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

Rabobank Bronnenarchief

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