Restoring confidence
in the fiinancial sector
will be the key to
weathering this
particular s
Balancing act
fcont. from page 19)
However, it's not all doom and gloom, certainly not for
Rabobank International. "We have made it very clear we
should only use our resources for clients with whom
we already have a very close relationship, or with whom
we can build a close relationship. We're definitely not
closing any opportunistic deals. Nor are we charging the
highest margins simply because we're one of the very
few banks out there doing major deals. What we're doing
is negotiating on cross-selling business, tying loans to
other services we can offer. In effect, we're investing in
the future."
Given the added complication that the world economy
has slipped into recession, this is a very delicate balancing
act from a credit/risk perspective, Ten Heggeler says.
The bank has to be even more careful about the loans it
extends. "If we wanted to, we could close deals worth
billions tomorrow. But we have to use our scarce capital
as effectively as possible. We have to focus on our
own clients and on what we do best, more now than
ever before. So what l'm telling our people is: existing
clients before new ones, long-term relationships before
opportunistic ones and Food and Agribusiness (F&A) deals
before any other sector."
"Because", he adds, "not only is Rabobank's traditional focus
on the F&A business, this sector is likely to weather the current
economie downtum better than many other sectors."
This is increasing consumption and the demand for food in
those countries. "Of course, commodity prices have been
very volatile and that makes it challenging, but the structural
demand for foodstuffs is definitely increasing. In the end,
everybody has to eat."
"So while Rabobank is not totally immune to the effects of
the crisis, it has certainly been less affected than its peers and
it could play a role in restoring confidence in the market,"
De Groot says. One certitude in these times of uncertainty is
that the banking landscape will look very different in the future.
As the sector adjusts to an overhaul of how risk is priced, clients
will almost certainly be faced with higher costs for their
funding.This couid signal a return to traditional relationship
banking, as banks and their clients reappraise the importance
of a close relationship. And, with competition for clients fierce,
this could present a real opportunity for Rabobank.
Indeed, Rabobank may even be forced to shed its image as
a bank 'proud to be boring'. Some people, both inside and
outside the bank, say that Rabobank could be one of the
so-called superbanks that market watchers are predicting
will dominate the banking landscape of the future. Experts
agree that the bank has already emerged as a clear winner
on the Dutch market, with main rivals ABN AMRO and Fortis
nationalised, and Rabobank still the only major Dutch bank not
to call on government help. As Bert Heemskerk said in a recent
interview: "Boring is the new sexy. So we're now very sexy."
20 ISSUE 18
THE WORD
