Q1,20Ö7 - main results
Solvency - getting it right
Clear vision
One of Rabobank's major domestic competitors, ABN AMRO, has been making
headlines worldwide. While this may appear a strange way to open an article
on Rl, Chairman Hans ten Cate is quick to point out the relevance, also in
terms of our potential into the future. 'What is happening with ABN AMRO
and its variety of suitors is not only relevant for Rl,' he says. The outcome will
change the European, and even the more global, banking landscape. I would
say we're seeing the start of a new European consolidation. If you had asked
three months ago whether ABN AMRO could be bought and split up, I would
have said: no, not possible. But it is happening just 50 kilometres from this
office. Any change in how our competition is structured means we have to be
even more focused on ensuring we are a strong, healthy and fit organisation.
That is what we have to keep in mind when external conditions are uncertain:
We have no intention of being a small or minor player. The question is: how
do you position for growth into the future?'
The question is, to some extent, rhetorical. Hans ten Cate and the Rl
Management Board (MBRI) have a clear vision on what needs to be done.
'I have always said that banking is an opportunistic business,' he states.
Hans ten Cate:'People talk about solvency as
if it were a new issue. But we've been talking
around it for years now.To date, we appear to
have lacked the discipline to stay within sol
vency budgets and we were never confronted
with that - until now.This is the last year sol
vency will be an issue as I believe we will man
age it. In total.the local member banks have
allowed Rabobank Group to use 6 billion
- this is an enormous outflow of capital. One
result is that our Tier 1 ratio is under threat. As I
speak, it is down to 10.1 .The Supervisory Board
has stated that it cannot fall below 10.That
would jeopardize our AAA rating - something
we are all very proud of and which is a clear
cornerstone of a lot of our business. So it is not
me saying: People, we need to stick to solvency
budget.The Supervisory Board is extremely
clear: Rl must stay within solvency budgets.'
In thefirst quarter of 2007, Rl generated a net result of 182 million,
strongly above budget 39 million) and significantly over 2006 Q1
performance 30 million).
Main contributors to Q1 results are, once again, participations, including the
divestment of Gilde's participation in Centurion/Hevea, and one-off items,
such as the sale of our interest in Deutsche Börse AG. Global Financial Markets,
one of our mainstays in overall performance, is well above budget.
The Structured Finance teams, especially in Europe, also made significant
contributions.The IP/Ponderosa transaction was a highlight.
