9
Short-term investorslike fiduciary
clients, central banks and money market
funds, are willing to place fiunds
with Rabobank.
has a good liquidity position on
FUNDING
Marco Roddenhof:
Fair price
One of the greatest challenges currently facing financial
institutions is the continuing rise in the cost of borrowing
money. Although this is partly because the government-
backed banks have re-set the base for the pricing structure,
Gower also believes it is down to risk being priced at too
low a level over the last three or four years. "However, I think
it's clear that the market now knows this to its detriment.
Will we ever return to that point? I doubt it."
One of Gower's internal clients - Jacque Buysse - agrees.
As the man who receives the long-term funds from Gower
and distributes them to the entities within Rabobank that
require them, Buysse realises that there is a need for Rabobank
to play the good cop/bad cop routine.
"Although it can be difficult, we have to convince clients
that there is a reason why they have to pay as much as they
are paying for funds. If they complain, ask them to look around
at what is on offer in the market. Look at what happens
to banks that are not as strict as Rabobank. The financial
community is in the process of learning that risks have real
prices attached, and it is the choice of the banks to decide
whether they want to pay those prices themselves - and
pass on the discounts to their clients - or whether they want
to do fair deals with their clients and offer real market prices.
We have to accept there's a price to be paid for risk."
Buysse's role includes fully hedging currency and interest
rate risks, and optimising liquidity management. Working for
Group Finance, his counterparties include account managers
in Utrecht, Rl and Group affïliates such as De Lage Landen
(DLL), FGH Bank and Bouwfonds. He tries to ensure that there
is awareness within the Group about the costs of internal
switches - for example, from one currency to another or one
maturity to another. "When you are convinced (internally)
about the real cost of funds, you can also convince clients
that the price they are being asked to pay is fair."
"We have to introducé transparency to the sort of risks we run
- in other words, providing short-term and long-term liquidity.
In the past, products granted to clients - not loans, but facilities
to take funds over say five years - were offered based on
three-month Euribor rates. But when we give these facilities,
we are binding ourselves to five years liquidity. So the challenge
for me is to make clear that we have to translate these sorts of
issues into rules. In other words, when we give these facilities,
clients pay a liquidity premium - if it's five years, then they get
it at three-month Euribor plus 80 basis points. The idea being
that the facility is not Euribor flat, but has a cost attached."
Dick Klaasse and Marco Roddenhof both work
at Global Financial Markets (GFM).
Thijs Berenst, Jacque Buysse and Michael Gower work
at Treasury Rabobank Group (TRG), part of Group Finance.
Group Finance manages the overall liquidity of Rabobank
Group. The TRG executes the Group Finance policy.
GFM manages the short-term liquidity.
Over the coming period, GFM Treasury will establish three
corporate centre service desks in America, Asia and Europe
respectively; Rabobank International Corporate Centre Services
(RICCS). The managers of these RICCS's wiil be available to
provide prices and assistance to the regions and relationship
managers so that they will be in a better position to observe
their relevant funding costs. The RICCS desks will also be
available to relationship managers to answer their questions
in regards to the policy. RICCS' primary function is to make
long term funding available to Rabobank International
clients so that assets can be match funded.
ISSUE 18
THE WORD