It's really a constant
dialogue between us
and our customers as
to what areyou wdling
to do and what are
you able to do
COVER STORY
Diane Boogaard, Rabobank's Global Head
ofTrade and Commodity Finance:
Empathy
i
having an impact on business. For example, with the division
of some domestic banks we've found ourselves lending close
to those institutions' capital limits, resulting in the loss of access
to the capital levels we had previously. In July, for example,
when the oil price was at 147 and we were funding a tanker
of around 2 million barrels, we needed a huge amount of
capital funding. Now, as the price has dropped, we require
less funding for the equivalent shipment. However, as the
market in July wasn't as distressed as it is at the moment,
it wasn't too diffkult to get the money out of the market.
That has changed over the past few months."
Jan de Laat, Global Head of Energy at Rabobank, believes
the energy-trading sector has coped relatively well with
the crisis. He explains that there is one main reason for this.
"Most of our clients need short-term banking facilities to
cover their trading activities. Of course there's less liquidity
in the market, which should have an impact, but this is largely
offset by the current reduction in oil prices. We are very
thankful for this - if oil prices today were at the same level as
July, we would probably have a big, big problem servicing
the requirements of our clients. So we've been helped
enormously by the price reduction."
De Laat believes two of the most important offerings a bank
can make to its clients in today's market are understanding of
their business and commitment by way of being there when
it really counts. "Our clients are happy to talk to us in the good
times, and they expect ongoing support during these rough
times. Here at Rabobank we don't develop a great deal of new
products, so loyalty and support is critical. Clients are leaning
heavily on their banks, but it's proving to be difficult as
many pull out, or go bust, and this hits trading companies hard."
Boogaard agrees, adding that most clients are looking for
more than just a bank that's willing to listen - they need
empathy and understanding. "Clients are looking for us to
understand their predicament and provide solutions and
help," she says. "This can range from extending loans to
servicing them with cash management and providing risk-
management products. For example, helping them manage
exchange rate risk, commodity price risk, transfer risk, marine
cargo insurance, and so on. They also look to us to provide
insurance in case of deterioration in the quality ofgoods -
one example would be when a brewer's barley falls below the
Standard required to make beer and has to go to the
animal feed industry. And because our products are very
much tailor-made for each dient - there's not really a
standardised package - it's crucial to have specialists on
board that really understand the business."
Vitol's Van Rijt explains that the company's relationship with
Rabobank over the past year has strengthened. "With the
rising oil prices, Rabobank were very flexible," he says. 'The
bank's Energy Team understandsthe business, and they know
when to be flexible and they understand the market and its
changes. Critically, they know how the business works from
the inside out."
Looking ahead. De Laat believes most clients within the
commodities sector, and especially those within the energy
market, will be very keen for oil prices to remain relatively low.
"My main concern at the moment is climbing oil prices,"
he says. "If oil goes to 100 a barrel, for example, our solvency
budget will simply not be large enough to service all of our
clients in the way that they require. However, the general
expectation is that in the first six months of 2009 not much
will happen in the trading environment. Hopefully that
will give the banking system time to right itself and return
to some form of normality."
ISSUE 18
LHE WORD
