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A CO-OP BANK’S RESILIENCE THROUGH CRISES
Presentation byHenk Adams
3 October 2012
1 About Rabobank, 3 Oct. 2012
INTRODUCTION TO RABOBANK
About Rabobank, 3 Oct. 20122
Working for people, by people
3 About Rabobank, 3 Oct. 2012
Our logo signifies
For:• Our staff• Our customers• Our stakeholders
About Rabobank, 3 Oct. 2012
‘People are core for us’
4
Our Roots
UnitedKingdom
France
Spain
Republic ofIreland
GermanyBelgium
Luxemburg
Italy
Switzerland
Portugal
Denmark
Norway
Sweden
Austria
Poland
Czech Rep.
Hungary
Ukraine
Slovakia
RomaniaCroatia
Mont..
Bulgaria
Greece
Lithuania
Belarus
Serbia
Latvia
Turkey
Kingdom of the Netherlands
• Length: N-S +/- 300 KM• Width: E-W +/- 200 KM• Population: 17 million
The Netherlands
About Rabobank, 3 Oct. 20125
versus Singapore
• E-W 42 KM• S-N 22 KM
The NetherlandsA Land Of Water: 1/3 Below Sea Level
About Rabobank, 3 Oct. 20126
The Netherlands:A Land of High Quality Agriculture
• Agriculture accounts for 10% of Dutch national product
• World’s biggest producer of cut flowers
• Europe’s vegetable garden
• 3rd biggest agricultural exporter in the world!
7 About Rabobank, 3 Oct. 2012
RABOBANK IS A STRONG,
SUCCESSFUL BANK…..
About Rabobank, 3 Oct. 20128
Rabobank is the 2nd largest association in the Netherlands with nearly 1.9 million members
x 1,000 members
About Rabobank, 3 Oct. 20129
…with an extensive network and high market shares in the Netherlands, …
-139 local banks with 853 branches
-Strong and stable market shares:
• Agriculture 84%
• Savings 39%
• Mortgages 28%
• SME 43%
About Rabobank, 3 Oct. 20121010
…a global spread of activities, …
• 47 countries
• 766 foreign branches
of which appr. 600 retail branches
About Rabobank, 3 Oct. 201211
…after more than 115 years of positive results (and not paying dividends)…
About Rabobank, 3 Oct. 201212
Rabobank has a strong capital position, …
Capital ratios as at June 2012: Capital EUR 45.2 bln
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
J une 09 Dec. 09 J une 10 Dec. 10 J une 11 J un-12
Tier 1-ratio
Core Tier 1-ratio
About Rabobank, 3 Oct. 201213
• Tier-1 ratio:16.9%
• Core Tier-1 ratio: 12.7%
Retained earnings
& minority interests
67%
Member Certificates
15%
Hybrid capital18%
For over 10 years, Rabobank ranks among the Top-10 Safest Banks in the world
About Rabobank, 3 Oct. 201214
1. KfW Germany
2. Bank Nederlandse Gemeenten (BNG) Netherlands
3. Zürcher Kantonalbank Switzerland
4. Landwirtschaftliche Rentenbank Germany
5.Landeskreditbank Baden-Württemberg - Förderbank
Germany
6. Caisse des Depots et Consignations (CDC) France
7. Nederlandse Waterschapsbank Netherlands
8. NRW.BANK Germany
9. Banque et Caisse d’Epargne de l’Etat Luxembourg
10. Rabobank Group Netherlands
11. TD Bank Group Canada
12. Bank of Nova Scotia Canada
13. DBS Bank Singapore
14. Oversea-Chinese Banking Corporation (OCBC) Singapore
15. United Overseas Bank Singapore
“World’s 50 Safest Banks’ list”,
Aug 2012
THE BASIS OF THIS SUCCESS IS
THE COOPERATIVE NATURE
About Rabobank, 3 Oct. 201215
16
To understand Rabobank 2012, it is good to go back to where it all started1895 - 1898
First Cooperative Banks founded in the Netherlandsinspired by the initiative of Mr. Raiffeisen in Germany
Dignitaries and wealthy farmers:• provided savings money and • helped managing the cooperative. Some became voluntary members.
PRINCIPLES:• Obligatory membership for borrowers• Members fully liable for the entire debt of the cooperative• No shareholding• No dividends• Profits to be retained to build equity capital
Friedrich Wilhelm Raiffeisen,founder of the very firstagricultural co-operativebank in Germany.
16 About Rabobank, 3 Oct. 2012
1898
Establishment of two separate cooperative banking groups:
Raiffeisenbank, predominantly in the North and
Boerenleenbank (Farmers’ Credit Bank), in the South
• Local banks had to pay up share capital in their Central Bank pro rata with their size
• But still no shareholding by members in their local cooperative bank
• No dividends to individual members
• Profits retained to build equity
17About Rabobank, 3 Oct. 2012
1898 – 1972Successful growth and mitigation in liability
Successful growth of:
• Number and size of local banks and the two central organizations
• Capital growth through retained earnings
About Rabobank, 3 Oct. 201218
1965-1972 Increased competition between the two groups on local and central level
1970-1972
• Merger process of the two Central Banks
• Followed by mergers of (competing) local banks
• Field of operation limited to designated local area
• Limitation of member liability
About Rabobank, 3 Oct. 201219
1972Merger into Rabobank
• All RAiffeisen member banks and BOerenleenbank member banks became member of the newly formed RABObank
• 1,200 local cooperative member banks
• 3,000 offices
About Rabobank, 3 Oct. 201220
And with a unique Cross-Guarantee
• Autonomous local banks are liable for each other’s obligations (1st level)
• Ensures intra-Group credit support (2nd level)
• Rabobank Group is treated as a consolidated entity for regulatory, accounting and credit rating purposes.
De LageLanden
SchretlenRabobankNederland
Rabo Mortgage
BanksLocal Rabobanks
About Rabobank, 3 Oct. 201221
2012:Members and autonomous local bank remain the basis of Rabobank
10 million clients1.9 million members
139 local cooperative Rabobanks 853 domestic branches
Ownership andcross-guarantee
division: Rabobank International Rabobank Nederland
Specialised subsidiaries asset management, real estate, leasing, mortgages
About Rabobank, 3 Oct. 201222
About Rabobank, 3 Oct. 2012
Regional Delegates Assembly
LocalMember
Bank
LocalMember
Bank
LocalMember
Bank
LocalMember
Bank
LocalMember
Bank
LocalMember
Bank
Central Delegates Assembly (“Parliament”)
1.9 mln members
139 member banks
12 region assembliesmeet every 3 months
2 delegates per bank:1 member, 1 manager
6 delegates:4 members, 2 managers
Cooperative governance in 2012
Central Delegates Assembly
72 delegates
48 members + 24 managers meet every 3 months
Regional Delegates Assembly
Regional Delegates Assembly
General Assembly
23
Supervisory BoardRabobank Nederland (elected)
Executive Board Rabobank Nederland (appointed)
History of membership policy
1896-1972 - Borrowers have to be member
- Unlimited member liability
1972-1982 - Limited member liability
1982 - Member liability waved
1982 - 2000 - No active recruitment of members
1995 - 2000 - Evaluation and revaluation of Cooperative values
(The Cooperative Debate)
From 2000 - Recruitment of ‘more members’
From 2001 - Appreciation of more involved members
About Rabobank, 3 Oct. 201224
In short: members make the difference
• Putting the cooperative philosophy into practice
• Real involvement
• Members are more loyal and better customers
About Rabobank, 3 Oct. 2012
“Imitating the competition is the most widespread disease in management”
“Being different offers greater future prospects than being better”
Michael Porter
25
PHILOSOPHY:
Re-defined strategy:Balance between being social and being commercial
About Rabobank, 3 Oct. 201226
Core Objectives
Core CSR Values
Defined by:
About Rabobank, 3 Oct. 201227
meaning
Size necessary to fulfill mission, while safeguarding the strength through controlled growth
“As large as is necessary, as small as possible”
STRATEGY FOR GROWTH:
Strategic Core Objectives
About Rabobank, 3 Oct. 201228
Achieving all-finance market leadership in the Netherlands
Extending our position as a leading international food & agri bank
Most sustainable, socially involved bank
Corporate Social Responsibility (CSR) Core Objectives
About Rabobank, 3 Oct. 201229
Safe and sustainable food supply
Promoting economic participation and access to financial services
Supporting community involvement
Clean production methods and sustainable energy
Cooperative Banking in 2012
About Rabobank, 3 Oct. 201230
• Focus on customer interests: Good products-appropriate advice - service excellence
• Connect with society: Cooperative dividend - Community sponsorship
• Connect with the future: Focus on young people – Innovations (Rabo Project Fund) with emphasis on long term sustainability
• Rabobank Foundation: Supports disadvantaged people, domestically and abroad
• Rabo Development: Non-controling investments in rural banks to support banking infrastructure in 7 developing countries.
To summarize:
• A cohesive structure with a bottom-up decision making proces
• a conservative strategy
• a modest and selective growth
• a modest target for return on equity
• strong focus on long-term performance and long term relationships
• strong capitalisation and
• the highest possible level of creditworthiness
About Rabobank, 3 Oct. 201231
The cooperative nature of Rabobank did essentially not change in more than 115 years and is the basis for:
About Rabobank, 3 Oct. 201232
This cooperative nature,
combined with healthy results
and a strong balance sheet,
allows Rabobank to fulfill its
mission as a social enterprise
also for the future generation.
Thank you !