*Working relations -
Uwe E. Flach on partnership
7
strategy organization
did you know?
As the new venture begins to take on definite structure,
we ask DG banker Uwe E. Flach who is heading up the business
integration team how he sees the future.
What's NewS Issue 9 October/November 1999 5
The concept of a pan-European bank has been
mooted frequently by various players in the EU
market place, but so far with little success. We've
seen a flurry of M&A throughout the financial
^urvices industry in the region, especially
Wfomestic consolidation, and the merger of, say,
specific niche providers and boutiques. DG Bank
and Rabobank are the first to move decisively
using the multi-domesticity ticket. How do you see
recent developments and what do they mean in
the near and longer-term?
The global trend towards mergers has
also arrived in the banking sector and
will not stop there. Markets are
becoming more liberal and more
dynamic. New competitors and new
distribution channels are speeding up the
process of restructuring. It is therefore
an essentia! question of survival rather
than an option. Banks which do not
optimize synergies will not be fit for
tomorrow's markets, especially in
Euroland where a new and enlarged
domestic market is about to take shape.
Bhe numerous efforts of some of our
competitors to merge or cooperate
internationally have not always been
successful. When it comes to integrating
businesses one crucial point is bridging
various cultural elements. This has to be
taken into account when a new and
reliable framework is formed. DG-Rabo
International will be created in such a
new setting and will give the
cooperative sector a competitive edge for
the next century.
Could you give a concise SWOT on DG-Rabo
International, with specific focus on the
'international'?
Both banks have a strong domestic
position in commercial banking and a
significant position in investment
banking. Combining these forces offers
™uge market opportunities due to the
comprehensive network of local
cooperative banks and their customers
as well as through the developed
international network. The cooperation
between the two banks is a first step
towards a Pan-European cooperation
with further business areas and further
cooperative banks. The joint venture is
hased upon the complementary assets of
both partners. On the product side,
Rabobank's worldwide presence in
treasury, its expertise in tax-based
structured finance and securitization,
and its AAA-Rating will be combined
with DG Banks equity origination
expertise, its strength in originating and
selling Pfandbriefe, and its asset liability
management. Referring to customer-
related assets, both banks have a strong
retail placement power. Rabobank holds
expertise with Dutch corporate and
institutional clients as well as specific
experience in the field of food and
agriculture. Moreover, Rabobank's
worldwide network is certainly a strong
asset for the new joint venture. DG
Bank, on the other hand, will contribute
its excellent relations with the vast
German "Mittelstand" and German
institutional investors as well as its
industry focus on relemedia and IT.
The media hype on the letter of intent will have
raised expectations among customers in both
Germany and the Netherlands. Are there any
immediate dient benefits, or will these emerge as
the organizational and operational structure takes
real shape?
Both DG Bank and Rabobank will
continue to serve their clients directly
plus - in their respective markets - the
clients of the other bank. This will
entail immediate effects of scale for the
banks and also for their customers.
There will also be an improved product
and service supply through a broader
range of products. Moreover, DG Bank
and Rabobank have agreed upon a
Cross Border Service which aims at
offering the respective national range of
services to the customers of both banks,
outlined in our business plans. This will
generate profits and benefits as well.
At Rabobank International, it is business as usual,
although everyone knows people are working
feverishly behind the scenes to further the new
venture. What has been the reaction at DG Bank?
Positive to enthusiatic. Many colleagues
have already asked how they could
participate and contribute to the new
joint venture. So I think the idea of
creating the nucleus of a European
cooperative bank is fascinating for all of
us. Moreover, it shows that our
organizations are fit for a new European
era and that the idea of a common
European market is deeply implemented.
Of course, we have to keep our
employees informed about the ongoing
process in order to create an
atmosphere of joint commitments. Ton
Ioebosch and I will do our very best to
make this spirit come true.
What's NewS will be carrying
an update on merger developments
in every issue - look out for our
regular coverage.
