initiatives Regional change Valueformoney Difficult markets What sNewS Issue 8'December 2000 5 Rl (London) Purchase Agreement 000 "Rabo Invest", Russia Re-purchase (Buy-back) Agreement Acceptable Foreign Off-taker commodity traders and processing compa- nies. The whole structure works in very much the same way as the Chilean model (see chart), hut with a number of major differences. In Russia, Rabo Invest lias also introduced the con cept of having a non-Russian customer who is contracted to purchase the com- modities front us if the Russian cliënt does not honour its repurchase commitment. In addition, the commodities are always properly and fully insured, as well as be- ing monitored by an inde pendent surveyor.' Rabo In vest policy is to check the quality of surveyors' work continuously. There are a number of con- ditions which have to be met before Rabo Invest em- barks on a transaction. 'The off-take agreement between us and a Russian cliënt has to be in place and a similar contract with the alternative buver must have been closed,' Pronk ex- plains. It has proved a highly successful proposition for a market which, as the Russian participants at the sugar and sweeteners conference (see WNS 7/2000) confirmed, is extremely volatile. 'Basi- cally,' says Pronk, 'this structure allows us to finance targeted F&A activities for core customers in Russia. At the same time, it is very attractive to domestic customers who are interested in value-for-money fi- nancing without having to change many of their existing technological or logistic procedures. It is also reasonably flexible and can be tailored to the needs and 1.The transaction is based on Commodity Repo approach and is practically implemented via 000 "Rabo Invest" Russia - a wholly owned operational subsidary of Rabobank Group in the Russian Federation; 2. Purchase, Repurchase and (onditional Off-take Agreements are conduded simultaneously while entering into the transaction; 3.Throughout the whole life of transaction the commodities are properly insured and monitored by an acceptable surveyor; 4. Acceptable International Off-taker obliges to purchase the commodities from 000 "Rabo Invest" if the Russian trader/su bsidary defaults. Strategie structure: Rabo Invest, Moscow's evolution of the successful Chilean model, has proven to be well worth the effort the insurance aspect. Providing unique solutions to Rabobank's focus F&A customers and their clients through a structured trade finance prod uct which combines low solvency usage and low country risk usage with a high level of risk mitigation clearly provides us with interesting opportunities worldwide.' The evolution of a new model: Russia's Maarten Pronk possihilities of individual customers.' And it's good news for the bank, too. When the Russian crisis hit back in 1998, a lot of financial institutions got burned. Rabobank was one of the few that came through the process relatively un- scathed. This had every- thing to do with risk man agement and in an emerging market, risk management is clearly of paramount importance. The Rabo Invest concept proved a solution for niiti- gating both credit and country risks. 'This kind of structure carries a re- duced weighting,' says Rabo Invest's Aleksei Belyaev. 'That means we can do around six times the business our country limit would nor- mally allow.' An additional advantage is the fact the bank's funds are protected not only by the commercial legal code, but also by the criminal code. This is im- mensely valuable in an environment where the commercial code is relatively young. It's also a product that requires little sol vency, a factor that is very popular with the managing board. 'The bottom line,' Pronk says, 'is that this structure is ideal for emerging and otherwise difficult mar kets. We're talking a low level of opera tional costs, relatively mitigated risks be- cause we actually own the commodity, and comparatively limited risk through For more information on the exact struc ture of Rabo Invest's asset-backed pro gram, contact Maarten Pronk on Maarten.Pronk@mow.rabobank.com Since 1996 RI has cooperated with the European Bank for Recon- struction and Development and two major regional banks to invest in the Kiev International Bank. One of the first banks in Ukraine with a strate gie participation, the bank targeted international and local clients in F&A. The original agreement pro- vided that RI would buy out EBRD's stake at a pre-agreed sum, taking 100% ownership. This transaction was completed on 23 October 2000. However, the Kiev International Bank has been operating at a loss over the last two years and the likeli- hood is low of a substantial int- provcmcnt in the near futurc. At year's end, it was therefore decided to liquidate the bank. RI has more than three years of experience serv- ing both international and local F&A businesses in the Ukrainian market. The resulting strong rela- tionships with local customers and international clients operating in the region remain important to RI, and these clients will be serviced by, among others, London, Utrecht, Moscow, Warsaw and Budapest. The valuable expertise and experi ence of Kiev's 18-member staff will continue to be used in the region.

Rabobank Bronnenarchief

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