Responding to risk and opportunity
Rl strategie review
Having set up a dedicated team to review all options relating to future
strategy and sources of growth, Maarten Hulshoff, the new Chief Executive
Officer of Rabobank International (Rl), has moved swiftly to implement
immediate short-term measures to respond to a serious backlog in RI's
budgeted performance targets.
Competitive realities
Fundamental questions
Clarifying objectives
Cutting costs
What sNewS Issue 6* June 1999
Initial measures announced in recent
weeks already include a headcount
freeze for the Mini-Euroland comprised
of London, Utrecht, and head office, a 6-
month moratorium on new business
Pnitiatives, and a 20 percent cut in travel
and entertainment expenditures. In the
meantime, Hulshoff has been meeting
with Rabobankers to introducé himself
and share ideas and get to know staff
from all levels of the organization. 'If I
read people right,' Hulshoff says, 'they
are dying to see someone take charge,
make decisions, and exercise executive
responsibility. That is what I am here to
do - and we all confront a situation that
is hardlv easy.'
During conferences with the entire staff at
Utrecht and in London, the latter of
which was videotaped and is being distri-
buted throughout the global network,
Hulshoff has presented a frank and far-
>eaching assessment of the competitive
ealities that prevail in the global financial
services industry, sketching out the funda-
mental strategie challenges that confront
Rl in this competitive context. He has also
spelled out his key priority - to reach a
level of efficiency that enables us to spend
as much time as possible out with the
customer - as well as his guiding vision,
which is to transform Rl into 'one of the
most entrepreneurial' of banks.
Globally, of course, the picture is one of
concentration and growing extremes -
what Hulshoff terms the 'Beauty and the
Beast' scenario. Today's successful play-
ers are characterized either by a
knowledge-based niche specialization,
such as investment banking, or by their
Mieer size, with massive technology-based
global networks such as that fielded by
players like Citibank. In common with
many other mid-sized regional banks, Rl
has been left in what Hulshoff calls 'the
vulnerable zone right in the middle' and
therefore needs to confront the most
fundamental of questions with pressing
urgency. 'How we are going to differen-
tiate and position ourselves, with what
kind of products and services, delivered
to which sorts of customers in what
these expansions along with the conti-
nuing strength of our F&A image, and the
loyalty and enthusiasm of Rl staff. 'People
want to move and do business, which has
been both a benefit and a drawback. The
consequence of growing so rapidly is that
our infrastructure support levels - the
delivery capability - are lagging behind.
Management information must intprove
substantially. We need to evolve from the
Dutch consensual tradition towards the
Anglo-Saxon model of accountability that
currently prevails on the global scene. We
must further clarify our strategy and the
way in which it should be implemented.
There is a shared perception that sonte-
Hulshoff and the team determining strategies for RI's future. Clockwise from left - Anne Laflamme,
Ejnar Knudsen, Reinier Mesritz, Jason van Praagh, Valerie Boas, Ceorge Yau, Jorge Correa, Robert
Wolthuis, Maarten Hulshoff, Matthias Wiemeyer (not pictured - Jan Willem Krens)
markets? How can we build on the
circles of competence where Rabobank
Nederland (RN) excels - for example in
retail banking, mortgages, food and
agribusiness, asset management with
Robeco, and the small and medium
enterprises - on a global scale?'
'The Rabobank Group has invested a lot
of money in Rl. My predecessors have
done an exceptional job when you
consider everything that's been built up
inside this organization over the last few
years. Our international network expan-
sion,' he says, 'and our breakthrough on
the global financial markets (GFM) scene
are second to none amongst European
banks.' Hulshoff specifically singles out
thing needs to be done: that we need to
focus our strategy, clarify our immediate
objectives, and make decisions.'
On the financial front, the picture is
worrisome. While revenues have clintbed,
costs have advanced at an even faster
pace, and both margins and the net
result have shrunk accordingly. By now,
it has become abundantly clear that
some two-thirds of all Rl costs are
generated in the so-called Mini-Euroland
which consists of London, Utrecht, and
Utrecht head office, while only 38
percent of all revenues are booked there.
Hence, the initial tranche of short-term
cost containment measures are focused
specifically at the Mini-Euroland cluster.
