Sugar, grain, fish and fruits: with its major corporations and many family-owned farms, South America offers great opportunities for Rabobank. That's why Rabobank South America is now a separate unit within the bank. But opportunities come with challenges. How important is rural and retail banking versus corporate banking? And is local funding feasible? Twin-model: corporate and rural banking Salmon was not on the menu in Chile during Christmas 2008. The reason for this was that previously a deadly virus in the country's waters, and a lack of funds to come up with a solution, forced many of Chile's salmon exporters to harvest and sell most of the surviving fish to get an income. As a result, the output of the world's second largest salmon producing country dropped by more than thirty percent in 2009. That production gap will not be closed until 2011, and fish farms are struggling to finance their way out of the crisis. "It's a disaster for one of Chile's main export products," confirms Roberto Simpson, head of corporate banking at Rabobank in Santiago de Chile. 'The price of salmon has reached record heights, but production volumes are dramatically low and liquidity is limited in the fish farming industry. At Rabobank Chile we have to devote a lot of time to the companies involved." The salmon scenario is a so-called 'perfect storm'. A crisis in production or market pricing coincides with an economie downturn, which makes most banks hesitatent to finance struggling companies. It takes a strong bank to recognise these dynamics, choose potential survivors, and support the companies while they are navigating their way out of rough waters. Rabobank is ideally positioned within such a sector, with its expert understanding of the market dynamics of the F&A sector, access to funds that local banks lack, and international presence that enables itto look beyond local limitations for solutions. "Because of our expertise in F&A, we can analyse business cycles in agricultural commodities and show confidence in our support for companies that have to deal with downturns," explains Guillermo Bilbao, Regional Head of Rabobank in South America. 'That expertise is what Rabobank brings to the table, especially when other financial institutions are getting a bit nervous. They don't have the same view on what these cycles are all about. But they do know Rabobank is usually involved for a long period. So when we support a specific company, other banks understand that we see this company as a long-term survivor. In effect Rabobank is a market-maker." What happened to salmon in Chile is a scenario that Rabobank is familiar with. Although two years of production might have been destroyed, liquidity will return and prices will bounce back. Weaker companies in the food chain will be wiped out, but the survivors will return stronger than ever. "F&A in South America is a mature sector with advanced companies, many of which are really cutting edge," ISSUE 22 JANUARI THE WORD 25

Rabobank Bronnenarchief

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