Self-funding has now
reached 33 percent
and it is sttll improving
by the cl 9
SELF-FUNDING
George YauCFO Rabobank Australia
and New Zealand:
George Yau
Edwin van Raalte
liquidity, in some cases rising 80 to 100 basis points for longer
terms and that is affecting RAF's ability to compete. While
Rabo AgriFinance is adapting to the new liquidity rules, the
competition is not necessarily following. Grass: "In the short
run we are not seeing all of our competitors applying liquidity
in the same manner as Rabobank, which has made it difficult
to compete from a pricing standpoint. Despite some of the
competitive issues we face today, we're not standing still. Our
target customers - the largest 5-10 percent of producers in
the US - are sensitive to many factors other than just price. As a
result, we are focusing on customer needs and our knowledge
ofagricultureand service to differentiate the RAF brand from
competitors, and we're seeing it work in the market. In the long
run, we are confident our competitors will adjust their pricing to
reflect their true funding costs, and the deep relationships we are
creating with our customers will prevail."
RAF does not have the option to find funds in retail deposits.
The situation is different in Australia and New Zealand,
where Rl does not have a retail network but has instead
launched two RaboDirect businesses. There may also be an
opportunity to use local currency long-term funding through
its debt securities programme, explains George Yau, the CFO
for Rabobank Australia and New Zealand. "Australia has a
withholding tax regime that limits the possibility to attract
funds from abroad. That is why Rabobank Australia and New
Zealand has established separate local funding platforms,"
says Yau. "Last year, we raised AUD 6 billion in long-term
funding, half of which is used by the head office in Utrecht.
In thefirst four months of this year, we raised more than AUD
2 billion at costs that are typically marginally cheaper than
the competition. That puts us at an excellent competitive
advantage in funding our balance sheet - better than most
of the foreign banks operating in this region."
While Rabobank Australia and New Zealand has access to
funding at a good price, it is not completely clear yet if local
debt securities count as self-funding as envisioned for R&R
activities. "But this funding platform is much cheaper and
more efficiënt than consumer deposits and one that would
count toward the stable funding ratio under Basel III,"
suggests Yau. In addition to the local funding platform,
Rabobank Australia and New Zealand also has access to
retail deposit funding via its rural branch network and online
business, RaboDirect. "Ever since the R&R Management Team
gave us the target on self-funding, we have been working
overtime with relevant stakeholders to ensure we are focused in
moving towards achieving that target," explains Yau. "Farmer
ISSUE 25 0'. RI WORI.D
