POLICY COMMITTEE
CORPORATE FlNANCE
12
info exchange
WHAT'S News Issue 9 .October 1997
As the Policy plans for international corporate clients as well as corporate
finance both underlined the need to train a laser-sharp focus on target
customers, specific markets and certain product categories and the one
couldn't be seen without the other, the decision has been taken to merge the
respective policy committees. In some cases the plans call for radical
changes in the way we work. What's NewS discussed the impiications with
our managing board vice chairman Wouter Kolff.
'Some time ago, we enunciated our broad
strategie objective; namely, to cultivate
highly selective relationships that are built
on delivering value-added products and
services,' says Kolff. 'Now, with these new
policy papers, we have taken the next step
of defining the essential details involved in
actually executing this policy.'
INTERNATIONAL CORPORATES
What sort of companies fall under this
rubric? Essentially, international
corporates have been defined as business
customers who share two basic
characteristics. First, they are operating
outside our focus sectors of F&A, health
care, and financial institutions. For
instance, they might be specialized in a
particular niche of the Telecoms market.
Secondly, they are not within the sphere of
the large internationally-active Dutch
companies. For a variety of reasons, we
serve these companies with a particularly
full spectrum of banking services that we
cannot profitably offer every corporate
customer abroad.
SWELLING NUMBERS
Our international corporate customers
have swelled in number as the geographic
scope of our activities had widened
around the world. Regrettably, the
ROSadd, which is to say the profitability
and return on solvency associated with
these clients, has failed to keep pace.
Clearly, since our solvency constraints
imply a need to prioritize, these customers
will in the future have to be dealt with
differently than core clients within our
focus fields. 'It is time to become more
selective,' says Kolff. 'Doing business with
international corporates must advance our
overall objective of insuring a decent
ROSadd return overall - something like
six per cent on a portfolio basis by the
year 2000 - and it must be consistent with
our intent to finance growth by
diminishing the proportion of credit-
related business while increasing value-
added products and services particularly
in investment banking and corporate
finance.' In practical terms, this implies
that we will have to adopt a more
immediately product- and yield-driven
orientation when it comes to international
corporate clients.
IDENTIFYING NICHES
While a cliënt management group is being
formed - one that will be supported by
policy committees actively overseeing the
key cliënt focus sectors - the international
corporates committee will play a less
interventionist role. It has carefully
avoided identifying acceptable operating
niches for our corporate clients. Instead, it
has simply set basic criteria for
profitability, and wil) otherwise rely on the
initiative of individual offices throughout
our network to make detailed selections
that reflect local or regional opportunities.
'The burden of entrepreneurship rests with
the offices,' says Kolff. 'They have to
choose a judicious mix of industries along
the "industry life cycle" curve and
maintain balanced portfolios. In addition
to our ROSadd targets, we want to see a
20 percent gross return on the invested
solvency per customer and per portfolio.
What's more - since we spend a lot of time
on cultivating our customer relations - we
want to see a minimal income per
customer of some USD 500,000. So our
ambition level has been substantially
increased.'
HANDLING CUSTOMERS
Kolff illustrates the difference between the
Wouter Kolff
finalizing policy
plans.
handling of a focus cliënt on the one hand
and that of an international corporate
customer on the other. With larger and
primarily core-market clients, the senior
relationship manager (SRM) model will
apply. These SRMs will act as a single
point of coordination, reference and
authority.
VALUE ADDING
In the case of international corporate
customers, in contrast, Kolff notes that
'we need to be proactive, just as we are
with core customers, but on a different
scale and with somewhat different goals.'
The emphasis will be on selling selective
products and delivering quick bottom-line
results for the cliënt and ourselves. Say
we're in London and dealing with a big M
but non-core UK company. As with our
core customers, we want to bring more
value-added products to their attention.
But it won't necessarily be the relationship
manager who takes the initiative: it might
just as well be someone from structured
finance or investment banking.
ENJOYING BENEFITS
A fundamental difference in approach is
that the large network cliënt will enjoy the
full benefits of a relationship manager,
who will be directly responsible for
orchestrating our product know-how and
capabilities in a way that meets the
customer's very specific and long-term
needs. In other words, the sale of products
and services will be linked to delivering
customer value and cultivating a long
term relationship. He will act less as a 4
salesperson and much more as a close
consultant. His credibility will therefore
be based on the thoroughness of his
industry knowledge and on his ability to
establish firm bonds of trust. This is a
