TDG and RI - joining forces
strategy organization
What is multi-domesticity?
Almost a month to the day after Germany's DG Bank and Rabobank signed the
far-reaching letter of intent, the first visible effects will be happening.
The project to build the new DG-Rabo International bank will be kicking off on
12 November. We ask the two-man team responsible for getting this joint
venture up and running, DG's Uwe E. Flach and recently appointed RI managing
board chairman, Ton Toebosch, what has been done and what will happen next.
Integration timelines
Best practice
DG-RI worldwide
The basis of the new
joint venture is equal-
kty, Ton Toebosch stresses.
wliis means that the struc-
ture set up to pursue and
further the integration
process of both business
and support modules
consists of someone from
each bank if necessary,
supported by a consultant.
Four business units have Ton Toebosch
been defined, which corre-
spond roughly with our own existing
post-SRT structure, although capital mar
kets and treasury are clustered in the DG-
Rabo International model (see diagram).
In addition to the capital
markets/treasury,
equity/international
M&A, structured
finance, and international
finance (including the
international network),
there are also four
support units, covering
IT/operations, finance/
control and risk, human
resources, and research.
The integration process
will be led by Flach and Toebosch. They
will each be supported by a personal assis-
tant and a support platform comprising
communication, culture, target setting,
Players in the financial services in-
dustry, including the cooperative
banks, have been talking about the
possibility and potential of a Pan-Euro-
pean approach ever since the single
currency began to look like a reality.
One of the stumbling blocks has al-
ways been how to protect, retain and
grow domestie market share in the face
of cross-border competition. Corporate
and wholesale banking teams - both
domestie and foreign - were often tar-
geting the same cliënt groups. Getting
past this obstacle, combined with the
fact that the cooperative European
partners are facing more or less the
same equitv problem: where to get the
money to buy banks on their own, has
led to the development of a brand-new
philosophy for cooperation in Europe -
multi-domesticity. l.ike all good ideas,
it is a simple concept. Each partner ser
vices customers in its own domestie
market. If those clients need cross-bor
der services elsewhere in Europe, then
the partner(s) provide what is needed.
A second factor is the combination of
international presence and expertise
into joint ventures wherever possible.
The idea here is that by combining
forces, economies of scale and cost
control can be achieved. At this mo
ment in time, the most visible sign of
how the concept can work is the joint
venture between Rabobank Interna
tional and DG Bank's corporate and in-
vestment banking activities around the
world. The charter partners, in what
could develop into the first truly Pan-
European group, are also in the process
of exploring far-reaching cooperation
in other areas, such as asset manage
ment, leasing and international private
banking.
What's NewS Issue 9 October/November 1999
organizational design and human
resources, legal and fiscal teams.
It is a transparent structure with familiar
names on the RI side; the DG colleagues
working on this process will obviously
become familiar as the integration process
continues. At present, the timelines are for
launch of DG-Rabo International in the
second half of 2000, although the first
phase, according to Toebosch, will be
rolled out by year-end, 1999. 'We will
have the headlines for integration by I
January 2000,' he says. 'The expectation
is that the whole joint venture will be up
and running by the end of next year, al
though some parts will probably be ready
earlier than that.' He is also quiek to
point out that the people involved in the
integration project will not necessarily
form the future management of the joint
venture. Clearly, he wants no misunder-
standing here. 'Equality has been at the
forefront of everything we've done with
our colleagues at DG,' he says. 'But even
though we're acting as "equally" as possi
ble, you can't have two people on the
same chair once we get business moving.'
At the same time, while recognizing that it
is no more than human nature to jockey
for your own business position, both
Flach and Toebosch are concerned to get
the best for the new entity. 'Obviously,'
Toebosch says, 'people are going to try to
push their own particular activity or busi
ness. And there is competition. Uwe Flach
and I are more than aware of the contra-
diction in mindset that setting up a joint
venture of this kind represenrs for people.
On the one hand, you are anxious to stay
in the driving seat. Conversely, you also
understand that what is needed for the fu
ture success of the business is best practice
and the best people. What I am trying to
do is to see the joint venture in terms of a
European bank, peopled by Europeans,
rather than an RI or a DG staffer.'
The current focus on Europe will be un-
derstandable. RI had been heavily en-
gaged in exploring the Euroland market
for some time. But the obvious question
now is what does the new venture mean
for the international network as a whole?
'I think it's almost all good news for
