Trading ideas initiatives Creative reception It's just over three years since we first reported the launch of a so- called trading company by our Chile operation. Since then, the idea has been picked up by Rl offices in other markets, especially emerging economies, such as Russia. We look at how a good idea in one location can be exported successfully, adapted to local conditions and bring in considerable returns. Added value Ad hoe solutions Tailored approach What sNewS Issue 8'December 2000 One of the main reasons behind the Santiago de Chile team's decision to set up a trading company was the fact our business there was growing too fast. Back in 1997, we had rep office status in Chile. There was no plan to apply for a full banking license, at least at the time. But the rep status, which essentially means you're a forward sales office for a par- ent organization else- where, limited what the team could and could not do in the rnarket. At the time, Ronald Blok and Jorge Cristoffanini had a team of 17 people at the 'rep' of fice and understood they had to come up with an alternative solution. The answer would prove to be the adaptation of a Citibank initiative. However, said Cristoffanini in 1997, 'we adjusted the idea and made it accessible for Chilean food and agrihusi- ness clients.' 'we never buy anything without a firm sales contract with the customer, who also pays for things like storage. The advantage is that the commodity is not on his balance sheet. Companies are willing to pay a pre mium for a higher added value product like this.' Chile's Jorge Cristoffanini A special purpose company was set up to offer what Blok calls 'a banking product which is essentially asset-based financing taken one step fur- ther'. The trading company buys agricultural commodities on behalf of a customer, either in the local rnarket or as an im port. It is rather like giving the cliënt a loan, but RI actuallv owns the collateral. The whole structure is underpinned by all manner of safeguards. Mitigating risk is a top priority. 'First,' explains Cristoffanini, Poland's Ronald Blok, armed with his Chilean experience Rabo Invest has been making head lines in the international press. With the European Bank for Recon- struction and Development (EBRD), our team in Moscow has come up with a neat scheme to provide seasonal fi nancing for Russian agribusiness. The scheme is in response to a USD 150 million Regional Warehouse Receipts program initiated by the EBRD. This program aims to help Russia's strug- gling agricultural sector overcome a structural lack of investment. According to Hans Christian Jacobsen, director of the EBRD's agribusiness team, 'this sector has significant poten- tial, but it will only be realized if it can attract substantial commercial financ ing. The use of warehouse receipts could help achieve that goal.' The Russian government is currently work- ing on legislation which would enable a warehousing receipts systern and the EBRD/Rabo Invest initiative is seen as a stopgap measure while new laws are in the pipeline. When this structure was first introduced, both Blok and Cristof fanini were convinced it was exportable and could prove very useful for other RI offices, especially in emerging or difficult markets. In fact, that prediction proved correct, although highly developed markets like Germany were among the first to piek up on the idea. Of- ten it is used as an ad hoe solution in these markets. Australia actually developed its own form of 'trading' option. But the con cept has truly come into its own in Russia. 'This is a very difficult rnarket,' confirms Maarten Pronk who heads up our activi- ties there. 'It is very hard to do business here. The environment is uncertain. If you are to do anything at all, each commercial transaction has to be highiy structured and equipped with comprehensive risk mitigation mechanisms. This means only a very limited number of counterparties would be able to comply with the tough requirements we lay down for customers.' Yet, RI is still very active in Russia and is even making rnoney there on monthly ba sis. The solution that Pronk and his team have come up with is Rabo Invest, the Russian equivalent of Blok and Cristof- fanini's Rabotrading Chili. But Rabo In vest takes the concept further. 'Our ap proach is tailored to the present Russian environment,' Pronk continues. 'So we're offering asset-backed lending to selected

Rabobank Bronnenarchief

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