4
We do struggle with the
fact that the rural areas
are asset-rich hut cash-
poor, while th
usually asset-poor and
cash-rich 9
We believe that 40
to 50 percent of our
lending
Farmer MacJ
SELF-FUNDING
6Berry Marttin, Executive Board Member:
Mark Grass, CFO Rabo Agri Finance:
The 'Wake up your lazy money' campaign includes
advertisements in traditional media and online channeis,
as well as a quirky Money Tree promotion that has
generated more than 100,000 views on YouTube since
initially screening on the 'Sunrise' breakfast television show.
The campaign, which kicked off in late May, has been
instrumental in increasing RaboDirect's deposits to a
historie AUD 3.8 billion by the end of August - edging
the bank closer to its self-funding goal.
RaboDirect Australia's Wake up your lazy money' advertising
and promotional campaign is just one example of the
increased marketing efforts that Rabobank International's
(RI's) Rural Retail (R&R) business has initiated in order
to achieve its 70 percent self-funding goal by 2014. The
general idea is that further R&R growth should be less reliant
on Group funding. At the same time, Rl wants to increase
awareness of liability costs to the business. But the shift to
self-funding is also preparing the bank for new regulations
evolving from Basel III.
"Rl has done well," explains Executive Board Member Berry
Marttin. "We have expanded, created profitable assets and
financed our growth. But now the time has come to develop
a more solid business case and get a better understanding
of the price of that growth. The move from primarily
financing F&A towards also finding funds by enhancing our
visibility in the markets requires a mind shift within the bank.
Rabobank is not only a farmer's bank." The general purpose
and the specific requirements for new regulations seem well
understood within the bank. But there are huge differences
between different units within R&R in terms of tools and
capabilities to find sources for self-funding. And the move
towards self-funding will have major consequences for the
branding and marketing of R&R, since the core target group
of farmers has limited potential as suppliers of deposits.
Rl will have to look beyond F&A to find new funds, both on
a local and global level.
Dan Stevens, Chief Financial Risk Officer for Rabobank N.A.,
(RNA), describes it as a climate change. "Before the global
financial crisis, our mantra was to grow the asset side of the
balance sheet and not focus as much on the need for self-
funding via core deposit growth. As a result, loans increased
by approximately USD 4 billion from 2003 through the end of
2008, while our deposits only increased by roughly USD 200
million. When Lehman Brothers collapsed in 2008 during the
unprecedented financial crisis, the resulting liquidity concerns
dramatically highlighted the need for us to rely more on self-
funding our loan growth. Self-funding became our primary
focus here at RNA and, especially in light of Basel lll's recently
proposed requirements, for Rabobank globally as well. As Rl
had primarily been wholesale focused, RNA was somewhat
of an outlier, but now we have maybe become a more
interesting model for international growth."
issue 25 Rl WORLD
Stills from RaboDirect's Lazy Racing television commercial