Coming out of the crisis
I believe that clients have
a better appreciation for
Rabobank and we are now
positioned as a stronger
more important bank to
our clients 9
0 Who is Bill Mansfield?
0 Your role as head of GFM Americas put
you at the center of the financial crisis:
how did this impact you?
0 What is the impact of the recently passed
US Financial Reform Bill (Dodd-Frank Act)
and the Basel III proposals?
0 How do you see this regulation
impacting Rabobank's business?
Will it affect Rabobank to the same
degree as other banks?
0 What do you think the reforms will
ultimately achieve? What is the outlook
for Rabobank in the Americas?
A "l'm responsible for Global Financial Markets (GFM) in the
Americas. I have worked for Rabobank since 1998, starting on the
GFM Sales desk covering financial institutions, and assumed my
current responsibilities in late 2006.1 have spent a large part of my
life in New York City, but started my career in St. Louis, Missouri,
working for Dean Witter Reynolds (now part of Morgan Stanley).
AThe credit crisis challenged all bankers. We had to react to external
events that many of us had never had to deal with in the past,
certainly not on this scale. One thing we did well as a bank during the
crisis was to never lose sight of our commitment to clients. Coming
out of it, I believe that clients have a better appreciation for Rabobank
and, as a result, we are now positioned as a stronger, more important
bank to our clients. My personal experience was similar: I managed a
department in Rabobank that was at the center of the crisis and, like
the bank as a whole, I believe I emerged from the crisis a stronger
bankerthan I was going into it."
A "With the Dodd-Frank Act, it's clear that the legislation is both
extremely complex and extremely comprehensive, and it will
be a mammoth task for companies to introducé and regulators
to enforce. Currently, the legislation probably presents more
questions than answers. Our immediate priority at Rabobank is to
put in place a team of specialists to analyse, understand and review
the Act, so we can make informed decisions about what concrete
steps to take and which changes to implement.
"Basel III, as currently proposed, is not perfect but I believe it is a step
in the right direction by regulators. There are flaws in existing banking
regulations that arguably contributed to the crisis, one being an over-
reliance on external ratings for many of the capital calculations in
Basel II. In some organisations, prudent internal reviews of credit
risk were replaced by external ratings. So, this is an opportunity
for regulators to learn from past mistakes and ensure they don't
recur. My view is that many of the new Basel III rules, specifically
around increased capital and prudent liquidity management, will
strengthen the banking sector. More importantly, they should lead
to more prudent underwriting and pricing of risk by banks globally.
1 am confident that, in the end, the final rules will result in a more
sound global banking sector, while still allowing banks to provide the
critical role of providing financing to clients."
A "I think the impact on our business will actually be fairly minimal.
This is not to minimise the importance of the regulation, but is a
reflection on the nature of our business and the efforts we have
undertaken in the two years since the crisis. Rabobank has already
put in place a number of changes that are required by the new
regulation, particularly around liquidity management and prudent
capital/leverage ratios. Likewise, the types of business that we
engage in with clients will, in most cases, not be materially impacted
bythe new rules.
"I do think the regulation will have a more material impact for other
banks. In addition to the costs of implementing these new rules, the
impacts for other banks may be in the types of business they do with
clients, applying a more conservative funding profile, and increased
capital requirements. That will affect many of our competitors much
more so than Rabobank, and could indirectly benefit us by requiring
other banks to manage and price risk on a level more equal with our
practice.
A "I believe the reforms, while not perfect, will create a more
balanced playing field within the banking sector. Everyone will be
forced to abide by the same rules and regulations, even though
Rabobank will continue to set itself apart through its high credit
rating and prudent balance sheet management. I also believe the
increased regulation will cause some banks to adopt the client-
focus model used by Rabobank, while many of the non-banking
entities - which were able to leverage risk to a much greater
level than banks could - will either have to change substantially,
downsize, or in some cases, stop doing business entirely.
"This will create more opportunities for us, as these banks
reappraise their business models. Rabobank in the Americas, in
addition to abiding by and implementing these new rules and
regulations, will continue to hew closely to our model: throughout
the crisis we remained focused on our clients, we are still today,
and we will remain so tomorrow. If there is a positive to be
taken from the crisis and ensuing regulatory impact, it is that our
relationship with our clients, and our clients' relationship with
us, has been shown to be watertight. Going forward, this means
that we will play an even more active role in helping our clients
manage their risk, carry out their business operations, and pursue
their strategie goals.
issue 25 RI WORLD
