Rabobank to cut 9,000 more jobs

Rabobank Group will eliminate 9,000 more jobs over the next three years, the Dutch bank said as it announced a strategic overhaul that includes a revamp of its century-old cooperative structure.

Bloomberg News reports that the Netherlands’ biggest mortgage lender also plans to reduce the amount of home and business loans on its books by $165 billion, 22% of its total balance sheet, in preparation for tougher capital rules in Europe, it said in a statement Wednesday. Closely held Rabobank recorded assets of $742.2 billion at the end of June.

'We need to make fundamental changes', Chairman Wiebe Draijer said in the statement. 'Change that needs to be made in our businesses in Netherlands and around the world'.

Here's the bank's complete statement:

Rabobank today announced its strategic direction. As a customer-focused cooperative bank Rabobank wants to be closer than ever to customers, members and society. Through its cooperative mission Rabobank aims to make a substantial contribution to welfare and prosperity in the Netherlands and as a Food&Agri bank to feeding the world sustainably. The Central Delegates Assembly decided this today. The General Assembly also voted today in support of the changes to the governance of Rabobank. From 1 January 2016 Rabobank will operate as one cooperative, with one banking licence and one set of financial statements. The member councils of all 106 local Rabobanks already voted in support of the new structure on 2 December. The combination of changed governance and the new strategic direction are preparing Rabobank to act on three key priorities in the coming years: excellent customer service, a flexible and even stronger balance sheet, and an improvement in the financial results.

The strategic direction equips Rabobank to be continually responsive to societal developments which present both opportunities and challenges: changing consumer behaviour, technological developments, financial innovation, growing competition, a complex economic context and tighter capital requirements. Given these changes, Rabobank is adapting its structure and choosing a new strategy that underlines its strong commitment to the cooperative customer service model.

To achieve the intended performance improvement all business units need to improve efficiency. In the period 2016-2018 Rabobank will reduce the workforce by 9,000. The job losses will be mainly in the back office and support functions and will come on top of the reduction of 3,000 jobs already planned in ongoing programmes. In line with the ambition to operate closer to the customer, the jobs of staff who directly serve customers will be spared as far as possible. This further reduction of 9,000 jobs will be phased. Rabobank is committed to conducting these reductions with care and in close consultation with the trade unions and employee representation bodies. The workforce reduction will be achieved partly through natural wastage and partly by a decrease in the use of external contractors. The key focus will be to help staff from work to work. Rabobank will make every possible effort to avoid compulsory redundancies.

Improved customer focus, even more nearby

Rabobank wants to reinforce its position as the bank which is closest – most nearby – to its customers. To be a meaningful cooperative which is successful on the long term for members, customers, employees and the society it operates in. Excellent customer service through the bank’s financial products offering, knowledge and network are crucial to achieving this aim.

  • Rabobank strives to be leading in the Netherlands and internationally leading in Food & Agri. The new structure will ensure that the bank remains firmly anchored in local communities.
  • Rabobank envisions significantly higher customer satisfaction levels, to be measured by indicators including NPS scores (Net Promotor Scores)
  • Rabobank will invest in new forms of contact points in the coming years in addition to the current bank branches. For instance mobile advice centres, pop-up stores and bank advice at home. Next year a few hundred new contact points will be introduced.
  • Rabobank will introduce specific new products and service concepts to support customer life courses, and interest-rate averaging on mortgages (as of 1 July 2016).
  • Rabobank will extend its service provision to businesses by acting as a financial linking pin for entrepreneurs. This means servicing a broader range of business funding needs. For instance this year Rabobank started working with the Fundipal crowdfunding platform. Rabobank will also extend its intermediary role to institutional investors interested in investing in its Dutch and Food & Agri customers

Flexible and even stronger balance sheet: Rabobank will strengthen its capital position by a more flexible utilisation of its balance sheet:

  • In anticipation of higher capital requirements (Basel IV, TLAC and MREL) Rabobank envisages a potential balance sheet reduction of EUR 150 billion by 2020
  • Rabobank will serve more customers through flexible utilisation of the balance sheet. Selling on mortgage and business loans to investors means that more loans can be granted. This will not impact on customer service provision, which will still be provided by through Rabobank.
  • Rabobank aims for a CET1 ratio between 14% - 17% and a total capital ratio between 25-30% by 2020.

Improvement in results: Rabobank will remain a rock-solid bank by making a substantial performance improvement which will ultimately lead to a return on invested capital of 8%, under the higher capital requirements.

  • The improvement programme aims to achieve a gross result improvement of EUR 2.1 billion by 2020. This will be achieved partly by cost savings and partly by increasing income. This will lead to a cost/income ratio of around 50% by 2020.
  • Rabobank is making a strategic choice for growth in Food&Agri worldwide and for focus on growth themes in the Netherlands: food and agriculture, mobility, vitality, raw materials, water and residential.
  • The improvement programme will lead amongst other things to a workforce reduction of 9,000 between 2016-2018. Jobs will be lost mainly in the back office and support functions of the bank. These cuts come on top of the reduction of 3,000 jobs already planned under ongoing programmes.

Governance change: The new governance will make Rabobank a better bank and a better cooperative.

  • Local banks will maintain and reinforce their local market operations and members will gain more influence on the Rabobank as a whole through the formation of a General Member Council
  • Formation of one cooperative, with one banking licence and set of financial statements

Executive Board Chairman Wiebe Draijer:

‘We want to be literally and metaphorically even closer to and nearby our customers. Physically (through customer meetings and networks), virtually (through apps and websites) and mentally (through involvement). Rabobank will continue to be distinctive through its professionalism, entrepreneurship and innovativeness. We provide our customers with knowledge, networks and financial solutions. We need to make fundamental changes if we are to excel in customer focus. Change that need to be made in our businesses in the Netherlands and around the world.’

‘A key pillar of the strategy is innovativeness, which is increasingly a precondition to improve current processes and respond to customer needs. Customers want to do more of their own banking through digital channels. Innovation is also essential to meet the strategic demands of both customers and Rabobank itself. As a cooperative bank we want to do all we can to help our customers and their communities seize the opportunities that innovation offers. Which is why we are strengthening our innovativeness, stimulating experiments and continuing our close involvement with national and local innovation initiatives.’

‘We must continue to respond to a number of trends decisively and effectively which offer both opportunities and challenges. These include changing consumer behaviour, technological developments, financial innovation, increased competition, a complex economic context and tighter capital requirements. All these developments reinforce our view that a bank based on cooperative principles has a significant and long term role to play in society for the long term.’

‘Our ambition is to be leading in the Netherlands and to be an international leader in Food & Agri. Our mission is to make a substantial contribution to welfare and prosperity in the Netherlands and to feeding the world sustainably. Our “Banking for the Netherlands” and “Banking for Food” programmes help us fulfil this mission. We are committed to being a meaningful cooperative that is successful on the long term for its members, customers, employees and society.’

‘Through Banking for the Netherlands we contribute to the earnings capacity of the Netherlands. By 2020 we will use over 80% of our lending for sectors in which we expect to see growth: agriculture and food, mobility, vitality, raw materials, water and residential. This currently stands at 65%. Rabobank will also intensify its actions to support optimal life courses for our customers and to strengthen people’s living environment. By 2020 Rabobank will have issued 25 social impact bonds to address social issues. By 2020 the number of social initiatives that Rabobank supports through local banks will have doubled to 1,000.’

‘Through Banking for Food we will contribute to feeding the world sustainably. We provide players in the global food chains with access to financing, knowledge and our widespread networks, supported by Rabobank Foundation and Rabo Development.’ Our loan portfolio in Food&Agri will increase from EUR 100 billion in 2014 to EUR 115 billion in 2020. In 2020 we will offer 3 million smallholder farmers access to financing through Rabobank Foundation. This figure currently stands at 2 million.’

‘Our ambition is to strengthen our capital position by more flexible utilisation of the balance sheet. For instance by selling on loans to investors, and further intensifying our focus on core activities. Obviously, this doesn’t mean that we will grant fewer mortgages and business loans. On the contrary, our customer focus and improved local market operations will in fact enable us to help customers even better by using our knowledge and networks.’

‘Rabobank aims to remain a rock-solid bank by achieving an improvement in gross result of EUR 2.1 billion by 2020. We will achieve this partly by increasing income and partly through cost savings. As a result our cost/income ratio will fall towards the 50%-level, similar to other market parties. At this time our cost/income ratio is still over 60%. This performance improvement will enable us to achieve a return on invested capital of 8% in 2020. This is the level that is needed to ensure our long term future as the rock- solid bank we have always been.’

‘We have to realise the transformation we are presenting today in order to attain excellent customer service and ensure a healthy future for the bank. We are asking a great deal from our staff in order to achieve our goals and we are fully aware that this is not easy. On the one hand the collective task of making Rabobank stronger for the future offers challenging opportunities for individual employees; on the other hand many employees face uncertainties regarding their personal future. We will facilitate staff to invest in employability to help them find other work within the bank or outside.’

‘Rabobank will change its internal governance effective 1 January 2016. A number of measures will better equip the bank to meet the requirements of regulators and financial market players. The new governance gives local Rabobanks greater scope to focus on customers in their own local market. Members will gain greater influence. All local Rabobanks will be represented in the General Members Council, the highest decision-making body within the Rabobank organisation. The 106 local Rabobanks and Rabobank Nederland will merge to form one cooperative Rabobank, which will then operate with one banking licence and one set of financial statements.’


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