Planning for business
business info
Metabank concept becomes RNG
All the business units have been
working solidly on preparing business
plans for the coming year. We look at
the plans prepared by both the Rl
Capital Markets (RICM) and Rl Treasury
Markets (RITM) teams to take these
product groups into 2000.
Goals to 2002
Future issues
High returns
Full potential
Following the strategie review process,
the RICM business unit quickly got
down to building the kind of transparent
functional structurc Jonathan Laredo and
his team think is crucial for growing prof-
itability. This push went hand in hand
with the definition of risk businesses and
key areas of business focus. The resulting
business plan, complete with implementa-
tion strategies, is now in the approval
process by senior management. RICM
will be operating in a market character-
ized by a continuing shift towards consoli-
dation and globalization. Unsurprisingly,
RICM product groups work on a global
basis, hut sales and marketing are re-
gional. In addition, there are a number of
specialized originators, such as FARM
and the New Issue/Syndications group to
generate business for the Hve specialist
product groups: liquid credit trading, illiq-
uid credit trading, rates, credit structuring
and risk management (the latter consisting
of interest rate options, simple and com
plex, commodity derivatives and equity
derivative risk). Illiquid trading continues
as a distinct part of the credit structuring
group until it reaches critical ntass.
Besides creating clarity in structure,
RICM lias also been engaged in several
cost reduction initiatives with Alain
Younes' operational groups. Most focus
specifically on indirect costs. Td say 1999
was when we laid foundations for a more
competitive cost structure,' says Jonathan
Laredo. 'Most rewards from this work
will only be harvested in subsequent years
when a continuing emphasis on cost con-
trol in combination with an increasing
level of production and sales will lead to a
rapid rise in profitability.' RICM is look
ing for most of its future growth in activi-
ties that require comparatively little sol-
vency. 'We will be leveraging the bank's
rating and the Dutch base as part of our
mission as a specialist provider of invest-
ment banking products to the bank's cor-
porate clients and a selected number of in-
vestor groups,' confirms Laredo. 'We also
intend to become known for expertise in
structuring complex financial products,
taking complex risk on balance sheet and
distributing it efficiently and profitably.
Obviously, all this depends on our ability
to respond rapidly and effectively to the
problems confronting clients.'
RICM is still working on a number of is
sues which must be resolved in order to
achieve its ambitious goals - a 3% reduc
tion in indirect costs and considerable in-
creases in turnover. Among them are sta-
bility of focus and direction so that
mission drift is avoided. 'We are also
looking to establish accountabiliry for
each subset of cost and revenue,' he con
tinues. 'The credit process for market
structures is also being overhauled and
further aligned to business needs. Service
Level Agreements (SLAs) between various
divisions need to be finalized, and cru-
cially we must have a centralized, trans
parent and neutral control over allocation
and management of scarce resources.'
RI Treasury Markers (RITM) has two dis
tinct businesses - short term interest rates
(STIR) and foreign exchange (FX). Al-
though there is some overlap in terms of
target clients (for example, both share a
sales team for Central Banks) and there is
a close alignment between the two, STIR
and FX have their own separate issues.
The targets set by STIR's 1998 business
plan have been achieved, including
growth in revenue and in the diversifica-
tion of revenue streams. Risk limits have
been halved, while gross return on both
solvency and assets has increased. This
performance has gone some way to
achieving the primary objectives - a high
return on solvency and growth in rev-
enues - set by this business group when
forrned back in 1997. The strategies for
these goals included diversifying the
sources of income away from proprietary
trading, exploiting all forms of liquidity,
managing the balance sheet on a unified
global basis, and introducing a clear cus-
tomer focus into the culture.
For STIR, one of the biggest achievements
of the past two years is the fact that the
Continued on page S
In early November, the executive
board gave the green light on plans
for the creation of an organization
which in the run-up to approval was
known as the 'metabank'. Now offi-
cially named Rabobank Nederland
Grootbedrijf (corporate clients), RNG
will be launched officially in the new
year. Willem Cramer, formerly general
manager of Rabobank in Brazil and
most recently head of the Transition
Implementation Project, has been ap-
pointed managing director. RNG will
form a specialized unit within the
Rabobank Group. It will cooperate
with local member banks to service the
business market in the Netherlands,
targetting companies with turnover
exceeding NLG 20 million. The re-
mainder include such typically R] seg-
ments as top 100 Dutch corporates,
large international F&A clients and
large institutionals, which remain our
responsibility. Establishing an opera-
tion of this kind is increasingly seen as
a strategie necessity for the Rabobank
Group. Although RNG will no longer
be part of RI, our relationship remains
strong. RNG will position as a strong
relationship bank in the market and
will be drawing on RI product
expertise for its customers.
We'll have more on these exciting
developments in our next issue.
