WHAT'S NewS Issue 9 October 1997
info exchange
13
time-consuming and costly process that
cannot be extended to international
corporates except in exceptional cases.'
STRIKING THE BALANCE
If we strike the balance correctly,
international corporate clients will
continue to play an important role in the
overall mix of our business. For one thing,
they help us both to diversify our risks
and to maintain an acceptable risk profile
ranging between one and six as measured
in the US solvency risk scoring system. For
another, doing business with them helps
provide the critical mass for the
specialized services and products that we
need to mobilize in pursuit of our broader
strategie objectives in the core relationship
^k-oups. For example, against the
^^ackground of the worldwide trend
towards securitization, our dual efforts to
build profitable relations with a core
group such as institutional investors -
while simultaneously freeing up solvency
to finance our own growth - can be
advanced by lead managing and arranging
deals for international corporates. The
resulting paper can be sold to institutional
clients, and thus earn fees and drive a
higher turnover volume on our inventory.
Of course, to maintain our rating and in
order to accurately measure our
performance in relation to the general
target criteria mentioned above, we will
need to engineer a substantial
improvement in our management
information and risk management systems
(see article on page 6). Data generated
^^ïroughout the network must be
consistent and enable us to measure risk in
a way that is crystal clear both to
regulators as well as the all-important
rating agencies. In the case of both core
and non-core business clients, however,
there is a clear need to substantially
enhance our proficiency in cross-selling,
and it will be up to investment banking
and corporate finance to deliver the
goods.
CORPORATE FINANCE
The business plan for corporate finance
places a sharp emphasis on the need to
organize our know-how and spread it
efficiently throughout the network. Many
of our activities here are still largely
balance-sheet driven - such as project
finance - and while this business remains
important it is equally clear, as Wouter
Kolff remarks, that 'we cannot be all
things to all customers.' The policy paper
sets out several essential objectives. The
aim is to build an innovative, cross-border,
product-led wholesale capability in
t selected areas where we can reach critical
mass and clearly-defined levels of
profitability. Strategie products include
acquisition finance, mergers and
acquisitions (M&A) plus strategie
advisory, structured finance, syndication
and trade finance. The aim is to achieve
an overall net ROSadd of at least 12
percent, including after-tax benefits.
FIELDING COMPETENCE
In order to succeed, we will have to
increase the proportion of value-added
deals, particularly in connection with
target F&A customers who are positioned
higher up on the food chain. Such
customers include brand portfolio
managers, retailers, those involved in
packaging and transportation, as well as
food processors. Flitherto, the historical
distribution of our F&A cliënt base has
been more heavily weighted in the agri
/commodity trading segment positioned
lower down the chain. It is important to
promote more intensive cross-selling of
products and services, as well as to
engineer appropriate bridges to link the
know-how in our competence centres with
the resources in our sales offices. The plan
recognizes that the shape of these bridges
will vary considerably from one area of
competence to the next.
KEY STRENGTHS
Drawing on detailed input from our
various corporate finance product groups,
and the expectations of our three principal
competence centres based in London, New
York and Utrecht, the policy paper notes
that most of our corporate finance
activities are new and that our key area of
strength at present lies in structured
finance. This holds true for the
Netherlands, London, New York and
South America. The plan sees medium
term opportunities in Central and Eastern
Europe and notes that in Asia our
activities are now mainly restricted to
syndication operations. In structured
finance, it is important to link our
capabilities more closely with the
emerging relationship management
structure. Moreover, an increasing
emphasis will be placed on M&A, against
the background of restructuring in the
food business, and on grasping
opportunities associated with the ongoing
securitization process. In connection with
both of these areas, the report stresses the
need to extend our research capabilities,
not only on a sector-by-sector basis but at
the individual company level as well, and
on the crucial importance of hiring and
retaining skilled staff.
For more about investment banking policies
see the coming November issue.
Adrie Zwanenberg and his new Dairy
Cooperative study.
RECTIFICATION
To clear up some confusion which may
have occurred in the last issue - there are
now two dairy studies available.The first,
written by Adrie Zwanenberg is entitled
'European Dairy Cooperatives Developing
New Strategies'and can be ordered from Rl
marketing for NLG150 (tel.+31 30 216
2804). The second is one of the first in series
of new style special reports from F&A.
'Changes and Challenges in the Dairy
Industry in Central and Eastern European
Countries' is also available from F&A
Research (tel.+31 30 216 1178).
