group performance
RI's budget rounds
Lean and mean
4 What's NewS Issue 8 Aug/Sept 1999
have a lot of plans for where we want to
be in Europe and how we want to posi-
tion ourselves in the region. Clearly,
we are looking for ways to en
sure quality services for o
clients throughout Eu
rope and so we are ex-
ploring strategie al-
liances, specifically
with Iike-minded, ie.
cooperative, financial
institutions. We have
developed a policy
paper on our future in
Europe, it is called
Strategie Framework
2005, and we will be dis
cussing it with the organization in
the Central Cirele in September.'
September is also slated as deadline for
Rabobank International's own strategie
review. But in anticipation, Smits
explained that we will continue to focus
on F&A customers worldwide, on large
Dutch corporates and institutionals. The
Rabobank
International
Subsidiaries
Local member banks
addition of large corporates with specific
needs in which we have real expertise
was new. He also stressed that RI
will emerge from the strategie
review process with
improved relationship
management focus,
stronger account-
ability and a
1 streamlined organi-
I zations. 'By the end
of next year,' Smits
stated, 'we will have
a lean and mean
organization positioned
to meet the challenges of
our specialized niche markets.
We will be an organization with
good investment banking capabilities,
but we will not have a separate
investment bank. There will be less
trading by our 1B people, and more
client-oriented activity.' Asked about
possible further job losses or closures of
offices ensuing from the 'lean and mean'
goal, he explained that it was too early
to say how the current network map
would look in the longer term, adding
that we could see 'a similar trend of,
for example, regionalizing or centralizing
some functions, such as back office
tasks. Our national offices would then
become more like front offices.'
For RI, the first-half result was below
budget, although the performance
shortfall diminishcd somewhat during
the second quarter. This was due in part
to an extraordinary gain from our stake
in the high-tech group Origin. Costs
were substantially higher than planned,
largely as a result of the ongoing re-
structuring.
Looking forward, budgeting for the year
2000 will be carried out as a two-phase
process which has been established by
the managing board. This work has
been delayed by the strategie review,
which will significantly affect next year's
business and the way it is structured and
reported. In the first phase of the budget
process, following the recent completion
of half-year accounts, the managing
moard is devcloping 'top down' busi
ness plans. Board members have already
held business review meetings with rep-
resentatives of the locales and/or prod
uct groups in order to assess business
opportunities and constraints for the
year ahead, and to develop new business
initiatives. These business plans should
be complete by 24 September, by which
date a significant amount of detailed
preparatory work on the budget will
have been undertaken.
The second phase of the budget process
will involve production of detailed 'bot-
tom up' budgets for each locale. This
work must be completed by mid-Octo-
ber for presentation of a Consolidated
budget to the executive board in No
vember. The budget will be based on the
current business situation, but will also
reflect changes arising from the Strategie
Review and approved projects in the top
down plans, for example IT infrastruc-
ture investments and cost saving initia
tives. All those involved in the budget
process will have to work to tight dead
lines to ensure that individual locations'
budgets are complete by the middle of
October. This will be especially chal-
lenging, given that the full results of the
strategie review, with all of the associ-
ated structural changes, will only have
been made known a few weeks before-
hand. Success will therefore depend on a
high degree of communication between
managers across different locations,
product/functions and cliënt groups.
As before, the budget process will be
managed by Control RI, with Alison
Straszewski as the main point of
contact for the managing board and
the CEO, and Deborah Hutchinson
working as overall budget coördinator
and looking after daily contacts with
the budget project team. In light of the
fact that there are some thirty
reporting entities within RI, it has been
decided to funnel contact between
Control RI and the offices through ten
regional controllers. These controllers,
operating out of the largest offices, will
assume responsibility for the process
on a regional level, facilitating
Communications and timely review.
Smaller offices can rely on assistance
from NDS. Questions about this
process can be directed to the local
controller or Deborah Hutchinson at
+44 171 809 3755.
