COUNTRY BANKING
Highlyfragmented
Country franchise
Strong platform
huge in rhis region? 'One of the
answers,' Hund explains, 'is the way
RI has always been structured. Out
sector was defined as: from the farm
gate onwards up the chain. In servic-
ing that market, we have been able
to build relationships with the
majority of clients we want. But we
weren't as huge as the market because
we were not touching the producers.
When I say producers, I don't mean
small farmers. "Farms" here are
massive. Basically, we got tired of
just talking about the potential for
Rabobank. And we had a model -
IM HA in Australia. PI BA effectively
broke with the Rabobank tradition
of not servicing agri-producers. Cor
Broekhuijse was instrumental in that
development. Through PIBA, RI
bought local expertise and grew it.
The answer to our question was:
why can't we do something similar
here in California?'
The San Francisco team subsequently
came up with a business plan that,
they hoped, would form the start of
'doing something similar'. 'One of
our problems,' I lund says frankly, 'is
that we're a bunch of corporate
bankers. Although I started in pro
duction agri-banking, that was a
long time ago. It's a different business.
So we proposed setting up a separate
corporate farming division, with
specialized people. This initiative
was welcomed and approved by Cor
Broekhuijse in New York and we
started hiring local people for the
corporate farming division at the
start of 2002.'
At the same time, the hunt for a suit-
able acquisition was on. Broekhuijse
explains, 'The problem with the US
banking industry is that it is highly
fragmented. There are more than
8,000 banks in this country. The
same fragmentation applies to agri-
finance. There is no single financial
institution which is recognized as the
number one in production agriculture
in the same way RI is recognized by
the industry for corporate. That is
an opportunity. However, given the
fragmentation, suitable acquisitions
are very difficult to find.' Identifying
where and how to start and finding
potential acquisitions is a full-time
job. Which is why Adams was
brought in. Adams started his career
with Rabobank in the Netherlands,
where he was a local bank General
Manager before he joined RI in
1983. He has opened up markets
and managed offices for RI in regions
as diverse as the Far East, Central
Europe and Turkey. North America
was a new challenge. 'Fortunately,'
he says, 'Eood Agribusiness Re-
search's (EAR's) Joyce Cacho and
Business Manager Kanta Rajkumar,
both out of New York, provided a
great deal of support. And Hund
and her team had done a lot of
homework on large farm lending in
California. Taken together, all this
input helped focus our choice on the
western region. But I still spent
months getting to know the area and
its market. What we were looking
for was an existing community bank
with an adequate network of
branches in rural areas and total as-
sets of between USD 1 and 2 billion.
That would give us the platform we
need to build the Rabobank "country
banking" franchise.'
Adams set out on a number of scout
ing trips in the region. 'We identified
five "community banks" that fit the
profile. I think we all saw the poten
tial offered by VIB, and it came up
for sale. This is a "community
Bruce Baccus - heading up a strong agricultural lending division
Lizz Hund:'We tend to be the innovators.
The Word I '5