34 issue 24 ju RI WORLD
ACT
Earlier this year, GFM and Rabobank Milan completed the bank's first non-deliverable
forward (NDF) trade* for Italian coffee giant lllycaffè. Rabobank has been working with
llly since 2004, mainly on the commodities trading front, but the NDF deal marks a step up
in their relationship. "This is a landmark deal, as it represents a new source of income with
an F&A cliënt, one that was only trading with us on the commodities side until recently,"
says Eliana de Rossi, of GFM's Corporate Risk&Treasury Advisory Europe.
The deal consisted of three euro/Brazilian
real NDFs with tenors between 4 and
5 months, worth BRL 14 million each,
making the total deal size BRL 42 million
(EUR 17 million), with llly buying reals and
selling euros. llly buys around 300,000
bags of coffee from Brazil annually with
an equivalent exposure of BRL 80 million,
which means Rabobank has hedged a
large portion of llly's total exposure to the
Brazilian currency. This new business is a
direct result of Rabobank's increased focus
on F&A and its strengthening of the Italian
sales team, says Marco Pallazzi, Senior
Relationship Manager in Milan. Pallazzi
joined Rabobank Milan in 2007, when
Rabobank was adding to its Milan-based
team and intensifying its relationship
with llly. Pallazzi: "First, we decided to use
FAR to gain access to clients by offering
industry intelligence they could not get
elsewhere. Our unique focus on the F&A
sector, our credit rating and our approach
to sustainability, plus our products, give
us a unique edge with F&A clients, as we
can offer more than any other bank in
Italy. llly is proof of that, as the company
now sees us as a true strategie partner. We
now have regular meetings with the CFO
and the heads of Derivatives and Treasury."
FAR enables Rabobank to talk to clients at
a strategie level and in their own language,
says Rossella Schiavini, General Manager of
the Milan office. And of course Rabobank's
commodity trading relationship with llly
- at CFO level - put the bank in the right
place at the right time to recognise the
opportunity to offer the coffee giant other
products, such as the NDF.
Of course, none of this would have been
possible without the close cooperation
between the Milan team and GFM and
between the New York, London and Milan
offices. As Senior Relationship Manager,
Pallazzi is in constant contact with llly's
CFO to address any financial issues, while
De Rossi and the traders are in touch
with llly's head of derivatives and head
of raw materials. Pallazzi: 'This enables us
to anticipate the client's needs and offer
tailor-made solutions. In llly's case, one
of their main risks is the price volatility
of coffee, as this has a direct impact on
margins. The price depends on both
commodity prices and the euro-dollar and
euro-real exchange rates, and we had to
structure a deal that took all of that into
account, which is where GFM's expertise
comes in."
GFM is the most successful provider
of services to Rabobank Milan and the
collaboration has been excellent, Schiavini
says. It is the first of Rabobank's product
providers to truly align with the business
strategy of individual country offices.
Schiavini: 'The llly deal proves just how
well the RMs and product managers are
working together to identify and seize
opportunities with clients, as our daily
dialogue with clients develops," she says.
The evolving relationship with llly is also a
perfect example of how the commodities
hedging business can act as a springboard
to new business. Right now, Rabobank
Milan and llly are in talks about working
with Rabobank's Trade Commodity
Finance (TCF) business on financing for
llly's coffee supplier around the world,
Pallazzi says. "And the more Rabobank
Milan works with llly, the more parts of RI's
business offering they will unlock and use,"
Schiavini adds.
A major factor in the success of the llly
collaboration is that Rabobank Milan can
call on dedicated resources, across the
world, that have a dedicated country
focus. "Marco can piek up the phone and
talk to Eliana and she knows the customer,
their business cycle and their market.
And she knows what products they might
need," Schiavini says. In fact, it was Eliana
De Rossi who pulled everything together,
says Andre Kitahara, an Interest Rate
Derivatives trader with Rabobank in New
York, who played a key role in pricing the