To describe South America
as an emerging economy
doesnt do justice to the
countries we are working
in and the companies we
work with 9
RE G ION SPECIAL SOUTH AMERICA
Guillermo Bilbao:
Local funding
Guillermo Bilbao
explains Bilbao. "The idea that F&A in South America has to catch
up with similar sectors in established western economies is a bit
of a misconception. The markets that our clients deal in, and the
conditions they deal with, are global. The role that South America
plays in those markets is quite compelling. To describe South
America as an emerging economy does not do justice to the
countries we are working in, and the companies we work with."
One of those countries is Brazil. "Rabobank started as a bank
in Sao Paulo some fifteen years ago, focusing on corporate
customers with export activities in commodities," says Henrique
Costa, Rabobank's head of corporate banking in Brazil. "In 2004,
Rabobank launched a complementary business in rural banking,
fïnancing mainly larger farmers in the interior of Brazil. The rural
banking network currently has fourteen branches. Corporate
banking represents some eighty percent of Rabobank's exposure
in Brazil; rural banking is good forthe remaining twenty percent."
The twin-model of corporate banking and rural banking is also
used in Chile, where Rabobank acquired retail bank HNS Banco
in 2007 as a way to improve cross-sell capabilities and further
expand the existing rural banking capability throughout the
entire country, via HNS' branch network. Expanding the rural
banking business while also integrating HNS into Rabobank has
not been easy or simple, says Fernando Araya, general manager of
Rabobank Chile. "It's a bit like rebuilding a train while it's running,"
he says, "You have to change engine parts, fix the cooling system,
upgrade seats and paint the cars, even while the train is in motion.
We also adjusted the cliënt portfolio, exiting many relationships
that feil outside our core business scope, while at the same time
expanding our portfolio, especially within F&A. Finally, we had
to bring the credit policies in line with Rabobank standards,
and upgrade overall systems not orrly to expand our rural/retail
activities, but also to create a platform to support other businesses
as well, such as GFM."
Argentina, meanwhile, is not yet ready for a rural presence,
explains Jorge Correa, general manager of Rabobank Argentina.
"We expect to branch out rurally in a couple of years. Rabobank
is already fïnancing large farming operations, but we have not
been able to supply individual farmers with all the facilities that
rural banking would offer them. That is a completely different ball
game. In corporate banking we deal with some eighty names, and
that's relationship banking at its best. Corporate banking is more
customised, while retail and rural banking depend on standardised
services. For rural banking we would need a full banking licence,
and in the current governmental climate that is not really feasible
for Argentina."
What is the rationale for rural and retail banking, when corporate
banking seems to be a less complex way forward? "Rural and retail
banking is the way for us to diversify how we finance the F&A
chain as we grow in the region. It is a very different business from
wholesale banking, and requires both a different business model
and focus," explains Guillermo Bilbao. "Rabobank International has
recognised and established a structure better suited to managing
the needs of each, by separating the management teams for
wholesale banking on the one hand, and international rural and
retail banking on the other."
Currently, Rabobank transfers funds from North American
dollar markets to finance its clients in South America. The aim
ISSUE 22 JANL
THE WORD
