STRATEGY WATCH and 'country banking' is moving in that direction too, in the professional prod- ucts pillar, 90% of business is sold to professional counterparties, only 10% is clearly F&A. Of course, it's always difficult to define exactly what consti- tutes F&A. The current discussion within senior management about the issue of F&A profitability is partly about how to interpret the numbers. Clearer definitions are needed. They must be applied consistently as we go forward. In this way we can set clear targets and measure our success more precisely. It is firmlv believed that if there is any area where we can be more profitable and make progress, it is in F&A. TW: S'<olvency was another bot topic on the meeting agenda. RD: Yes, it was. Three years ago, we implemented a strategy specifying greater efficiency for solvency usage. We began looking at the Return on Solvency (ROS) figure and not Net I'rofit to quantify RI's success. The result was solvency use went down while revenues went up. Now people are keenly aware of the net ROS of every deal, which is excellent. In the past, we advised people to be careful with solvency because, in theory, it's scarce. But the implicit notion was that there will always be solvency for deals with good ROS. Things are different now. Nearly every business across RI is making an incredible 15% ROS or more, certainly anticipating the Bank of International Settlement Accord II (BIS II) rules. This creates tough compe- tition for solvency. Cirowth opportuni- ties also continue to present themselves - it adds up to a 10% predicted increase in solvency required. And the Group's decision to target the domestic market and increase our insurance offering signifies that solvency will become even scarcer. TW: How does that affect Rif RD:This solvency issue is particularly pressing for RI because of strong growth in 'country banking'. Growth plans here aim to aggressively grow the balance sheet. The ACG Bank in Ireland is bringing in 100 million per month in assets. They have a full solvency weighting of 8% but promise tremen- dous returns and are low risk, so we really want these deals. The same goes for Australia and VIB in the States. In all these areas our strategy is one of fast-paced growth, but given the prob- able absolute scarcity of capital in the group, we are poised for problems. This issue demands more discussion. But there's no need to panic; for the coming year we have adequate capital. Nevertheless, we need to think carefully about how to pursue this growth strate gy over the long-term - because that is what we want. TW: What about liquidityf RD:Th is is the next issue that is top of mind for management now. I.iquidity refers to the amount of cash available to pay creditors and is an important criterion in rating agencies' assess- ments. In ideal circumstances, the amount of cash we need to pay to our creditors at any point in time should, at the same time, be fully off-set by the amount we receive from our debtors. The success we have in getting new long-term assets on our books has thus ideally to be matched by long-term liabilities. Getting these long-term liabilities in the international financial markets, the core task of Group Treasury (GT), is becoming more and The Word I 5

Rabobank Bronnenarchief

blad 'RI The Word / The Word' (EN) | 2003 | | pagina 5