Global forex -
INTEGRATION FOR
EXCELLENCE
4
investment banking
What's NewS Issue 2 February 1998
Foreign exchange trading is one area where the bank has always been strong
even without the advantages of a full investment banking infrastructure.
The arrival of Michele di Stefano as forex global product manager and
a number of new hires is designed to make Rabobank International even
stronger in this lucrative though potentially volatile field. Here's an update
on the finalized global foreign exchange business plan.
Michele di Stefano
Only three months in the bank, but the
business plan is almost complete and
Michele di Stefano has done some -
though not enough, he says - travelling in
the network. However, once the plan is on
track, he will be spending much more time
in trading and sales centres around the
world meeting people and expounding the
strategy behind the ambitious goals that
have been set for us. He agrees that R1 has
always been strong in forex, with some
offices even generating much of their
income from trading. Reflecting that, the
changes he envisages are towards
integration.
What will change?
At present, the focus is too much on
trading as opposed to sales and trading.
This means we have not yet tapped into
global institutional investors in the US, the
UK and in Continental Europe. With the
exception of the Netherlands, which has
the world's fourth largest accumulation of
institutional capital, our business in this
area is very limited, although I do believe
the fact that we are a Dutch bank will be
an advantage when getting into this
market because of the Netherlands' top
position. So if you ask what will change,
then I would say that integration is the
major goal we have.
Integration in terms of foreign exchange?
Yes, but also working in conjunction with
our colleagues in fixed income and other
products and with our people in corporate
finance. I mention the institutionals
because that really is a market we, as the
forex group, should be servicing. At
present, we are seen by a lot of players as
a provider of foreign exchange services,
but not necessarily as an innovator of
products or new ideas. Given the strength
of our balance sheet and our status in the
market, we need to be seen as a much
more sophisticated player. That is why
most of the new hires you will be seeing in
forex will be sales specialists used to
dealing with institutionals and who will be
taking the approach that we now have an
investment arm capable of providing a
much wider range of products and
services.
Is this what you mean when you say global
forex will be knowledge driven?
Yes, that is the difference between a
primarily trading operation and an
integrated sales, i.e. solution-oriented, and
trading activity. We want to be seen as an
advisor, as a bank where clients come for
execution, not only as a provider of
products.
So the major change will be a shift away
from comparatively small-scale, local
treasury operations to a more
comprehensive approach to customers.
What we have to do is create a global
integrated network so that we have
professionals speaking to those clients
who need access on a 24-hour basis,
whether those clients are in Sydney,
Singapore, London, Paris, New York or
wherever. The type of products this
professional sales team will be offering in
this market will be very homogenous.
There will certainly be differences in
specialized currencies, depending on
geographic location, but our sales
approach to customers will be seamless.
How will this look in practical terms?
For forex trading, we have selected four
centres of competence. London will be the
major one globally because it will offer a
wider number of products in what is
undeniably the world's main forex market.
This is why London will be trading until
late in the evening to cover the New York
time zone.
That means there will be no trading
in New York?
Yes, New York will exclusively cover US
clients, global investors, as a sales force.
The Global Investment Team in London,
will be made up of sales professionals who
will look after US accounts during the
London time zone and the Asian accounts
after Asia closes. There will also be
trading and sales in Singapore. The sales
force will consist primarily of Asian and
international investor specialists, because
global investors from Europe and the US
will want access to the Asian markets.
So we will have trading and sales in
Singapore. The other centres in Asia will
be sales satellites; Hong Kong will be
responsible for North Asian sales;
Sydney for Australia and New Zealand,
Singapore for the G10 currencies and all
Southeast Asian markets. Utrecht will
look after Benelux customers and London
will handle the global investors.
Emerging markets is an area you aim to
develop into a niche for Rl. It is both risky
and lucrative. Why the focus here?
lt's quite simple. The arrival of the Euro
and the disappearance of a number of
currencies will create a vacuum in
investors' portfolios. They will have to
replace the old European currencies with
new ones and emerging markets offer
attractive yields. They are by definition
economies that are maturing. And they
offer the type of return that investors are
looking for. Risk is obviously an issue. But
if you have a highly trained and
specialized team, then the risk associated
