impressive
growth
Hans Pontier and Yin Wu
Building local knowledge
Controlled growth
interests - the team has one common
goal and that is to sell products.'
Equity Derivatives regularly adds to
its product line, in response to cliënt
demands and market changes, and the
products on offer are developed and risk
managed by the team themselves. Four
years ago, this wouldn't have been the
case. 'We could develop simple products,'
says Pontier, 'but if it was anything a
little more complicated, we had to buy
it from other financial institutions, such
as Barclays, because we didn't have the
capacity to risk manage it ourselves.
Now we don't have to buy any products
from third parties. Equity derivatives is a
competitive market, so keeping as much
business as possible in-house can increase
profits considerably. It also indicates how
far our risk management capabilities have
come in the last few years.'
Equity Derivatives' clients have also
changed as the team's capabilities have
matured. These days,just 10% of the
business comes from Rabobank member
banks, while 90% is external.
'Our business depends very much on hav-
ing the right products to trade,' says Wu.
'New York and Hong Kong, for example,
receive operational and IT support from
London, and the same vertically inte-
grated business model is in place there;
but despite these similarities, it is vital
that local staff find out what the clients
in their region want, because this differs
from market to market. Local knowledge
is very important. In Europe and Asia, we
focus largely on retail and private banking
clients, while in the United States, the
team targets pension funds, insurance
companies and large asset managers.'
Other differences between regions are
also taken into account, including time
differences. Even though the New York
team is still relatively small (fïve people)
and they are currently in the setup phase,
they will soon be handling the risk man
agement of equity derivatives on United
States stocks and indices. These products
are moving from London because 'we are
on our way home in Europe when they're
just having lunch in New York,' says Wu.
'It's not efficiënt to keep those products
over here, because we lose half a trading
day every day.'
Equity Derivatives is now active in three
key financial locations and does not
anticipate opening any further desks in
the foreseeable future. 'We want to focus
on doing a few things really well, and not
being all things to all people, so there are
no benefits to be gained from spreading
ourselves too thinly,' says Wu. 'We are
aware, too, that there is a lot more
potential to be tapped in the regions in
which we are currently based. We want
to concentrate on growing Hong Kong
and positioning New Yorkto be just as
successful.'
To this end, the regional teams will be
focusing on steady, controlled growth
- something Rabobank excels at. The
hope is that this growth will also be driven
by increased cross-sell activity, and will
involve leveraging the global sales and
origination platform ofGFM.
'GFM's senior management has been
vital to our success,' concludes Wu.
'They've been very supportive of our
business model, which has been a good
thing because it has allowed us to grow
exponentially while still establishing a
strong, continuous business philosophy.
There's often a temptation, when a
project is doing well, to tinker with it in
the hope that it will do even better. Senior
management has adopted the pragmatic
motto of "don't fix what isn't broken" and
supported the equity derivatives business
all the way on this.'
Issue 12 October 2006
The Word
9
