Updating the network -
region by region
regional focus
The last 12 months have seen many transi-
tions at Rl. New decisions, new faces and
new strategies are all part of the picture that's
becoming increasingly focused everyday.
This issue marks the first part in a series fea-
turing RI's most powerful players - the
regions. Europe (outside the Netherlands)
takes the podium first, with regional head Henri Jacquand talking
What's NewS through the stages.
What'sNewS Issue 1 January/February 2001
There's been a lot oforganizational change
lately in the European network. Can you teil us
how the region is being restructured?
First of all, "restructuring" really isn't
what we're doing. In each country, we're
making sure that the existing structure fits
the strategy we want to implement. Our
mission statement is to provide tailor-
ntade solutions (mostly corporate finance)
to specific clients (selected in RI focus sec
tors) for specific purposes (strategie,
growth). The name of the game is to stick
to that and do nothing else. If in any given
country, that's all we're doing (Spain for
example), then fine, there's no need to
adapt the structure. If we're engaged in
activities that don't fit in the strategy, we
phase them out, one way or another.
That's what we did in Germany, in France,
in Hungary, in Poland. But no two Euro
pean countries are the santé - in market
segmentation, customer needs, competi-
tion, legal framework. So each general
manager has a business plan to make our
strategy work in his (her) market.
Now that the TMI and F&A strategy is in place,
how are you ensuring European activities are
focused on these areas?
Actually, the focus has been there all
along. An evaluation of our clients 18
months ago showed the majority was in
these sectors. But, we also found a num-
her of non-core clients. And, most of
those were rather uninteresting. So the de-
cision to phase them out was easy - but
the execution wasn't always that easy. For
example, when we found ourselves stuck
with a term loan priced below market.
The real challenge is to increase the prof-
itability of the relationships, particularly
in F&A. In many cases, the relationship
was based on commercial banking prod-
ucts, and we didn't distinguish ourselves
by providing anything unique. So, in each
country, we evaluated the real potential of
each cliënt in light of our mission state
ment. When we didn't see an opportunity
to make money by using our skills, prod-
ucts, international network and research,
it went to the list of non-core clients. I
must say that all offices have done a
tremendous job in phasing out relation
ships, which were unprofitable or didn't
offer a big enough profit potential. There's
still work to do in central europe but
we're almost there. However, increasing
the profitability of our relationships will
be an ongoing task in the years to come.
Certain markets in Europe, like Spain, are a
great fit for F&A, while others, like Italy, are
more challenging. And what about Turkey?
How do you plan to combine very different
markets into a 'unified front'?
1 think all markets in Europe, at least
where RI already has a presence, are a
great fit for F&A. This sector is key in all
of them, not only because it represents a
big share of GNP (up to 20% in Western
Europe if you include retail, even higher in
central/eastern europe), but also a major
share of exports (more than 20% in Ger
many and France). The question is, do the
needs of F&A clients in these countries
correspond to what we want to do, and
can we can do it with the returns we want.
In Turkey for example, the demand is for
the type of financing any of the 80-odd
other banks can provide, whereas we're
much more interested in doing structured
trade finance. In the UK trends in F&A
show a strong demand for corporate fi
nance products, particularly in acquisition
finance. In Italy, there's certainly a lot of
potential for M&A and advisory. In
France, the demand is for off-balance
sheet financing. If there is a unified front,
it's in our F&A focus - it gives us a lot of
credibility with clients - and in our intent
to stick to business where we can generate
decent returns.
But Europe as a region isn't as naturally posi-
tioned in F&A as, say, North America, orAus-
tralia.
A region is a place where you can make
the marketing effort more effective by
building connections. I see it as a place to
create bridges. Bridges between the coun
tries in the region, bridges between Eu
rope and other regions, bridges with head
office, with product units. It's where
"good ideas from elsewhere" are ex-
changed. The regional office is also a
problem solver, in solvency issues, on
credit issues, on HR issues. I won't hide
the fact I also see the region as a com-
mand post, where we make sure that
we're progressing towards making budget,
achieving corporate goals such as solvency
reduction and getting risks under control.
But the region is also the place to talk to
product managers about how to make a
product strategy work in the area, to lo-
cate extra resources to help get a deal
done, and to think about development. It
isn't always perceived that way.
