What's NewS
New Zealand
Business down
under
Supplement for What's NewS March 1998
The relatively new Rabobank Australia and New Zealand
Group started operating in New Zealand following the
acquisition of Primary Industry Bank of Australia (PIBA) in
October 1994.Time in the market is proof that, while
admittedly no market is easy, business in down under
remains cut throat. But, in true kiwi pioneering spirit, the
team is well and truly on the cutting edge.
Chaina
Japan
Philippines
Pacific ocean
Australia
New Zealand
True, in terms of our network,
a comparatively small and
somewhat isolated market
New Zealand may be, but its
significance to the F&A
industry, and therefore
Rabobank, remains
undisputed. Farming is the
very essence of New Zealand,
the primary industry in
partieular forming the
backbone of the country's
economy. Of New Zealand's
'ZD 90 billion total GDP, 27
to 30 percent, representing
around NZD 14 billion, is
primary agri related - making
Rabobank's target a significant
one. 'Agribusiness, with its
stronghold on the market
makes business aggressive,'
confirms Jaap Klep, general
manager New Zealand of the
Rabobank Australia and New
Zealand Group 'There is only
a finite amount of money and
margins are tight. Add to this
the fact that the New Zealand
market is a developed one -
infrastructure is sound and
export is already booming.' All
positive stuff, he admits,
except that financing for New
Zealand's F&A industry is no
longer a growth area. 'It's this
stagnation that provides a
climate of extreme
competition.'
SUCCESSFUL FORMULA
Unique to operations in both
Australia and New Zealand is
the primary banking slant. On
the coattails of PIBA,
Rabobank has built up a
strong asset base. 'Through
PIBA,' continues Klep, 'we
found a successful formula
involving lending to successful
family farming enterprises on a
long term basis. We are doing
business as a wholesale bank, a
niche player in the New
Zealand market and a low cost
operator. Our quality portfolio
of clients, lean branch network
and strong parent backing
allows us to lower our
operational costs - producing
savings which we can pass on
to our clients in the form of
competitive interest rates and
loan costs. In this price
sensitive, highly competitive
market, this strategy gives us
the necessary ability to be
players.'
BIG BROTHER
In terms of Rabobank, say
New Zealand and Australia is
spoken in the same breath.
'True,' says Klep, 'in reality we
are an inseparable division. As
far as doing business is
concerned, many
characteristics of New Zealand
may be applied to our parent,
Australia. But, that doesn't
simply mean we function as
Australia's backyard. The New
Zealand market is a separate
entity entirely, a different kettle
of fish altogether. In our case,
small means big,' he grins.
'Although with the recent
Wrightson's acquisition (see
page 9), New Zealand's rural
portfolio is approaching half
the size of our big brother
Australia. The geographic
isolation of us both keeps our
Australasian team spirit alive,
and that's a spirit of
communication we rely on. We
are also heavily dependent on
our total network.'
ONE-STOP BANKING
An interesting development the
team down under are working
on is a move towards
transactional banking (in the
form of cheque books and
ATM cards) - a move perhaps
contrary to global trends, Klep
admits, but nevertheless a
missing link in kiwi banking.
'We want to offer a one-stop
shop in wholesale banking, in
line with our customer focus
strategy,' he continues. 'Over
here transactional banking is
what's needed to provide a
complete product, which is
what we are positioning
ourselves to offer.' In answer
to transactional banking being
credit costly to run, Klep's idea
is to outsource. Although still
under wraps, the Australia
New Zealand Group is in the
process of pairing up with
New Zealand's Association of
Credit Unions. Not officially a
bank, the non-aggressive,
cooperatively structured rural
financier is seen by the
competition as something of a
dormant giant, but according
to Klep, 'it provides us with
the backup we need.
Ultimately, it will make us
pretty competitive,' he
continues. 'The Association of
Credit Unions has the retail
Jaap Klep heading the team
down under
