eastern europe
Working developments
i
What'sNewS Issue 1 January 1999 I I
In the wake of Russia's financial collapse last summer, the news from that part
of the world has been rather gloomy. Many neighbouring countries feit the
financial fall out. But even though Rabobank International (Rl) has been
rethinking operations in the region, and country limits are either very limited or
even non-existent, we are still at work there through a variety of projects.
Black Earth
Staying power
Marketing in Latvia
Daunting task
RI's involvement in the former Eastern
Bloc has always been fairly low key
»n most countries until three years ago.
'he quick developers, such as Poland and
Hungary, were recognized and
appropriate investment made. For Russia,
the move to set up operations was rather
more cautious. The very prudent - and
sometimes criticized - policy on limited
activity in the country meant we avoided
the kind of numbing losses incurred by
much of the competition last year. Yet, as
we carefully weighed every cent allocated
to the region, we continued to be deeply
involved in a number of fund
management and advisory and
consultancy projects that ensure a
foothold in the region for the future.
One such project in Russia is the Black
Earth Regional Venture Fund, whose
kstablishment and management was
Members of the Black Earth Regional Venture
Fund, left to right: Kari Hataaja (EBRD), Michel
Hendriks (fund manager RBE), Casper
Heijsteeg (investment manager RBE), Nozdrin
Evgeniy (Bezrk), Alexander Orlov (Berzk),
Sergei Zhernovoy (Berzk), Tatjana Dorokhina
(translator) and Jaap Kool
tandated hy the European Bank for
Reconstruction and Development
(EBRD). This venture was set up in late
1996 to stimulate local initiatives,
investment and capital markets through
participation in the equity of new
enterprises. The EBRD made available
USD 30 million for investment, with
consortium members - headed by
Rabobank guaranteeing a further 10
percent. Rabobank currently holds a 57
percent stake in the management
company, with three other players
accounting for the remaining 43 percent.
Over two years of activity, the Black Earth
Fund has proven to be one of the best
managed EBRD regional funds in Russia.
The success of the fund is one reason why
Rabobank has negotiated a share swap
with the other participants in the
consortium. Now, we hold a 52 percent
stake in the Black Earth Fund and a 5
percent interest in the Urals fund. 'One of
the reasons for our ongoing interest in
these funds,' says Jaap Kool, our Eastern
European coördinator, 'is that our
continued presence in this region should
pay off in the future. Few foreign
investors are willing to go into Russia at
this stage. Through the EBRD
involvement and guarantees, we are able
to remain a name in Russia without
taking huge risks. The EBRD has given us
permission to seek out those projects and
investments we considered suitable - that
mandate opens up opportunities, also for
our people in Moscow, who can offer this
fund as a possible investment option for
customers.'
This approach is a cautious recognition of
that fact that the current crisis is not
infinite, either in Russia or in other
Eastern European countries. Another
example of Rabobank involvement in the
region is the twinning project with the
Latvijas Krajbanka, the Latvian Savings
Bank. Potentially, the Krajbanka could
play an important role in the
development of the country's burgeoning
economy. As a nationwide retail bank and
the recipiënt of much of Latvia's savings,
the Krajbanka has been supported by
PHARE, the EU development agency for
Central and Eastern Europe. Through
R1AS, Rabobank has contributed
expertise, primarily from the retail
perspective. However, RI is also involved
currently to support the marketing and
communication effort of the partly
privatized bank.
RI's head of marketing, Roel van Veggel,
has spent some time recently in the
Latvian capital of Riga where the initial
framework for a customer marketing and
communication plan was being developed.
'The challenge facing this formerly state-
Roel van Veggel, setting up the marketing
plan in the Latvian capital of Riga
owned bank was to persuade the general
public that Krajbanka is in the process of
becoming a customer orientated bank,
with a broad product range and service-
minded attitude,' he says. 'The consensus
is that this task is daunting. RIAS asked
us for assistance and support in working
with the people in Riga to improve and
expand corporate Communications,
review the marketing methodology,
especially for the kind of new products
that are becoming available to consumers
there, and not least, help in planning and
designing an effective investor relations
campaign. In my view, this type of rnulti-
faceted cooperation - with RIAS and with
a very different financial institution
represents a very real learning curve for it.
It takes us back to the grass roots - not
only of the banking business, but also my
own field. In that sense, it is very much a
win-win situation for all concerned.'
