Rabobank (Coöperatieve Centrale
Raiffeisen-Boerenleenbank B.A.) is a
financial services provider with offices
worldwide.
Their main location is in the Netherlands
. They are a global leader in Food and Agri
financing and in sustainability-oriented banking. The group
comprises 153 independent local Dutch Rabobanks, a central
organization (Rabobank Nederland), and a large number of
specialized international offices and
subsidiaries.
Food &
Agribusiness is the prime international focus of the Rabobank
Group.
They have the highest
credit rating,
(AAA), awarded by the rating agency
Standard & Poor's.
History
Rooted in
agriculture, Rabobank is set
up as a federation of local
credit
unions, which offer services to the local markets. The central
organisation is the daughter organisation of the local branches,
rather than the parent organisation, as is the case with most
banks.
The bank
is rooted in the ideas of Friedrich Wilhelm Raiffeisen,
the founder of the cooperative movement of credit unions who in
1864 created the first farmers' bank in Germany
.
Being a countryside mayor he was confronted with the abject poverty
of the farmers and their families. He tried to alleviate this need
through a variety of charitable activities. He soon realised,
however, that self-reliance had more potential in the long run than
charitable aid. He therefore converted his charitable foundations
into a farmers' bank in 1864. In doing so he created the
Darlehnskassen-Verein, it collected
the savings of the countryside dwellers and provided the
enterprising but needy farmers with loans.
This model
found a lot of interest in the Netherlands at the end of the 19th century. One of the
first of Raiffeisen's followers was father
Gerlacus van den Elsen who stood at
the basis of a number of local farmers'banks in the south of the
Netherlands. The model caught on being championed by the clergy and
the countryside elites. The mission of the farmers' lending banks
was an idealistic one but they always operated using strict
business principles. Controversially, a founding principle of
Rabobank's co-operative style was to co-operate in the interests of
"warding off the Shylock". The cooperative bank model assured a
tight bond between invested capital and the community.
The bank's
traditional headquarters are Utrecht
and Eindhoven
. In 1898 two cooperative bank conglomerates
were formed:
- Coöperatieve Centrale Raiffeisen-Bank in Utrecht
- Coöperatieve Centrale Boerenleenbank in Eindhoven
The first was formed as a cooperation of 6 local banks and the
latter as a cooperation of 22 local banks. These two existed side
by side for three quarters of a century despite their obvious
similarities. The reasons for this owed in part to legal
disagreements. The most important difference, however, was
cultural. The Eindhoven based Boerenleenbank had a decidedly
Catholic signature while the
Raiffeisen-Bank had a
Protestant
background. In the past the Netherlands underwent a process of
pillarisation or verzuiling, which in
practice meant that members of different religious congregations
and political movements essentially lived side by side each other
without contact between the two. The religious backgrounds found
their way to the organisational structure as well; the Eindhoven
organisation stressed a highly centralised structure while the
Utrecht organisation promoted local autonomy.
By 1940 the two organisations cooperated with each other, albeit on
a limited scale. Three major developments caused a further
tightening of the bonds between the two:
- Increasing number of offices - leading to increased local
competition
- A gradual fading of the confessional differences between the
two
- An increasing demand for capital in the Dutch industry, which
in turn led to higher concentration in the banking business
In 1972 the two organisation merged. The name Rabobank is a
portmanteau of
Raiffeisen-Bo
erenleenbank.
The
organisation chose Amsterdam
to be its statutory headquarter due to the
historical neutrality in relation to the founding
organisations. As of 1980 the central organisation is
referred to as Rabobank Nederland.
Rabo purchased Lend Lease Agro Business ,an Australian based
company, in 2003.
Rabobank completed the acquisition of Mid-State Bank & Trust on
May 1, 2007, which allows Rabo to expand its services to the
Central Coast region of California.
Development
Right from the start the cooperative banks prospered. They managed
to perform the key tasks of a banking organisation i.e. bringing
excess capital and capital shortages together. These moneylenders
stood close to the farmers and were better in judging the
creditworthiness of individual farmers than the city banks. This
allowed the banks to offer lower interest rates. The local banks
were self-governed by members of the cooperation. They adhered to
the principle of non-remunerated management and elected the board
and the commissioners from among themselves. Only the cashier
received a small salary. This has of course changed by now, but
even as recently as in late '1950s the local bank office was
nothing more than the cashier's living room, he generally performed
his administrative duties besides another regular job. Much later,
in the '1960s the most local banks moved into new and modern
offices that reflected their new-found professionalism. The
position cashier was replaced by a local bank director. Since 1998
the local bank director is an appointed professional banker and he
presides over a board of directors which is chosen from among the
members.
Local presence and local autonomy were always important but this
hasn't stopped a wave of concentration of the local banks. The
major rationale behind this was the need to attain economies of
scale in the fields of payments, transaction, processing, staff and
of course capital. Increasing customer demand for standardized and
widely available products also played a significant part in this
development. Currently the motto is:
As large as is necessary, as small as
possible.
this of course applies to the size of the local bank offices.
Traditionally the bank served mostly farmers and small businesses.
Since the introduction of consumer salary accounts in the 1960s the
number of retail clients grew exponentially. This has led to
Rabobank being a prominent player in the field of savings accounts,
checking accounts and mortgages in the Netherlands.
Rabobank has been awarded the Triple A (AAA) credit status by the
major ratings agencies, making it the only privately owned bank in
the world with such a status.
Rabobank Group
The Rabobank Group consists of a network of local banks, Rabobank
Nederland and several daughter organisations. Formally the local
Rabobanks are the mother organisation of Rabobank Nederland, their
central organisation. The local banks are facilitated by Rabobank
Nederland to serve their customers and not the other way around as
is often the case with traditional banking organisations. Employees
of the group do not routinely speak of a headquarters but prefer to
speak of Rabobank Nederland, which is their daughter
organisation.
The central organisation does occasionally overrule the autonomy of
the local bank organisations. In accordance with Dutch regulations
in the field of credit and financial services Rabobank Nederland
oversees that the local banks maintain a required level of prudency
and professionalism while selling financial products. This has
grown to be especially important in view of recent developments and
international standards such as
Sarbanes-Oxley Act,
Basel II and
IFRS. This leads
to an interesting and rather unusual phenomenon within
international business: the mother companies and the much larger
daughter are essentially forced to coexist together in order to
function properly. This has led to a very ambivalent relationship
between the two over the years.
At the time of the merger there were five management instruments
within Rabobank Nederland:
- Algemene Vergadering - general assembly. The boards of
all local banks within the cooperation were represented here.
- De Centrale Kringvergadering - advisoryboard manned by
representatives of clusters of local banks.
- De Hoofddirectie - general management. Theoretically
they were an autonomous management organ, but in practice, they had
to pay 'serious consideration' to what the 4th organ; Raad van
Beheer; thought about the course of action for the
organisation.
- Raad van Beheer - management council. An independent
advisory council whose chairman also attended the meetings of
De Hoofddirectie.
- Raad van Toezicht - supervisory board.
In 2002 this rather cumbersome structure was simplified. The
Raad van Beheer was disbanded. De
Hoofddirectie
received an integral authority over the banking business. It was
also renamed to
Raad van Bestuur or
board of directors. They have an added
task compared to a traditional board i.e. they are expected to look
out for the specific interests of the members (local banks and
their certificate holders). The supervisory board was renamed to
county commission and now held an
independent supervisory role. The chairman of this board also
presides over the
Centrale Kringvergadering. The latter is
the most distinguishing organ as compared to other financial
institutions in the Netherlands and abroad.
Market Position
Rabobank is traditionally a farmers' bank and it still holds an
85%-90% market share in the agrarian sector in the Netherlands.
Throughout the years, the company has also started targeting small
and medium sized companies. By the mid 1970s the market share in
this sector reached some 30% and currently amounts to approximately
40%. In 1987, an important milestone was reached; the total
outstanding loans in sectors other than agriculture exceeded those
in the agricultural sector for the first time. By 2005 the
agricultural credits amounted to some 8% of total outstanding
credit.
Rabobank also holds some 40% of the total outstanding sums on Dutch
savings accounts and they account for approximately 20% of all
private consumer mortgages in the Netherlands.
The Rabobank Group currently consists of the following
divisions:
RaboPlus
RaboPlus is the brand name for online only
services offered by Rabobank.
RaboPlus operates in the Republic of
Ireland
(under the name of RaboDirect), Belgium
, Australia, and New Zealand
. RaboPlus offers savings accounts,
term deposits and managed funds.
RaboDirect Ireland
RaboDirect.ie is an online bank. RaboDirect is part of the Rabobank
Group.
In 2009, RaboDirect ran the
Life's more interesting when
you tell the truth marketing campaign that included TV
commercials which featured staff confessing truths about
themselves, and a
microsite where
customers could "confess" their own truths.With the ratings
agencies now highlighting its rising bad debts in the country, the
group, it is said, is determined to extricate itself as quickly as
possible. Almost one-third of its €6.2 billion Irish loan book was
either overdue or impaired at the end of 2008.
New Zealand
RaboPlus is the only bank in New Zealand whose parent company is
rated AAA by
Standard &
Poor's. The money invested is used in the New Zealand rural
sector.
The bank advertises to customers as "Your significant other bank".
Since it opened it has gathered over $500 million in deposits (as
of August 2006).
Australia
On 23 May 2007, Rabobank also opened a RaboPlus Internet bank in
Australia.
References
- RaboBank Group Profile
- RaboBank Triple A Rating
- Business & Leadership News Article
-
http://www.independent.ie/opinion/analysis/rabobank-cant-get-out-of-irish-adventure-fast-enough-1831716.html
-
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=THE+INSIDER-qqqs=themarket-qqqs=computersinbusiness-qqqid=43327-qqqx=1.asp
External links
-based financial services corporation, formerly
VIB corp.
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