Greenfield on horizon
Cost effective alternative
Funding first
Propelled by the success of its direct distribution channels in the
retail banking market in the Netherlands and the achievements
ofRabobank.be' in Belgium, Rabobank plans to launch an Internet
bank, 'RaboDirect', in Ireland in April 2005. The ambition is to
establish direct distribution channels in foreign markets that
will strengthen and support RI's 'country banking' strategy and
international retail operations.
Ralf Dekker, the Rl Managing Board Member responsible for this
initiative, explains the three opportunities for growth. 'Firstly,
we are interested in setting up "greenfield" direct bank operations
in countries where Rabobank is not yet present in the retail banking
sector. "Rabobank.be" was the successful pilot project for this
scenario in Belgium. In just over two years, 30,000 customers have
deposited €650 million in savings with "Rabobank.be". It's been
declared "best buy" in the market and emerged as an established
market player. While a neutral operating result is forecasted for
2006, an increasing positive result is expected in the near future.'
'Secondly,' he continues, 'in markets where we already have
retail operations through acquired retail banks, we will provide
advice and support to these banks in setting up alternative and
more profitable direct distribution channels. The third option is
to set up new stand-alone direct banks in markets where we do
have a presence, in the form of an acquired retail bank, but where
the market conditions indicate the venture will be a success.'
The Internet bankto be launched in
Ireland, 'RaboDirect', actually fits into
both categories. ACC Bank, the Irish
bank acquired by Rabobank as part of
its 'country banking' strategy, could
significantly reduce operating costs
by servicing over a 100,000 existing
customers from the new stand-alone
'RaboDirect'. In the meantime, the rest
of the Irish market is also fertile ground
for Rabobank's direct retail offering.
The short-term goal of the strategy,
Dekker tells, is to attract savings deposits -
an alternative source of long-term funding
for the bank. There has been a strong
increase in lending in the Netherlands
and abroad in recent years. 'We're aware
that the long-term funding Rabobank
requires is growing,' he explains. 'Already
we are the second largest asker of long
term funding in the interbank market.
Once we go over a certain threshold,
we are concerned that prices may go
up and we may disrupt our own market.
So it's important for us to develop
alternative sources.' However, because
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