expertise
Banking on the developing world
Back to Rabobank's roots
Ad Geerts
Rabobank and the rural cooperative banks will mutually benefit
from the relationship. 'An important aspect is the synergy that
will be created between these banks and our corporate banking
operations in Shanghai and Beijing,' says Kuijpers. 'For instance,
through savings deposits the rural cooperative banks have ample
access to renminbi funding, which will be used for Rabobank's
financing in local currency.'
RFID's modus operandi is usually as follows: it buys a strategie
stake in a qualifying bank in a developing country, thereby secur-
ing representation on the board. RFID provides the institution
with management as needed. The consultancy arm, RIAS, supplies
technical assistance, using Rabobank staff to transfer knowledge.
RIAS has assisted banks in developing countries in this way since
1989; assignments and funding typically came from developmen-
tal financial institutions, multilateral institutions and governments.
Now, though, the emphasis is shifting toward supporting RFID's
partner banks.
The historie acquisition in China is only the second
Rabobank Development Program investment. The first
involved the purchase of a 35% stake in the National
Microfinance Bank (NMB) of Tanzania in September 2005.
The government recently privatised this bank in order
to broaden the reach and scope of financial services in
the country. 'It has almost one million customers, but it's
financially still small, with a balance sheet of only US$ 600
million,' says Kuijpers.
Rabobank has provided a management team, and a
technical assistance project is being implemented for the
first three years. Key employees are being trained in the
Netherlands, and dozens of Rabobank specialists will take
their expertise to Tanzania. 'The privatisation, which was
considered important because NMB, with 116 branches, is
the only bank that reaches rural areas, is already regarded
as a success by Tanzania's government, its central bank and
NMB staff,' Kuijpers says.
RFID aims to create leading rural banks in an initial eight
countries - projects in Mozambique, Zambia, Paraguay and
Peru are currently being set up.
The RDP's activities help Rabobank achieve its goal of sup-
plying financial services in rural areas where such services
are scarce. It strengthens Rabobank's position and network
in economically up-and-coming countries, such as China.
And, it occasionally brings new business Rabobank's way.
'Partner banks are mainly retail banks,' says Kuijpers. 'When
they come across larger clients, such as international trade
clients, their business will be transferred to us.'
Banks are selected according to certain criteria. To qualify, an
institution must be in a country that is economically, socially
and politically stable. It must have a wide national branch
network or the potential for one, or, in large countries like
China, an extensive regional network. It should serve all
market segments in rural areas, including farmers, Small and
Medium-sized Enterprises and private individuals. Finally, the
bank should have the potential for modernisation.
All these factors reflect Rabobank's original values, and the
RDP is an opportunity for the bank to continue to pursue
them in parts of the world where it can make the biggest
difference in people's lives today.
18 The Word Issue 12-October 2006