Market and clients
As in previous years, there was excess liquidity
in the market for wholesale banking in 2006.
This resulted in continuous pressure on
interest margins and in longer loan maturities.
Despite significant competition, Rabobank
International showed strong growth in this
segment in 2006. At the end of the year, the
Big in green
Greenhouse horticulture is an important
contributor to both the economy and the
image of the Netherlands. At the same
time however, this sector has a significant
impact on the environment: greenhouse
heating and lighting take up a lot of
energy. That is why the Government stimu
lates Green-labelled greenhouses. These
are greenhouses that satisfy a set of strict
environmental criteria. The great majority
of Green-labelled greenhouses in the
Netherlands are financed with green finan
cing from Rabo Groen Bank, typically in the
form of an innovative sale-and-leaseback
construction. In total the Green-labelled
greenhouses are covering more than 200
hectares, the equivalent of approximately
400 football pitches. Apart from financing
Green-labelled greenhouses, Rabo Groen
Bank also has solid positions in biological
agriculture, agricultural nature manage
ment and wind power.
growth rate was deliberately reduced and this
policy will be continued in 2007. The present
volume of the loan portfolio will be used to
deepen the existing relations with clients by
offering more tailored products and by increa
sing the cross-sell efforts for non-loan related
products.
Excess liquidity likewise affected Global
Financial Markets and Corporate Finance.
Because the markets have become more
transparent in recent years and market volumes
for complex products have grown faster than
in the past, the profitability of the products
offered decreased.
Margins in the international retail banking
business were virtually stable in 2006. An
exception was the Australia region, where
fierce competition mainly from local Australian
banks put pressure on interest margins. In
2006, many farmers in Australia had to face the
consequences of extreme drought. It is expected
that the financing policy of past years will
afford an adequate basis for sustained support
to Australian clients in this difficult period and
to limit credit losses. In consultation with our
clients, Rabobank International tries to absorb
the financial consequences of this drought. Its
experience in the Netherlands, where conditions
in the agricultural sector are different every
year, provides a good framework in this respect.
In addition, Rabobank International was
confronted with a growing stream of new laws
and regulations in 2006. As a business with
international operations, Rabobank
International must comply not only with Dutch
regulations, but also with those in force in the
countries where it has a presence. A great deal
of effort was made in 2006 to ensure the
timely and efficient compliance with changed
regulations.
38 Rabobank Group Annual Report 2006
