'We are perceived
as a jriendly bank'
Growth
of financing, has resulted in a sharp
drop in mergers and acquisitions in
the second half of 2008 and first half of
2009. The decrease was between 45%
and 60%, depending on your sources.
"An entire class of investors has
disappeared from the market. Liquidity
has dried up, which in turn has created
an opportunity for strategie investors
who are well capitalised. While a
valuation gap still exists between buyers
and sellers, we are starting to see new
business coming through. This time it is
not fïnancial sponsors that are leading
the way, but strategie investors. Before,
they were typically outbid by private
equity."
There is a strong overlap between
corporate banking and the domain
of mergers and acquisitions, Durand
explains. 'They aim at what they call the
survivors; we aim at the consolidators.
But these are basically the same
companies. An interesting observation
is that we see national champions from
emerging markets getting active
in mergers and acquisitions.
"Leading companies from Latin America
are buying companies in America and
Europe. For instance, the meat packing
company JBS-Friboi from Brazil has
bought Swift Co in the US, and the
Mexican company Grupo Lala recently
acquired National Dairy Holdings
from the cooperative Dairy Farmers of
America. We are even seeing Chinese
and Indian companies entering western
markets. One example isTata from India,
the Eight O'Clock Coffee Company and
Vitamin Water in the US."
Rabobank in North America is focused
on F&A, but there is room for additional
growth at the edges of these domains
-for instance, by expanding into rural
and non-metropolitan regions in the
Western US. "Rabobank is positioned
in California as a community bank, very
similar to Rabobank in The Netherlands,"
explains Ronald Blok. "We are not
represented in large cities such as Los
Angeles or San Francisco, but we have a
growing presence in rural communities.
This year, we have opened nine new
California branches."
A new area for Rabobank in North
America is renewable energy and
infrastructure. "We view that sector as
connected to our strategy, because it
has an agricultural aspect," comments
Bob Bucklin. "Many wind farms are buiit
in rural areas. Also, renewables are a
sustainable business with strong growth
potential, typically a sector for Rabobank
to be involved in. But if you look at our
portfolio in the US and Canada, some
99% of our exposure is in the F&A
industry."
Z
Emmanuel Durand
Adriaan Weststrate
"Canada's economy has weathered the storm a bit better than
the US's, for a variety of reasons. Our economy was probably in
better shape when the current crisis began, because it had an
account surplus and low unemployment. Also, the real estate
impact in Canada was much less than it was in the US.
"Another difference is that the Canadian banking system has
more rigorous regulations.The government was relatively
pro-active in establishing liquidity and intervention measures,
up to the point of injecting capital into banks if that was
necessary. But the banks here were never in the leverage
stratosphere that some of the banks in the US, the UK and
even mainland Europe had gotten themselves into. So that
helped the Canadian economy to sustain a more stabilised
environment than in the US, the UK or some countries in
mainland Europe.
"Rabobank in Canada has always focused on F&A - some
99% of our portfolio is in those domains. We are trying to
expand our clientele in Canada, acquiring new customers as
well as extending our relationships with others. The market
was dominated traditionally by five or six national banks that
did what they could to exclude competitors. Rabobank,
however, is perceived as a friendly bank because of our F&A
expertise. Due to the recent turmoil in the markets, liquidity
is now at a premium. Rabobank is being asked to look at
customers that other banks have had significant relationships
with for years. Some banks want to reduce their exposure and
are therefore bringing in other banks.
"Let me give you one example. The credit committee of a
competing Canadian bank was looking at the renewal of a loan
facility of a cliënt that has had trouble in the past few years.
They wanted to reduce their exposure by bringing in another
bank. The credit committee itself recommended Rabobank
because of our expertise and because we were viewed as less
of a threat than the other Canadian banks.
"Rabobank can play both a partner role towards our customers
as well as to other banks. Also, companies are aware of
reduced liquidity, so they want to know which banks they can
count on. That enables Rabobank to position itself as co-lead
or at least in the top-tier/second-tier. This strategy is working
well. From a performance viewpoint, we are having a record
year in Canada."
ISSUE 21 O 1 OBER 2009 THE WORD 2
