UTRECHT, Netherlands, April 7, 2005 (PRIMEZONE) -- The Rabobank Group is going to strengthen its presence in Brazil substantially. In addition to its office in Sao Paulo that serves large businesses in the food and agri industry, Rabobank International, the group's international corporate and investment bank, is to establish a separate division that will provide financing (in dollars) to the top of the country's farming community. The bank will open 25 offices for this purpose in the key agricultural states of Brazil. The portfolio of agricultural loans in Brazil is expected to rise as a result to nearly two billion dollars in the years ahead. More than 150 million in equity will be allocated for this purpose.The top segment of the Brazilian farming community consists of large, almost industrial companies that focus on activities including growing cotton, sugarcane, soybeans, maize and coffee. The farmers that will receive financing in dollars produce their crops for the world market and receive their income in dollars. Rabobank International will consequently not run any currency risk.
Decision was reached following a successful pilot The decision of the Executive Board of the Rabobank Group to expand its operations to establish an agricultural lending operation in Brazil ensues from a successful pilot with a number of offices in the states of Bahia, Goias and Minas Gerais. Rabobank International previously began agricultural lending operations in Australia and New Zealand in the mid-1990s and in the United States in 2002.
"The pilot in Brazil proved be a tremendous success in large part thanks to the strong reputation we have developed as a food & agri bank in Brazil over the years. It is now time for us to take the next step," says Rik van Slingelandt, member of the Executive Board responsible for the group's international activities and chairman of the Managing Board of Rabobank International.
Crop financing
Van Slingelandt says that the decision was made for Rabobank to develop an office network for farm financing in Brazil on its own because there are no parties in the market that conduct similar operations and that are possible candidates for acquisition. "During the initial years the focus will be on offering financing products, with a special emphasis on crop financing whereby the harvest will serve as collateral. We also plan to add transaction services, such as Internet banking, in the future."
"Brazil is rapidly gaining a position as one of the world's most important food & agri countries. The country has well-capitalised farming companies that cover a total land area as large as the Netherlands and have net worth of 50 million dollars or more. Financing companies of this scale is extremely attractive to us," says Van Slingelandt.
Worldwide leader in food & agri The Rabobank Group is committed to attaining a leading position as an international food & agri bank, whenever possible in combination with retail activities in non-urban areas of high-potential countries. This global 'niche strategy' is aimed at establishing a presence in the world's most important food & agri countries and on acquiring a financial link function within the international food chain. Expanding the international activities in the field of farm financing into Brazil is a logical extension of this strategy.