FUNDING LIQUIDITY How much is enough? Funding programs Global distribution Member Certificates - real customer value organization, you have to be rather cre- ative when it comes to developing fund- ing programs, especially for raising Tier 1 capital, as we cannot raise it through share issues. The Member Certificate program shows that we not only tap our customer base, but that we also have the knowledge of customer needs to develop investment products they will snap up.' In addition to targeting the domestic customer base, Rabobank also offers certified debt, known as Rabobank paper, to an international investor base. 'However, before we propose the Mandate to the Executive and Supervisory Boards,' explains the Group's Head of Control, Bert Bruggink, 'we have to work out exactly how much we will need for the coming year. And how much is still outstanding from previous borrowings. All the Group entities, including the member banks and Rl, submit their budgets and forecasts. These are used as the basis for our Mandate calculations.' In fact, everyone in the Group is involved in the process at one stage or another. 'Once we know what amount and aver age maturity of funding we need,' says Haijo Dijkstra, Head of GT-GI.M, 'we then look at the most (cost-) effective ways of sourcing. We use a broad range of devices because our policy is to both diversify funding sources and ensure flexibility in the instruments. We run funding programs in all the important financial centers world-wide, using them to issue structured, medium-sized and large liquid capital market transac- tions. The latter are aimed at interna tional asset managers, insurance companies, pension funds and central banks. These investors are important providers of both long and short-term funding.' Longer-term funding is sourced prirna- rily through bond issues, also in a vari- ety of currencies. 'Although Rabobank is huge in the Netherlands and our dis tribution in the domestic market is exemplary - you just have to look at the Member Certificate issue last fall which was sold to more than 65,000 people within three weeks - interna- tionally, we are a niche bank,' Dijkstra says. 'Obviously, our own sales teams are immensely important for selling our bonds and other products (see Selling the bank, below). However, we don't have the global distribution channels David Vander - developing products that customers will snap up You could attribute the overwhelming success of the Rabobank Member Certificate issue in November 2002 to volatile equity markets. And in a sense, that would be correct. With share performance down to record lows, investors are certainly looking for attractive yields. They also want the security offered by an AAA institution. The Member Certificate program offers both. But volatile markets do not explain the equally strong success of the previous issues which generated €2.6 billion in Tier 1 capital. 'All issues were oversubscribed,' confirms Haijo Dijkstra, Head of Group Treasury - Global Liability Management. 'Basically, what we're seeing here is recognition by Rabobank members that we have a great invest ment product with a favorable risk-return trade-off, founded by the solid business model of the Rabobank Group. Our initial goal with last year's transaction was to raise €1 billion. It brought in €1.75 billion, a record in the European retail market in 2002. Many competitors are envious of the distribution power of our local Rabobanks.' Clearly, members have responded in huge numbers. In fact, since these Certificates were first launched in 2000, the number of members has grown from 500,000 to 1.2 million. This rise in membership is not exclusively related to the issues, but they have proved to be a clear driver. As a co-operative, Rabobank does not have shareholders in the traditional sense; it has members. Membership is open to all customers resident in the Netherlands, both retail and business. By 'joining' Rabobank, members have a real voice in the bank 's strategie development and growth, and real advantages. The Member Certificate program is just one way the local Rabobanks can add real value for their customers. The Word I 15

Rabobank Bronnenarchief

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