rest - were still
formally incomplete at the time that the
1998 proposals were due. 'We had a lot
of offices calling us to ask: how are we
supposed to prepare a budget when our
strategie scope hasn't yet been adequately
defined?' says Bert Bruggink, our RI
Controller. 'Because of the new strategy
implementation, the budget process for
1998 is inevitably proving more complex
than ever, especially in light of the fact
that the level of detailed information
required is so much higher, and the full
strategie picture is only now coming
clear.' Flexibility is therefore the order of
the day. 'However well-informed and
realistic the proposals may be, they are
still just best guesses. There will
Bram Kruimel: confident for the future.
inevitably be changes as the budget
process proceeds. Fortunately, the main
lines of strategie thinking were already
approved when the process began.'
STICKING TO GUIDELINES
The 1998 starting proposals consist of
several elements. First, they describe the
evolution of each offices business lines
and customer base. They also quantify, in
clearly measurable terms, the associated
financial demands on our scarce overall
assets. Finally, they include financial
statements - profit and loss accounts plus
forecast balance sheets for 1998. Having
been delivered, these individual feasibility
proposals will be jointly screened by the
Controllers' office and Network
Development and Support (NDS) in
Utrecht over the coming weeks. Together,
they will consider issues including current
and expected future performance of the
offices, return on solvency, cost
development, asset base growth trends,
composition of customer groups,
volatility of results and all the rest, with
the Controller more focused at a
Consolidated level and NDS on the
individual offices.
LONG-TERM TRENDS
Peter Heijne is a member of the six-strong
liaison team within NDS headed by Bram
Kruimel. As he explains it, 'our task is to
ensure that the individual proposals are
consistent with the overall strategy, which
has already been enunciated, and with the
specific Business Plans which will have
been completed by the end of August. We
will comment on details of the individual
offices' plans - in full consultation - and
the Controllers will produce a
Consolidated picture of the financials.
Together, this ought to provide a hase
both for the setting of immediate priorities
as well as for long-term trend analysis.
This work will clear the way for the start
of Phase II.'
PHASING-IN STAGE
The important second phase in the budget
process will get under way at the end of
August and will continue through
September. It will consist of a series of
discussions attended by the office general
management, the NDS liaison, and by the
managing board member responsible for
the area concerned. These meetings will
see the decisive back-and-forth under
which the offices' proposals will be
massaged into line with the organization's
wider priorities. 'Bids on our scarce assets
will be considered in light of actual recent
performance and realistic future
prospects,' says Bruggink. 'Fooking
towards the year 2000, the offices will
naturally want their programs to be
assigned top priority. But, as an
organization, we obviously can't do
everything at once. Thus, in the coming
weeks, we will be deciding not only on
next year's budget, but we will also be
taking important decisions about the
priorities and phasing of strategy
implementation over the next several years
as well.'
DETAILED FRAMEWORK
In the weeks following these back-and-
forth meetings, the revised proposals will
be woven together into a coherent plan
and eventually presented to our managing
board for decision. While there will
naturally still be room for refinements and
changes at this stage, it is hoped that the
bulk of the work will then have been done.
A decision at this level is expected by the
end of October, clearing the way for a full
RI plan to be sent for final disposition by
the board at Rabobank Nederland group
level before the year's end. 'Clearly, this
years' budget process is proving to be 'a
learning experience', says Bruggink.
'Nevertheless, one thing is already clear:
we are all operating under a more clearly
defined, constrained, and highly detailed
framework than ever before.'
