4 To understand
Rabobank you need
to look bevond the legal
issue and realise that
it's about the culture
ofRabobank
Investors' opinion
about Rabobank
COVER STORY RABOBANK'S WAY OF WORKING
Bruce Dick (1950)
holds a degree in Eco-
nomics from Otago
University, New
Zealand. He joined
Rabobank in 1999
as General Manager
Rabobank New
Zealand. Since then he
has held a number of
senior management
positions within the
bank, including General
Manager Australia
New Zealand and Chief
Executive Officer and
Director, Rabobank
Australia New
Zealand Group. Dick
is currently Managing
Director of Rabo
Development.
The beating heart of Rabobank is the cooperative model,
and for many it's this structure that has led to the bank's
ongoing success since its foundation in the 19th century.
And yet understanding Rabobank isn't as simple as
knowing that its principles are based on a cooperative
framework. According to Bruce Dick, an Australian who
now leads Rabo Development, the bank's strength can't
be pinned down to something as dry as a legal structure.
'To understand Rabobank you need to look beyond the
legal issue and realise that it's about the culture of the
company," Dick says. "And that's something that is unique
to Rabobank. It's about the way we work at connecting
with our clients, about how we make ourselves
accountable - from the member banks to the outreaches
of the organisation and back again - and how we ensure
that our clients are constantly involved in what goes on
within the bank."
Sander Pruijs, Chief Commercial Officer of region East
within Rural Retail Banking, agrees and adds that
there are a number of elements that melt together to
produce Rabobank's particular culture. 'The focus of
the cooperative is the customer," Pruijs explains. "And
that's rule number one within the bank, which is both
a powerful starting point and different from so many
other organisations. And you have to remember that our
customers influence the policy and strategy of Rabobank
as a whole. Client participation, which goes to the very
heart of the bank's operations in the Netherlands, is legally
determined, and that is unique. We also have advisory
boards in place in Rabobank Australia and Rabobank
North America, where we try to mirror that sort of cliënt
participation without introducing cliënt ownership."
Like all banks, Rabobank also raises long-term
funding in the capital markets by issuing bonds
to institutional investors, such as pension funds,
insurance companies, asset managers and retail
investors. Rabobank has currently around
EUR 150 billion in senior unsecured bonds
and EUR 7.5 billion of subordinated bonds
outstanding. Although a bond's yield - or the
return received by investors - varies depending
on the length of time to maturity and the
interest rate at the time of issuance, it is also
highly dependent on how safe investors believe
the bank issuing the bond is. When investors
ISSUE 29 >be i RI WORLD
purchase Rabobank bonds, they typically receive
a lower yield than is available with bonds issued
by banks with a lower credit rating. The reason?
Investors believe Rabobank is extremely reliable.
The bank's capital position is robust, its profits are
consistently strong and its strategy is clear and
consistent. But what supports this capital and
liquidity strength is the cooperative model and
cross-guarantee system, which connects local
member banks, Rabobank Nederland and some
of Rabobank Nederland's subsidiaries and ensures
that any shortfall in assets in one of the entities
will be covered by all the other entities in the
Group. Because Rabobank has no shareholders
and makes no dividend payments, it can operate
a more conservative capital position than other
banks. It's a model that has worked for over a
century and will continue to work in the future.