Wholesale banking operations
Rabobank International
33 Rabobank Group Annual Report 2005
Core activities: wholesale banking and international retail banking
Lending to the agricultural sector grew by EUR 7.0 billion in 2005, to
EUR 23.1 (16.1) billion. This sector now accounts for 43% of total lending.
Lending to the trade, industry and services sector increased by 7% to
EUR 28.5 (26.6) billion.
There was strong growth in lending in the United States. At the end of
2005, the United States accounted for 27% of lending, Europe for 50%,
Australia and New Zealand for 18% and Asia for 5%.
The wholesale banking operations focus their service mainly on the
food and agri business and on telecommunications, the media and
Internet. The wholesale operations comprise Rabobank International,
Rabobank Nederland Corporate Clients and Rabobank Participaties.
Rabobank International (RI) global operations are divided across various
regions. Last year, RI strengthened its position in Asia by opening offices
in South Korea and Malaysia. Each region is responsible for its own
lending and trade financing products. Besides this division by regions,
RI distinguishes a number of global product groups, including Global
Financial Markets, Corporate Finance and Corporate Advisory.
Global Financial Markets
Global Financial Market (GFM) operates in the international financial
markets. The Equities and Equity Derivative operations of Rabo Securities
have been part of GFM since July 2005. The main activities within GFM are
Position Management, Structuring, Equities, Equity Derivatives and Sales.
Position Management manages market and credit risk for these products
on behalf of Rabobank Group and its clients. It trades in money market
products - including the day-to-day management of the Group's
liquidity - currency products, bonds and derivative products. One of
Position Management's innovative products is the weather derivative.
Weather derivatives offer protection against the financial consequences
of specific weather scenarios. In 2005, GFM closed a successful trans
action of this type in South Africa. Another recently launched activity is
the trade in CO2 emission rights.
Structuring provides capital market solutions by securitising and/or
restructuring specific risks or cash flows of businesses or financial
institutions. In 2005, it successfully placed a perpetual Van Lanschot
Bankiers bond with institutional investors. GFM was both the arranger
and the bookmaker in the placement of this Tier 1 capital.
Equities (operating under the trade name Rabo Securities) is responsible
for the research, trade and purchase and sales of Benelux shares on
behalf of institutional investors. These activities are closely aligned with
the corporate market ambitions of Corporate Advisory and Rabobank
Nederland Corporate Clients in the areas of advising, mergers and
acquisitions and share issues.
In 2005, Equity Derivatives introduced various successful products, such
as the Rabo Performance Clicker guarantee product and the Rabo Yield
Booster. These products were placed with retail investors through local
Rabobanks as well as third-party banks.
GFM expanded its sales activities last year considerably in order to
strengthen its relationships with both wholesale and retail clients.
Corporate Finance
By structuring tailor-made products, Corporate Finance supports the
operations of businesses and financial institutions. These products are
aimed, for instance, at balance sheet optimisation and cash flow
management and are supplemental to standard lending. From this
perspective, Corporate Finance works together closely with other
subsidiaries and with the local Rabobanks. The products of Corporate
Finance are delivered by three product groups: Structured Finance,
Leveraged Finance and Project Finance.
Structured Finance offers tailor-made products aimed at both the asset
and the liability side of the balance sheet. In 2005, Structured Finance
opted for a stronger focus on tailor-made products for clients of Rabobank
Nederland Corporate Clients and the local Rabobanks. As a result, the
transactions were reduced in size.
Leveraged Finance is internationally involved in financing investment
companies' acquisitions with a purchasing price exceeding EUR 50 million.
On an international level, it is a major player in the agricultural market,
but it operates in other sectors as well. In 2005, its portfolio grew as a
result of transactions with Tetley Tea, Betafence and DSM Bakery
Ingredients.
Project Finance focuses on financing that centres on sustainable and
socially responsible business operations. In 2005, Project Finance
developed a product for the green-labelled glass house horticulture,
which enables horticulturists to avail themselves of government
investment subsidies.
Lending by region at year-end 2005
Europe
50
America
27
Australia and
New Zealand
18
Asia
5
Lending by sector at year-end 2005
4
2
TIS 52%
Agricultural 43%
Private
individuals 5%
