'Investors consider
Rabobank to be a safe
haven during this crisis'
'Having a triple A rated
banking partner does
The credit crunch started about a year ago
and clearly didn't come to a halt in 2008.
Bert Bruggink, CFO Rabobank Group, gives
his view on the impact of the credit crisis on
Rabobank.
'Tm afraid the crisis will continue for some
time", says Mr Bruggink. "In the first phase of
this crisis, the main focus was on the credit
quality and transparency of complex credit
related investment products. It was unknown
which banks would be hit by losses on those
investment products. This resulted in distrust
between banks and the related liquidity is
sues."
"At this point, we've entered a second phase
of the crisis. The credit crisis starts to have
an impact on the real economy. To a greater
'In today's markets, you want secure banking
partners you can rely on'
Wolters Kluwer offers professional electronic
and printed information products and servic
es for the health, corporate, financial services,
tax, accounting, legal, and regulatory markets.
Headquartered in the Netherlands, Wolters
Kluwer is a global player in the information
industry, operating in over 33 countries. Wol
ter Kluwer's total annual revenues in 2007,
amount to €3.4 billion. Boudewijn Beerkens
has been CFO since November 2002 and
Executive Board member of Wolters Kluwer
since May 2003.
extent, financial institutions are struggling
to survive. I feel that more banks will follow
the same path as Bear Stearns. I do believe,
however, that it's not just US or investment
banks that will be exposed, but also Euro-
pean banks. Most vulnerable are banks that
largely depend on investments not related
to an own franchise, on wholesale funding
and on real estate markets that are highly
overvalued.'The last phase is the consolida-
tion phase. "Financial institutions, as I just
described, will realise their existing busi
ness models are no longer valid", explains
Mr Bruggink. "As a result, they will need to
restructure their business and/or consolidate
with other banks. I'm afraid I have to say that
this process could easily run for another nine
to twelve months."
Despite tough market conditions, Rabobank
has performed well during the crisis and
delivered strong annual results at the start of
March. Mr Bruggink says, "During this time of
crisis, there are also many opportunities for
Rabobank. To start with, investors consider
Rabobank to be a safe haven during this
crisis. Taking into account that the Dutch
banking landscape is changing and given the
fact that more counterparties are looking for
high-quality institutions, there will be consid-
"Rabobank is a longstanding financial partner
of Wolters Kluwer and we view Rabobank as a
solid, valuable and proactive banking group",
says Boudewijn Beerkens.
At the start of the second quarter, Wolters
Kluwer raised €750 million with a new Eu-
robond transaction, in which Rabobank acted
as joint book runner. An outstanding and
remarkable achievement under today's chal-
lenging market conditions in which timing, in
combination with Rabobank's expertise and
reliability, were considered to be key success
factors.
'There was a lot of uncertainty in the market
as to whether this transaction was achievable
for a BBB+ credit rated company in the
first place. Eventually, this bond issuance was
six times oversubscribed and we've received
very positive feedback from investors. This
deal marks the first bond offering in 10 years
from a triple BBB name since June 2007."
Whereas this transaction was mainly driven
by the fact that this was the right momen-
tum for Wolters Kluwer, Rabobank's credit-
worthiness and track record proved to be a
crucial success factor. "Especially for a global
business like Wolters Kluwer operating in to-
erable opportunities for Rabobank. A positive
effect resulting from this crisis is the strength-
ened value of our triple A status; assets have
been re-priced to more realistic levels in com-
parison to related risks. Related to this, the
most important challenge for Rabobank is to
maintain its high-risk management standards
and to control scarce resources like capital
and our balance sheet tightly."
"Besides this, I think there will be many op
portunities on both the wholesale and retail
side. We should take a client-driven approach
in which we sell transparent and understand-
able products that fit our clients' needs. The
time of extremely complex products has
gone. The recent period has proved that a
focus on this kind of products is not a strat-
egy that yields benefits in the long run for
Rabobank."
'To conclude, in order to sustain our solid
performance, the key challenge for Rabobank
is to maintain its high-risk management
standards and to control scarce resources like
capital and our balance sheet tightly."
day's volatile markets, having a triple A rated
banking partner does matter. I must say that
expertise and sharing a history of cooperat-
ing also make a difference when selecting
the right counterparty. In terms of execution,
we feit that there was a good understanding
between our goals to invest in support of
the company's organic growth and the way
Rabobank executes its deals."
Boudewijn Beerkens continues: "In today's
markets, you want secure banking partners
you can rely on - Rabobank is one of those
banks. This in combination with Rabobank's
execution skills and extensive distribution
network for financial institutions through-
out Europe, this makes Rabobank a sound
choice. It's not a one-time event, but we see
our relationship with Rabobank as a continu-
ous exchange of information and dialogue,
especially between our treasury department
and the bank."
ISSUE 16 THE WORD 9
