WHAT'S NewS Issue 10 November 1997 info exchange 5 attain the economies of scale and global ^cope that are prerequisite to our goal of fjfrofitably serving our customers.' There is room to improve our presence in Dutch equities - where Rabo Securities has built an impressive 1997 market share of 80 percent in Dutch middle market IPO's. More needs to be done to obtain a fair share of the primary and secondary equity business of larger Dutch companies for whom there will be active demand from our retail investors. We will also build from scratch our London equity operation with about 70 stage staff, including OTC Equity and Derivatives; its focus will be on non-Dutch European equities in the chosen sectors of F&A, Health Care as well as several other non-core fields such as Telecommunications where Corporate Finance has built expertise. STRATEGIC CHANGES leing a knowledge-driven, customer- oriented bank implies a significant investment in pan-European research, including parts of IRIS. Our agri research unit - already regarded as among the world's best - will (as a result of the addition of equity analysts) extend its reach from macro research on agricultural products or projects to the provision of information and investment advice about individual companies for sale to institutional clients - this is one example of the integrated approach for investment banking. TRANSITION CHALLENGE In interest rates we have made the following choices. The single most important strategie challenge is the transition to the common European ^fcurrency and the disappearance of our ^^iuilder trading activities within 14 months. As a result, our most important source of profit will disappear. Trading in the common Euro currency is one of the few commodity products in which we intend to carve out a strong role. Our ambition is to become one of the top 10-15 Euro houses in the world - and the common currency is one in which we are not, for once, starting out from behind. Thus, in addition to servicing our Dutch customer base, Utrecht's task will be to get the Euro transition properly organized and emerge as a highly focused centre of Euro trading competence that generates Euro products available for use throughout the network. This is a new and much expanded role for Utrecht, an opportunity it did not have whilst its focus was on a niche currency. ENVIABLE PORTFOLIO One of the concerns that has recently affected corporate bankers is the solvency- imposed limit on growth in lending. However the advent of securitization - whereby such assets are sold to other institutional investors (who assume the associated credit risks) - has transformed our loan portfolio into an enviable resource. 'We have an army of loan officers managing relationships with customers who would do even more business with us - if only we could. By creating the skills to securitize loans on a much larger scale, we can transform what was seen as a bottleneck in our bank into a real advantage. We will have corporate bankers originating something that investment bankers go on to sell. This is another very practical example of investment banking as part of an integrated bank. Obviously, we can move beyond our own loan portfolio to offer similar services for customers'. MAKING CHOICES Hard choices have also been made with respect to our involvement in sophisticated non-commodity products. We will focus on those areas - such as long-term derivatives or complex options - where our AAA credit rating is crucial for our customers and counterparties. This advantage is only of value if we take the long-term credit risk on a prudent basis. EXPENDING PRESENCE Our investment banking presence will be expanded in areas like Eastern Europe, as well as selected countries in Southeast Asia and Latin America, where we will develop expertise in terms of trading currencies and securities for corporates and institutional investors alike. Finally we are currently investigating a new product range for hedging price risks associated with certain soft commodities. COST-EFFECTIVE PRODUCTS All of these interest rate derivatives, credit derivatives, soft commodity products (which are derivative related), private placements, asset swaps, spreads on bonds for emerging markets, asset backed securities and so forth are closely interrelated. We must look at generic classes of risk. This makes our activities in terms of trading and selling more cost effective. 'The essential point is to create a range of products that are like the contiguous colours of a rainbow,' explains von Ungern-Sternberg. IMPORTANT IMPLICATIONS Clearly, this increased range will have important implications for the member banks. Demographic trends mean that their retail clients are becoming more affluent, and are increasingly keen to diversify their investment portfolios. With the advent of the Euro, the range of products that they will be interested in will quickly extend beyond Dutch corporate equities. One of the key roles of Rabobank International will be to act as a reliable in- house supplier that can generate a constant stream of attractive investment products. GENERATING VOLUMES 'Our retail distribution network is a great strength. We need to see the volumes that only our retail network can generate,' says von Ungern-Sternberg. 'In this respect, we're not unlike the three big Swiss Banks. The Member Banks and Rabobank International together need to better organize the flow of products to these customers, based on a clear exchange of information about their anticipated needs. We need to spend a great deal of time over the next 12 months to organize this interactive process: it will be decisive to our success in Investment Banking and make them attractive to their customers.' (continued on page 15) Discussing investment banking policy plans from left: Michael lee, Alex von Ungern-Sternberg, Marcus Grubb, Ruut Schalij, Reinier Mesritz, Andries Mak van Waay, BUI Cuthbert, Mark Blundell, Rogier Krens, Teym Eliazov.

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blad 'What's news' (EN) | 1997 | | pagina 5