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Leap forward in China
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Arnold Kuijpers
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'Developing these banks is very rewarding in terms of corporate
social responsibility, as well,' says Arnold Kuijpers, Managing
Director of Rabo Financial Institutions Development (RFID),
which executes the RDP. 'Our staff and customers like it. And
it will take usto places that will become part ofourworld and
part of our business.'
Rabobank made history in July 2006 when it acquired a stra
tegie 10% share in China's United Rural Cooperative Bank of
Hangzhou (URCB): it is the first foreign equity participation in
a Chinese rural cooperative bank, and Rabobank's first Chinese
acquisition. The International Finance Corporation also took a
5% stake in the URCB; over time, Rabobank will take this over,
and, if restrictions loosen as expected, eventually increase its
interest to 25%.
RFID's consultancy arm, Rabobank International Advisory
Services (RIAS), will help the Chinese bank to professionalise
and modernise by transferring knowledge relating to man
agement issues, sales, Internet and telephone banking, and
customer relations, as well as credit and risk management, per
formance management governance and strategy. Rabobank's
Ad Geerts has taken on the role of URCB's Vice Chief Executive
Officer and will focus on helping local management implement
the changes.
'Commercially, we have to make big steps,' says Geerts.
'Becoming a customer-driven bank with a range of new products
on offer will be a big challenge. I have already noticed that cus
tomers are becoming more critical as a result of higher income,
higher education and tough competition.'
The purchase is a pilot project for the reform of China's rural
credit cooperatives. 'Regulators at both the provincial and
national levels want the pilot to be successful, because that
will prove that the reforms are justified,' Kuijpers says. 'And, of
course, we want it to be successful because we want to invest
in more rural cooperative banks in this country.'
The Chinese Banking Regulatory Commission chose another
bank in addition to URCB to participate in the pilot project with
Rabobank, the Tianjin Rural Cooperative Bank (TRCB), Kuijpers
says, 'and others may follow.' He hopes the TRCB acquisition
will be completed next year, with Rabobank initially taking a
15% stake and International Finance Corporation 10%.
'China has an extensive network of rural cooperative institu
tions,' says Kuijpers. 'They are going to be restructured into
larger entities, but they still face tough competition from
established banks. We plan to help these institutions become
more competitive because if they vanish, some smaller clients
will no longer have access to financial services.'
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