Rabobank Group

8-3-2010 | Other news

Piet Moerland took over the helm as Chairman of the Executive Board of Rabobank Nederland in mid-2009. Rabobank is by far the largest financier of the agricultural sector in the Netherlands. Moerland grew up in Sint Annaland, a small village on the island of Tholen in the Zeeland Province of the Netherlands. The Chairman dug potatoes and picked tomatoes in his youth. He then embarked on a lengthy career in the fields of science and banking. He speaks about the financial crisis, the dangers of the Greek situation, the loyalty to agriculture and corporate social responsibility.

First of all, do you believe the economic crisis is now behind us?
‘While the financial crisis as we knew it has now passed, there continues to be a mixed picture. The economy and world trade are once again growing and that is crucial for an open economy such as the Netherlands. In contrast, unemployment in the Netherlands is rising by 10,000 people every month and we are afraid that this trend may continue for some time yet. This is unfortunately putting the brakes on a strong recovery.’

Do you agree with some economists that it would be better to have two eurozones, one for Southern European countries and one for Northern European countries? Relatively uncompetitive countries are currently unable to use exchange rate policy to halt a growing influx of imports.
‘Dividing up the eurozone is not an option. China is in the process of becoming a superpower and the US already holds this status. Europe simply cannot permit itself to become fragmented. The European Union must instead impose much stricter requirements on all the existing euro countries, in other words it needs to beef up fiscal discipline. Stringent attention must furthermore be paid to the prospective euro countries, such as Latvia. The Netherlands has a number of top international companies in the food & agri sector and a reliable euro is essential for exports.’

At the beginning of 2009, the co-operative Rabobank had 23.5 billion in outstanding loans to the primary sector and another 68 billion in outstanding loans to the agribusiness. Why should Rabobank maintain a strong focus on food & agri in the future?
‘First of all, agribusiness represents a stable factor because people will continue to eat. Secondly, there will be nine billion people on our planet by the year 2050 and this means the agribusiness represents a growth sector. And last but not least, we have worked with and in the sector for a hundred years, so it has become something that Rabobank is good at. I am absolutely certain that the sector will get back on its feet. The companies in the Netherlands are the best in the world in a number of areas such as animal welfare and the environment. Rabobank attaches tremendous importance to these aspects. Not long ago a sheep farmer from Australia asked us to provide financing. He wanted to ship live wild sheep to the Middle East. This meant the animals would have been en route for twenty days and that an average of 1.5 percent of them would have died on the way. Rabobank consequently turned down the application.’

Does Rabobank’s focus on corporate social responsibility and sustainability form an obstacle for entrepreneurs who are faced with international competition?
‘In contrast to what is often suggested by some parties, the sense of responsibility is so strong in practice in the Netherlands that Rabobank does not have to provide considerable direction in this regard. But let me make this absolutely clear: high standards are vital for the Dutch sector because they give us a lead. The Netherlands has limited land space, so the sector consequently has to excel in other areas and sustainability is not a theme that will pass with time. Organisations that do not focus seriously on corporate social responsibility will lose their license to operate within five to ten years.’

Do you think a bank tax is a good idea and is there a danger that the banks’ customers will actually pay the tax via interest rates?
‘Apart from the issue of who will actually pay the bank tax, it is difficult for us as a bank that has survived the crisis without government support to swallow the idea of having to pay a bank tax. We do, however, believe it would be a good idea to have banks that have a higher risk profile contribute substantially more to the deposit guarantee scheme. We currently see banks that cannot raise any money on the capital markets raising funds by offering substantially higher savings interest rates. The risk is then borne by the deposit guarantee scheme, which actually means all the Dutch banks collectively, and that is unfair. Rabobank would also like to see a cut-off date for the provision of Dutch government support to banks. The crisis has made it perfectly clear that not all banks are cut from the same cloth.’

This article is an edited version of an interview with Piet Moerland that was published in the Dutch newspaper Agrarisch Dagblad.