Business reshuffle
While our broad strategie appraisal and the associated reorganization has
captured the lions' share of time and attention in recent months, the tactical
requirements of continuing day-to-day business were not being ignored. Global
Financial Markets, now working under its newly-appointed chief Jonathan Laredo,
recently announced an organizational reshuffle aimed at helping build or
improve bridges to our core dient base and generally operate in ways that more
consistently advance the bank's stated priorities.
Specialized niche profile
"elective base
Financing assets
Distribution focus
Further moves
What's NewS Issue S-Aug/Sept 1999 5
The changes include a reorganization
of several business lines as well as the
Itirst steps in rationalizing the European
'ales anti distribution platform. Regarding
the business reorganization, it has been
decided to merge Global Equity Deriva-
tives, Commodities, Credits Structur-
ing, and the options operations previously
grouped within LT1R and FX, and to add
the Interest Rate Swaps business under the
GFM umbrella. What's more, manage
ment and reporting lines have been recon-
figured with the aim on enhancing their
speed and transparency.
The outcome of this reshuffle is the cre-
ation of five discrete businesses. Two busi-
nesses are being erected on the credit trad
ing side, which involves both primary and
secondary trading (eg. buying and selling
fel bonds, loans, default swaps and other
^ecurities). Each of thern will address dif
ferent Rabobank International (RI) cus-
tomer constituencies, and will bring to-
gether unique strategies and unique skill
sets appropriate to their customer base.
The first of these, our Liquid Credit Trad
ing business, will cover investment grade
assets in the most liquid markets (eg. asset
swaps, fixed- and floating-rate notes, de
fault swaps, etc.). Here, we will focus on
developing our new issue capability on be-
half of the larger corporate clients and fi-
nancial institutions served by RI. This will
naturally require increasingly strong rela
tions with fixed income institutional in-
vestors throughout core Europe, as well as
a clearly defined niche profile in our spe
cialized market sectors.
The second of the new businesses, Illiquid
Credit Trading, will represent a new field
for RI: one that Laredo terms 'essential to
a positive development of the customer
focus strategy'. Since the bulk of our tar-
geted corporate cliënt base involves sub-
investment grade small- to medium-sized
enterprises, this new business is needed to
Laredo - engineering discrete businesses
process of repackaging loans into securi-
ties, and thus enhancing our profile as an
intermediary between these customers and
the financial markets. Clearly, since the
potential investor base for such securities
is more selective, we will need to further
build out our research and knowledge
base as well as our credibility as a strong
trader in this field. Where possible, while
building up recognition for the RI brand
globally, distribution will be outsourced in
joint venture with strategie partners.
A third of the four businesses is Credit
Structuring, which involves using rating
agency and BIS (or other) regulatory
guidelines to create synthetic offshoots
from existing assets and liabilities. In-
cluded under this rubric will be our tradi
tional securitization efforts as well as
credit repackaging and a whole panoply
of other devices to finance our assets.
Penultimately, a fourth business will be es-
tablished under the heading of Risk Man
agement. It will encontpass all non-linear
risk (ie. essentially the options and op-
tions-based business). This will include
equity, interest rate, currency, commodity
and credit products. Respective asset
classes will be reported separately but in-
tegrated into one unit with shred pricing,
risk management, and booking systems.
Finally, there will be the Interest Rate
swaps business, which is self-explanatory.
The aim of the overall effort, says Laredo,
is 'to niake each business more transpar-
ent, both operationally and finaneially,
and to eradicate overlaps and reduce costs
by using common platforms wherever
possible.' By eliminating a hodgepodge of
different businesses, unifying asset cate-
gories, and restructuring the operations,
we can more effectively serve our cus
tomer base.' Meanwhile, following on the
heels of earlier changes in management
structure, and the associated consolida-
tion of GFM's sales activities in Europe,
the distribution of GFM products is in the
process of being reorganized.
An Investors and Financial Institutions
unit will cover all kinds of institutional
investors. lts product line will encompass
all structured transactions and all I.TIR
products traded and priced within Liquid
Financial Products. It will be centered in
London, with Utrecht covering the
Benelux region. Paul Michielsen is the
Utrecht-based regional head of sales and
marketing to address the needs of our
Benelux cliënt base. With regard to our
treatment of all sovereign and suprana-
tional entities, as well as European Corpo-
rates in the core sectors and bank-related
Capital Market Financing and Securitiza
tion, further decisions are to be an
nounced. This will happen once the
broader strategie course is set with regard
to our corporate banking and corporate
finance structure. The same holds true for
clients in Central and Eastern Europe as
well as our activities in Treasury Sales.
