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Big advantage
From left to right:
Marco Roddenhof, Thijs Berenst,
Jacque Buysse and Michael Gower
(Dick Klaasse is absent).
Since the financial storm hit the world
eighteen months ago, financial institutions
in the Netherlands have taken a battering.
The Dutch government's takeover of Fortis's
Dutch business units (including ABN AMRO),
and a €10 billion capital injection into ING
left many Dutch savers shaken. As a result,
Rabobank's local branch network in the
Netherlands saw a sharp rise in cash deposits
as savers sought out safe-havens. Although
deposit growth is always welcome, the nature
and size of this growth is another reflection of
the current distressed markets. It also brings
along challenges for Rabobank.
'The practical implication of this increase
in deposits is that many local branches are
currently long on liquidity - which, in historical
terms, is a peculiar position to be in," says
Thijs Berenst, Rabobank's Central Treasury
manager. This means they have a decreased
need for liquidity from Central Treasury (CT).
Still, they have to hedge their interest rate
risks, as the interest rate characteristics
attached to savings are different from the
assets they're holding. What we're seeing now
is that local banks, instead of taking loans
internally, are taking out interest rate swaps to
better manage their assets and liabilities."
With the local banks currently sitting on a
liquidity surplus of around €20 billion, what
happens when CT finds itself too liquid? "Any
amount that comes into local banks and isn't
used at local levels will be reflected in CT's
relationship with Rabobank International
(Rl)," explains Berenst. "Just as we are the
bankers' bank for local banks, Rl is our bank.
If we are too liquid, it is the responsibility of
Global Financial Markets (GFM) to deal with
the situation, since they deal directly with the
external market."
"On the other hand, we see in Wholesale
Banking more long term loans given to
clients, than externally raised," says Jacque
Buysse, Flead of Corporate Centre. "If the
Corporate Centre, dealing with the long-term
liquidity, gets a deficit, the funds are raised for
short periods in GFM. This means that in the
end, the surplus of liquidity of local banks can
to a certain extent be used for fïnancing our
Wholesale business."
GFM is Rabobank's window into the short-term
capital funding market. Marco Roddenhof,
RI's Wholesale Treasurer, ensures the bank
doesn't suffer from a liquidity squeeze by
managing the bank's diversity of short-term
liquidity. Dick Klaasse, Global Head of Client
Trading Money Markets, is responsible for
managing the bank's daily funding needs.
As Klaasse explains, GFM's physical presence
- or the presence of its subsidiaries - in
practically all locations that the bank has a
balance sheet means it is uniquely placed to
manage the bank's short-term liquidity needs.
GFM's aim is to diversify sources of funds over
different products (like certificates of deposits,
fiduciary, corporate deposits and so on),
regions and investors (corporate, money
market accounts, and central banks).
Dick Klaasse: "Our big advantage is that we're
close to the information and can anticipate
ISSUE 18
THE WORD
