'As long as we make
the right, balanced
choices, this is a win-win
situation for us and
our customers'
Kenny Wei
BANKING SPECIAL THE FIVE VALUE DRIVERS
- is) m
Stable
income
stream
Optimise
liquidity
profile
The keys to our future
Minimise
expected
loss/
provisions
Balanced banking is certainly nothing new in his business,
says Kenny Wei, head of Trade and Commodity finance in
the Asia Pacific region. The number one priority has aiways
been the credit quaiity of the customers Rl does business
with, together with high Corporate Social Responsibiiity (CSR)
standards.
"Of course, all the value drivers are relevant and very much
linked to each other. If a cliënt is credit worthy, it means
minimum impairments."
Wei and his teams across the region are very aware that capital
is scarce and that they have to operate efficiently to achieve
targeted KPIs (RAROC/ROS and C/I). "We have to make sure
that the capital we have goes to the right transactions and
the right clients.
Of course, this is always a challenge and even more so in these
difficult market conditions."
But Wei also sees opportunities as some banks exit from certain
markets in the wake of the crisis. "With existing clients it is
possible to strengthen relationships and increase our market
share and share of their wallet." As for new dient development,
Wei adds, the challenge is in the selection process. It is
important that Rabobank does not end up refinancing other
banks that are exiting the relationships and find itself left with
a weak counterpart.
Wei also sees opportunities in RI's partnerships with other banks,
such as Rothschild, which should lead to successful cross-selling.
"As long as we stick to our strategy and make sure we make
the right, balanced choices, this is a win-win situation for us and
our customers."
This increased focus on the five value drivers does
not imply that Rabobank or Rl have not already
been doing this. The main reason that
Rabobank has emerged from the
current crisis in a much healthier
state than many of our peers
is because we have never
stopped practising balanced
banking; moreover, we have
and are doing this continuously. -
What we are doing now is rebalancing
and re-emphasising the focus on the five
value drivers, taking into account a new reality, both in terms
of fïnancial markets and the global economy. The landscape
in which we operate has changed completely. The five value
drivers are quite literally the keys to our future success in this
new environment.
Controlling costs is obviously important. Like every commercial
organisation, a bank has to operate efficiently and effectively.
If your costs are too high, you have to charge more, effectively
pricing yourself out of the market. Capital is scarce, so we
have to make balanced and informed decisions about how we
allocate our capital to the best effect, for both the bank and our
customers. We need to be transparent and inform our clients
well and in a timely manner on this subject. We need to explain
to them that making the right choices about how we allocate
capital will enable us to minimise risk and expected losses/
provisions, which tie up our scarce capital. As we all know, the
fïnancial crisis has led to a sharp tightening of liquidity in the
fïnancial markets. Cash is a commodity, and when a commodity
is scarce, the price goes up. We have to price the risk we
take correctly. We have to be transparent about that to our
customers and actively seek face-to-face dialogue with them.
Finally, we need to shift away from thinking solely in terms
of generating revenues to thinking about maximising the
income we can generate with our scarce capital.
SSUE 21
THE WORD
