As well as being a member of the board of the DACT (Dutch Association of Corporate Treasurers), Bart-Jan Roelofsz is mainly known as group treasurer and insurance manager at Endemol Shine. This entertainment group is the result of a merger between Endemol and Shine. The merger means that the Shine companies have now adopted Endemol’s holistic approach to risk management. But what does that mean in practice? We asked Bart-Jan to explain.

Endemol took over the Shine Group at the end of 2014. What exactly does the joint venture do?

“We now have our own offices in nearly 40 countries but there’s quite a market beyond those countries as well. There are three aspects to our operational activities: creating, producing and distributing formats. The production activities involve scripted and non-scripted productions. The scripted productions, such as Humans, Ripper Street and Black Mirror, have production budgets that can run to over EUR 5 million per episode. Some examples of non-scripted shows are reality TV series such as Big Brother and game shows such as Deal or No Deal. Once a production has been completed, we distribute these ‘finished programs’ around the globe. In addition to these distribution activities we also license formats or concepts to third parties. These are then allowed to produce a show in a country where we don’t have an office ourselves.”

To what extent has the operational side of the ‘old’ Endemol changed as a result?

“The scripted and non-scripted activities haven’t really changed since the merger with the Shine Group; they have primarily just multiplied considerably. What’s important is that the programs that come from Shine complement the programs that Endemol already had. That’s great, because our financing model is largely based on – indirect – advertising revenues. In the food world, there were brands that didn’t particularly advertise around Endemol’s programs, but the big food brands are very interested in advertising around a program such as Master Chef, one of Shine’s best known programs. So the two libraries of formats that we had didn’t result in any mutual cannibalism. Moreover, our distribution division was already big, but can now distribute Shine’s entire catalog as well – which triggered a huge growth spurt in 2015 compared with previous years.”

How are the two organizations integrated financially?

“The Shine Group’s revenues were half the amount of Endemol’s, so it was a relatively big takeover. There was a geographical overlap in seven countries, so we had to physically integrate the various local entities in those countries. It was only in the four Scandinavian countries that there was virtually no overlap. The accounting guidelines also had to be adapted. Shine reported using US GAAP, not IFRS, and it also had a split financial year. To minimize the liquidity risk within the group, it was also important to concentrate as much liquidity as possible. Endemol already did a lot of cash upstreaming, but that wasn’t the case in the Shine organization. Endemol had been using a manual, international cash concentration structure for many years. When operating companies make funding requests, our responsiveness as an in-house bank is so good that they’re confident in placing temporarily excess cash with group treasury. Because the Shine Group had a historical mistrust of the practice, it was difficult to introduce cash upstreaming, but the great thing is that we gained that trust. So we are able to increasingly align Shine’s liquidity targets with those of the Endemol organization.”

What’s the situation regarding the Endemol Shine Group’s currency exposure?

“Each operating company works more or less in its own local currency, so local FX exposure is limited. By grouping their data into the four main currencies in which we operate, we have a better insight into the FX exposure of the entire Endemol Shine Group. That exposure stems chiefly from our external financing which, in terms of currency mix, is not in line with our organization’s cumulative currency mix; our financing is relatively US dollar-heavy – outweighing the share that we earn in US dollar-denominated countries. There are three reasons why the long-term FX risk is important to us. First of all, because of our refinancing exposure in 2020 and 2021. Then there’s the FX exposure on our interest charges and, finally, the exposure on our leverage ratio, as per the definition in our financing documentation. We are trying to prevent currency fluctuations influencing the leverage ratio. As a non-listed organization, partly private equity owned, we have agreed with our shareholders that protecting this leverage ratio is the primary objective.”

Endemol has implemented a holistic approach to risk management. What exactly does that entail?

“Risk management demands an integral approach, because it’s not just about financial risks but also operational and reputational risks, for example. Last summer we set up a multidisciplinary risk committee with people who have certain responsibilities within the existing organization – such as treasury/insurance, compliance/legal, IT, tax, controlling and HR – and who pool their resources on the committee. I now coordinate this committee as risk officer.

As well as identifying, analyzing and mitigating risks in a cross-disciplinary manner, the risks are also reported. Reporting to our executive board doesn’t pass through one of its members, but directly to the full board. In my opinion, within any organization, treasury has the mindset and position needed to coordinate a more holistic risk approach that embraces more than just the financial risks, making it the best choice for that task.

Our risk committee looks at the risks we encounter from the perspective of various disciplines. We compare those risks with our risk bearing capacity (RBC), keeping in mind that components of that RBC have been allocated to previously identified risks. To give you a practical example of such a ‘broader’ risk, we are increasingly using drones, carrying airborne cameras, for our productions. In the insurance world, these are usually still classed as ‘aircraft’. But we aren’t using them to transport people or freight. What’s more, insurers see the use of drones for photography and video recording as high risk in light of the violation of privacy rights – especially among American insurers. We deal with this risk on a daily basis, around the world. Finding suitable coverage calls for flexibility in an insurer – and that takes time... What do you do as an organization while you don’t have that coverage? Have compliance draw up guidelines stating that drones may not be used? As ridiculous as that may sound, you have to estimate the risk involved. The scenario, for instance, of a drone causing a multiple vehicle accident is a possibility, but how great is that probability? Can we mitigate this? Should we organize training specifically for personnel, can the controls be hacked, how do you express that in monetary terms, and how does it relate to our RBC?

All of these issues involved a variety of departments – HR, IT, controls. When determining our RBC, we take into account aspects such as our liquidity, non-committal or even firm profit expectations, as well as financial ratios in our financing documentation, which is treasury’s domain. We even consider whether we have already assigned a portion of the RBC to other risks.”

Is the methodology adopted at insurance companies, which involves looking at probability and impact, also used in treasury? Are risks considered in the same way?

“Absolutely. There’s no difference between mapping treasury or operational risks (which may or may not be insurable), or determining their potential impact using scenario and sensitivity analyses. What you then do with that information may differ. For instance: an organization can accept the FX risk – or hedge it – but it may also try to pass it on to its customers. The liability risk of a potential infringement of third-party intellectual property rights is our core business and we can only accept it or insure it, but not pass it on to third parties. I believe that the process of accepting risks, deliberately allocating the RBC to those risks, and monitoring and reporting on them could be done much better by lots of companies. And that includes us, by the way.”

Looking at the company that was absorbed in 2000 by Telefónica, is the strategy nowadays very different from what it was then?

“Telefónica, which bought Endemol after a bidding war with KPN and World Online, was actually light years ahead of the game. Telefónica wanted to set itself apart from the other telecom companies, not just in terms of price, quality and network, but also in terms of content they wanted to offer their subscribers something extra: access to Endemol content. And the vision they had is now the reality: being able to view content on mobile devices. Both as a replacement for television – i.e. generally available content – but also specific, subscriber-only content. The only thing they were wrong about back then was the speed of the rollout of the 3G and then the 4G network.

In 2007, Endemol was sold to a consortium of three parties: Goldman Sachs, Mediaset and Cyrte Investments. What made this special was the fact that it was one of the last leveraged finance deals before the financial and economic crisis erupted. One of the mandated lead arrangers (MLAs) at the time was Lehman Brothers. We experienced the complications of the bankruptcy of an MLA first hand – absolutely fascinating!

Between 2008 and 2014 the Endemol organization practically had to reinvent itself. Our revenues plummeted as a direct consequence of the sharp decline in the advertising market. But by producing programs far more efficiently, our profit margins actually grew during that period. In 2015, with the new shareholders and capital structure, we focused on integrating Shine into the Endemol organization, and we are now ready for the future. We’re able to roll out new ideas really fast; we are ‘lean and mean’. With our shareholders’ support, we can continue investing at an accelerated pace in the further growth of our organization.”

Bart-Jan joined Endemol as cash manager in 2002. Prior to that, he worked as a cash & treasury management consultant at ING. As from 2007, he became responsible for group insurances as well as group treasury. Since mid-2015, as group risk officer, he is also responsible for the risk committee.

Would you like to know more about cash flow forecasting and/or risk management? Contact us today.

BNG Bank was founded more than 100 years ago – firstly under the name Gemeentelijke Credietbank – as a purchasing association with the main task of bundling the financing requirements of Dutch local authorities so that purchasing benefits could be obtained on capital markets. In 1922, the name was changed to Bank voor Nederlandsche Gemeenten and even today the main aim is, in essence, the same. What has changed is the role of local authorities, says John Reichardt, a member of the Board of BNG Bank. He explains: “Over the past few years they have diversified. Many of their responsibilities are now independent or even privatized. Hospitals, electricity boards and housing companies, for example, were in the hands of local authorities but now operate independently. They are, however, still our clients because they provide public services.”

Different to Other Banks

To satisfy the financing requirements of its clients, BNG Bank collects money on the international capital markets to realize ‘bundled’ purchasing benefits. “And we pass these benefits on to our customers,” says Reichardt. “While our customers have become more diverse over time, our product portfolio has widened. Some thirty years ago we became a bank, with a comprehensive banking license, and this meant we could take up short-term loans, make investments, and handle our customers’ payments. We try to be a full-service bank, but then only for services our customers need.”

The state holds half of the shares and the remainder belongs to local authorities and provinces/counties. “Because of this we always have the dilemma: should we go for more profit and more dividend, or should our strong purchasing position be reflected immediately in our prices by means of a moderate pricing strategy? Our goal is to be big in our market – we think we should keep 35 to 50 percent of the total outstanding debt on our balance sheet. We are not striving for maximum profit, and that differentiates us from many other banks. Although we are a private company, we do also feel we are a part of the government,” says Reichardt.

Changed Worlds

BNG Bank has only one branch in The Hague, with 300 employees. The bank has grown considerably, mainly over the past few years. As of the start of the financial crisis, a number of services from other parties have disappeared, so BNG Bank was often called upon to step in. Now, partly as a result of this, it has become one of the systematically important Dutch banks. “From a character point of view, we are more of a middle-sized company, but as far as the balance sheet is concerned, we are a large bank. We earn our money by buying cheaply, but also by trying to pass this on as cheaply as possible to our customers – with a small commission. This brings with it a strong focus on risk management, including managing our own assets and the associated risks. These are partly credit risks, but we have fewer risks than other banks – because, thanks to the government, our customers are usually very creditworthy.”

BNG Bank also runs certain interest rate risks that have to be controlled on a day-to-day basis. “We have done this in a certain way for a long time, but in the meantime the world has changed,” says Hans Noordam, head of risk management at BNG Bank. “So we thought it was time to give the method a face-lift to test whether we are doing it right, with the right instruments and whether we are looking at the right things? We also wanted someone else to take a good look at it.”

So BNG Bank concluded that the interest rate risk framework had to be revised. “Our approach once was state of the art but, as always with the dialectics of progress, we didn’t do enough ourselves to keep up with changes in that respect,” Reichardt explains. “When we looked at the whole management of interest rate risk, on the one hand it was about the departments involved, and on the other hand the measurement system – the instruments we used and everything associated with them used to produce information which enabled decision-making on our position strategy. That is a big project.

Project Harry

Over the past few years various developments have taken place in the area of market risk. When BNG Bank changed its products and methods, various changes also took place in the areas of risk management and valuation, including extra requirements from the regulator. “So we started a preliminary investigation and formed one unit within risk management,” says Reichardt. At the end of 2012, BNG Bank appointed Petra Danisevska as head of risk management/ALM (RM/ALM). “We agreed not to reinvent the wheel ourselves, but mainly to look closely at best market practices,” she says.

Zanders helped us with this. In May 2013 we started an investigation to find out which interest rate risks were present in the bank and where improvement levels could be made.

Petra Danisevska, Head of risk management/ALM (RM/ALM) at BNG Bank

Noordam explains that they agreed on suggested steps with the Asset Liability Committee (ALCO), which also provided input and expressed preferences. A plan was then made and the outlines sketched. To convert that into concrete actions, Noordam says that a project was initiated at the beginning of 2014: Project Harry. “This gets its name from BNG Bank’s location, also the home of a Dutch cartoon character, called Haagse Harry. He was the symbol of the whirlwind which was to whip through the bank,” says Noordam.

Within ALCO Limits

“During the (economic) crisis, all sorts of things happened which influenced the valuation of our balance sheet,” Reichardt explains. “They also had many effects on the measurement of our interest rate risk. We had to apply totally different curves – sometimes with very strange results. Our company is set up in a way that with our economic hedging and our hedge accounting, we can buy for X and pass it on to our customers for X plus a couple of basis points, which during the period of the loan reverts to us. We retain a small amount and on the basis of this pay out a dividend – our model is that simple. However, since the valuations were influenced by market changes, we were more or less obliged to take measures in order to stay within our ALCO limits. These measures, with respect to managing our interest position, would not have been realizable under our current philosophy; simply because they weren’t necessary. We knew we had to find a solution for that phenomenon in the project. After much discussion we were able to find a solution: to be more reliable within the technical framework of anticipating market movements which strongly influence valuation of financial instruments. In other words: the spread risk and the rate risk had to be separately measured and managed from one another. The world had changed and our interest rate risk management, as well as reporting and calculations based upon it, had to as well.”

After revision of the interest rate risk framework, as of the second half of 2015, all interest-rate risk measurements, their drivers and reporting were changed. The market risks as a result of the changes in interest rate curves, were then measured and reported on a daily basis by the RM/ALM department. “There is definitely better management of the interest rate risk; we generate more background data and create more possibilities to carry out analyses,” Danisevska explains. “We now have detailed figures that we couldn’t get before, with which we can show ALCO the risk and the accompanying, assumed return.”

More proactive

Noordam knew that Project Harry would involve a considerable effort. “The risk framework would inevitably suffer quite a lot. It had to be innovated on the basis of calculated conditions, while the implementation required a lot of internal resources and specific knowledge. Technical points had to be solved, while relationships had to be safeguarded; many elements with all sorts of expertise had to be integrated. The European Central Bank was stringent – that took up a lot of time and work. We had an asset quality review (AQR) and a stress test – that was completely new to us. Sometimes we were tempted to stay on known ground, but even during those periods we were able to carry on with the project. We rolled up our shirtsleeves and together we gained from the experience.”

Reichardt says: “It was a tough project for us, with complex subject matter and lots of different opinions. In total it took us seven quarters to complete. However, I think we have accomplished more than we expected at the beginning. With a combination of our own people and external expertise, we have managed to make up for lost ground. We have exchanged the rags for riches and we have been successful. Where do we stand now? As well as the required numbers, we have a clear view of what our thoughts are on ‘what is interest rate risk and what isn’t’. The only thing we still have to do is to fine-tune the roles: what can you expect from risk managers and risk takers, and how will they react to this? We will continue to monitor it. RM/ALM as a department is in any case a lot more proactive – that was an important goal for us. We can be more successful, but the department is really earning its spurs within the bank and that means profit for everyone.”

The International Organization for Migration (IOM) is the principal intergovernmental agency in the field of migration. Due to increasing migratory flows over the past decade, which have escalated in recent months, the organization realized that its treasury needed a transformation in order to continue supporting the organization and its cause.

The IOM is committed to the principle that humane and orderly migration benefits both migrants and society. The organization was established in 1951, then known as the Provisional Intergovernmental Committee for the Movement of Migrants from Europe (PICMME), which helped people resettle in Western Europe following the chaos and displacement of the Second World War.

In subsequent years, the organization underwent a succession of name changes to the Intergovernmental Committee for European Migration (ICEM) in 1952, the Intergovernmental Committee for Migration (ICM) in 1980, and the International Organization for Migration (IOM) in 1989. These name changes reflect the organization’s transition from a logistics operation to a migration agency. The IOM’s members currently include 157 states and 10 observer states. It has offices in more than 150 countries and at any one time has more than 2,500 active projects ongoing.

It works to help ensure the orderly and humane management of migration, to promote international cooperation on migration issues, to assist in the search for practical solutions to migration problems, and to provide humanitarian assistance to migrants in need, including refugees, displaced persons, or other uprooted people. The organization works closely with several partners in four broad areas of migration management: migration and development, facilitating migration, regulating migration, and addressing forced migration. The IOM assists in meeting the growing operational challenges of migration management. It aims to advance the understanding of migration issues and encourages social and economic development through migration, while upholding the human dignity and well-being of migrants.

Differing paces

In 2008 and 2009, the organization went through a major transformation. “As recently as 10 years ago, the organization was still executing payments manually at its headquarters – payment by payment,” says Malcolm Grant, head of treasury at the IOM. With a new enterprise resource planning (ERP) system, the IOM took its first step towards improving its treasury. But more change was needed. While migration activities were growing – leading to increases in staff, projects, and donation allocation – treasury didn’t grow at the same pace as the rest of the organization. On top of that, in the years thereafter, the financial crisis resulted in a sharp increase of compliance requirements. “Due to all these developments, our treasury was way behind where it should have been.

The impact of the organization’s growth in an outdated system environment was that people looked for solutions by firefighting; they built up several different systems and various ways of working. For example, new bank accounts were added, instead of using existing bank accounts and relationships. We found ourselves with more than 700 accounts and over 150 bank relationships. We needed to bring treasury back to the heart of the organization – a huge challenge, because we needed more people, more up-to-date technology and improved governance.”

Due to the tight funding in the years following 2009, it was a slow process, says Grant: “From a treasury point of view, we look like a corporate; we get money in, we pay it out and invest it. A corporate has a profit motive, a different set of values and different stakeholders. So there are cultural differences and due to political issues some things don’t happen as quickly.”

A treasury blueprint for the future

Eventually, the organization’s management was persuaded to review its treasury. Grant explains: “So in 2012, we initiated the ‘treasury review’ project. We wanted a comprehensive wide-reaching review that tackled just about all key areas of treasury. Therefore, we asked some consultant firms for treasury advice and after some meetings we hired Zanders to reinforce and challenge our assumptions. And it turned out to be a great step; they added deep knowledge of treasury, markets, and best practices, and together we built a very strong business case showing what needed to be done in our strategic planning to overhaul our treasury.”

Based on the organization’s strategy, Zanders helped IOM in writing a blueprint for the future, based on a number of areas such as treasury management, financial risk management, and treasury governance. “And a few months later we started our ‘global treasury design’ project, aimed at scaling up our treasury operations. But then the question was how to get there. So, how could all issues be improved?”

Treasury risk committee & governance

But before IOM’s treasury realized these three objectives on the technical side, it had already looked at some of the ‘no-cost’ recommendations. Grant says: “In terms of structure, we were very keen to make sure we had a written treasury policy – we now have one. We also lacked an annual treasury plan, which we have now introduced. And one of the most important aspects was setting up a treasury risk committee, which brings together some senior managers in finance and one from operations. They have now been meeting quarterly for two years and it has added enormously to treasury transparency. Moreover, it’s a two-way channel; it has also been a very effective channel for feedback into senior management – to show what treasury is doing and what we want to achieve in the near future. As a result of the review, some serious and valuable changes have been made.”

Grant’s treasury department worked hard to realize the targets as described in the roadmap. He needed some assistance in finding the organization’s banking partners for its cash management, to solve the problem of a too widely dispersed bank portfolio and bank account structure.

“We need to see what money is where,” says Grant. “We don’t see certain key collections in our accounts. Different field offices have different cultures; some are very proactive and engaged in centralized cash management, yet others aren’t. Therefore visibility is very important and a big challenge.”

Simplifying bank relationships

So, last year, IOM asked Zanders to conduct a European Cash Management RFP. Grant notes: “The number of bank relationships was over 150 across our organization. When we did the European RFP, we had 39 countries in scope with 38 different banking parties in those countries. Depending on the region, you could begin to centralize payments. We don’t need to have bank accounts all over Europe, for example. So instead of having 38 bank partners, in the future we may only have five or six.”

Based on IOM’s requirements, five banks were shortlisted for its cash management bank selection project with a pan-European scope. Zanders helped to write the RFP document, was part of the bank selection, managed the evaluation process, and supported the recommendation to senior management. IOM now has just two banking partners and has started the implementation with both banks. “And it’s going very well. We have good support from our internal IT team, which is extremely important. We did a lot of homework and research in Europe, mission by mission, to establish all treasury requirements and banking needs in detail.”

The strategic recommendations that Zanders gave were gathered in a roadmap for IOM’s treasury, with a prioritization of projects and focus areas. Grant adds: “We started by looking at three key achievable short-term objectives – things we could do within one year. The first was to bring on board the foreign exchange trading platform, 360T. The second was to bring on board a treasury management system (TMS). Third was to conduct a cash management RFP (request for proposal) in Europe for banking services. These objectives have been met; the systems are now live and working. There is still some additional TMS functionality to bring on board, but the initial level of functionality related to reporting and basic payment processing is available.”

The end of the beginning

“Our department is now about a third of the way to where we want to be. Centralizing payments and having payment factories, for example, is still years away for IOM; that demands a phased approach. In terms of payments, reconciliation, pooling, and technical architecture, we are improving our basic structures; we are looking at in-house banking (IHB) and payment factories. You need to walk before you can run. To illustrate it in an appropriate quote from Winston Churchill: ‘This is not the end, it may not even be the beginning of the end but it is the end of the beginning.’ I think that’s where we are now.”

Despite the many tough challenges for IOM’s treasury department, working for an organization in the field of migration gives Grant both energy and satisfaction. “Treasury is a humble servant of the dedicated workers doing the tough job in the field. We are just here to take a potential set of problems away from them. By, for example, ensuring that they have enough liquidity so they can do what they need to do, ensuring they do not get into trouble with local compliance, get best value in buying local currency, and ensuring they have proper banking partners and accounts. Our advice and expertise is a key area of support to the local missions, thereby ensuring that the mission activities in the field are not held up due to treasury issues.”

IOM’s key strategic focus areas:

• Migration management; helping migrants in any way possible regarding security.
• Operations and emergencies: ready to react rapidly to emergency events such as earthquakes or military actions. IOM is not a refugee agency – that work is done by the UN – however it works closely together with UNHCR.
• International cooperation and partnerships: including relationships with donors. IOM is very active in the development of international migration law. It has a team of lawyers and a department working on clarifying, establishing, and modifying international law, as far as it relates to migrants.

In 2014, Lamb Weston/Meijer, a major manufacturer of potatoes with roots in both the US and the Netherlands, decided to expand its capacity with a new production line for its specialty products. Arranging the necessary financing provided a good opportunity for evaluating its cooperation with existing finance providers.

With customers in the proprietary fast-food chains in the quick service segment and many ‘casual dining’ restaurants, Lamb Weston is a major player in the international food market for frozen potato products. The brand is also expanding in the retail sector, particularly in the Middle East and the UK. Lamb Weston invented the Twister®, the now famous curly fries. Moreover, the company also makes Ziggy Fries, which have a flaky structure, to keep them crispy for longer, and recently also introduced Connoisseur fries, which look as if they’ve been cut by hand.

Global ambition

Lamb Weston/Meijer (LW/M) is a joint venture owned by two companies, Lamb Weston and Meijer Frozen Foods. An American company, Lamb Weston was founded in 1950 by F. Gilbert Lamb, a grower from Weston, in the state of Oregon. Lamb developed the water gun knife, a device with which potatoes can be cut into fries by water under high pressure. After later developing Curly Fries and CrissCut Fries, the company grew rapidly. The stock-exchange-listed ConAgra then took over Lamb Weston Foods* with the aim of making it the world’s biggest producer of frozen potato products. In support of that ambition, the company decided to also establish itself in Europe, leading to the existing joint venture with Meijer Frozen Foods. This Dutch potato producer started up in 1920, when Cees Meijer Senior bought a potato plant in Kruiningen and decided to sell potatoes grown in the clay-base soil of Zeeland, as of the fifties in frozen form. The family-owned Meijer company and the listed ConAgra now each hold 50 percent stakes in LW/M. The company’s turnover is about EUR 600 million per year – and they process more than 1.3 billion kilos of potatoes into high-value products.

New production line

Significantly, LW/M’s turnover continues to grow and the company has succeeded in increasing its market share in several European countries. “That’s why we want to expand our capacity,” says Peter van Wouwe, CFO of LW/M. “We’d been toying with this intention for a while and last year we decided to act on it by installing a new production line in our Bergen op Zoom factory. We already have a production line there, but we’re now installing another alongside it for our specialty products like Twister® Fries and CrissCuts®. This was a key reason for us to start looking for fresh financing.”
The expansion called for an investment of about EUR 120 million. And even though the company generates substantial cash flow, it still needed to raise the new financing. “First we wanted to explore the best way of structuring it. We’d enjoyed several years of excellent collaboration with ABN Amro and Deutsche Bank, but it’s always a good idea to revisit existing agreements to ensure you have the best possible starting position.”

Financing form

LW/M had used Zanders for the financing of an acquisition before Van Wouwe joined the company. “That collaboration went very well so we decided to get in touch again for this financing requirement,” says Van Wouwe. “We’d already discussed it with Zanders in the preliminary stages and in December 2014, when we decided to make the investment, we immediately started checking out the best way to structure it all. We set up a good roadmap and the first question we encountered was which form of financing should we opt for.”
The choice was whether or not to arrange the funding through its regular banks. “In addition to the existing credit lines extended by our banks, we decided to also examine other potential financing opportunities,” says Van Wouwe. In exploring its options LW/M decided it was wise to include both a best-case and a worst-case scenario. “A specific aspect of our financing requirements is that there can be substantial fluctuations in our results. This has everything to do with our raw material. The potato is a natural product and one year the price can be very low and the next year prohibitively expensive - sometimes varying by a factor of 20. And, of course, this significantly impacts our results and working capital. This is why we had to include a worst-case scenario; what would it mean for our results and cash flow if we had a very bad year? Any new financing would have to make allowance for such a situation, so that we wouldn’t immediately have to go back, cap-in-hand, to the bank.” That said, new financing based solely on a best-case scenario would also raise questions, thinks Sander van Tol, managing partner of Zanders: “In recent years, the company has been profitable and has earned a lot of money. So it begs the question of whether you’re not allowing yourself too much room so you can make other investments too. It’s a trade-off between how much financing you are looking for and for how long? Based on all this, we checked the flexibility of possible financing instruments and soon came to the conclusion that bank financing was the best option.”

Term sheet

Afterwards, an inventory of the banks was started up. “First, we put together a long-list of banks that might be suitable,” says Van Wouwe. “Together with our partners in the US, we looked at what would suit us the best and with which banks we could maintain a good relationship in the longer term. In this respect we are pretty traditional because we have excellent relationships with our banks. At the end of the day, particularly when the going gets tough, it’s very important that you can always get on with one another.”
After whittling down the long-list to a shortlist, LW/M invited four banks so that it could present the company’s plans and expectations, together with a forecast of cash-flow development during the coming years. “We saw that the banks were interested and, by means of a detailed term sheet, we gave them a proposal in which the terms of the financing were summarized,” explains Van Wouwe. The ensuing discussions were mainly about what LW/M was looking for in the financing and the best way to structure it. Among other aspects, the impact of regulation (Basel III) on the pricing of the financing was also discussed. In the interests of cost optimization, it was decided that the loan should be ‘labeled’ as two separate parts. One part would be for the expansion of the plant (a so-called term loan) and the other would be for the company’s working capital (a form of current account financing that could be used when the company needs it – a flexible variant). “In this way we achieved the best composition for our size and organization,” assures Van Wouwe. “Working with just one bank is hardly ideal, yet every bank that’s added to the equation makes it more complex. At the end of the day this approach, in which banks were invited to participate on the basis of the detailed term sheet, worked out well.”

The devil is in the details

Documenting the agreements in the term sheet is a detailed (legal) process and to accelerate the documentation phase it’s common practice to set up the term sheet in a very painstaking manner. “Banks want to know now what you’ll be doing in three years’ time and lay down agreements on this in the term sheet. During the next few years, for example, we want to be able to establish new entities in different countries, without constantly having to consult the bank – which could suddenly refuse us. That’s the kind of thing you want to avoid.” This is also why Zanders collaborated closely with LW/M’s external legal advisor. “That accelerated the process considerably,” says Van Tol. “What was unique about this process was the time invested in preparing the term sheet that listed all the agreements with the bank. One page can sometimes be sufficient for a term sheet, but in this case it was eight pages. And its importance shouldn’t be underestimated either, because signing the term sheet is like signing a wedding certificate – and it’s always advisable to know exactly whom you are marrying. During the documentation phase, to avoid working with irregular templates that could make the agreements less clear, we used the term sheets of the LMA, or Loan Markets Association. And in this project too it proved successful, because the devil is in the details.” Nodding in agreement, Van Wouwe remarks that it does indeed pay to negotiate the contents of the term sheets in great detail. “The LMA principles adopt a different approach – more at an international than national level. And that’s a much better fit with what we want to achieve.”

New fries

April 2015 saw the groundbreaking ceremony for the new production facility and six months later they started installing the machines. “It’s a very complex project, comprising three separate projects rolled into one,” explains Van Wouwe. “Firstly there’s the technical realization of the new production line. Then, once the line is established, we must be able to start production immediately, the employees must be properly trained and the right sales contracts must be in place to ensure that suitable sales markets have been found for the production. The third and final of these projects is underscoring the continuity of the factory. The new production line, together with the existing one, will use the same receiving area for the potatoes, despite their packaging being very different. It’s a logistical challenge, but fortunately it’s all going according to plan.”
LW/M expects the new line to start being productive in July 2016. “We’ve never carried out a project of this scale before and we’re extremely pleased that we’ve been able to secure such a good banking solution for it,” concludes Van Wouwe.

On the 18th of November Conagra announced a renewed strategic focus: “ConAgra Foods Announces Plans to Separate Into Two Independent Public Companies”.

FMO provides financing for companies in Africa, South and Central America, Asia, and Eastern Europe, and its mission is to empower entrepreneurs to build a better world.

“And in the context of this mission we have two objectives,” says Paul Buijze, FMO’s director of finance & mid-office.

“We only finance those companies that we expect will make an impact. They must contribute to the type of development that maintains a balance between financial returns and environmental and social aspects. In other words, the investment must stimulate development. We don’t finance ventures that commercial banks already do. We invest only in private companies that would otherwise not be able to grow; it’s not our place to finance governments.”

Focus Areas

The development bank invests in sectors in which they expect the impact to be the greatest, such as financial institutions, energy, and the agrarian sector. “Many companies are too small to be served from The Hague,” reasons Buijze, “but a local bank is far better positioned to reach companies in a country on a smaller scale. “And without our second focus area, energy, development isn’t even possible. Without light, you can neither read, study nor run a factory. Energy facilitates a great deal of development. “Our third focus area is food and water. By 2050, our planet will be home to nine billion people and they will all have to eat and drink, within the realms of what’s possible, of course. There will probably be enough agricultural land, but at the moment it’s being used very inefficiently. “It’s about the complete chain, incidentally. If there is insufficient refrigeration capacity, food will spoil before it even reaches consumers.”

Finally, in addition to these focus areas, we serve a sector encompassing infrastructure, production and services. Kept deliberately broad, this ‘other’ sector owes its importance to distribution, and mainly because of risk considerations. Here, on specific issues we always collaborate with partners that have certain expertise, while in the first three focus areas we ourselves often lead the way.

Strong Corporate Governance

With an investment portfolio of €8 billion in more than 85 countries, on a global scale FMO is one of the biggest development banks serving the private sector. It finances entrepreneurs directly through funds, but the decision to invest in funds depends on more than just financial criteria. Buijze is a member of the credit commission that assesses the suitability of projects. “Over the years we’ve built up an extensive list of investment criteria. A bank must have a certain level of solvency. For an investment in energy, for example, we insist that the energy provider will be called on to supply a certain amount of energy over a certain period of time. “And we opt for renewable energy, as opposed to the fossil-fuel-generated variety. We have extensively documented conditions for each type of financing. This is a departure point. “If, on that basis, a request fails to meet our conditions in the areas of the environment, society, governance, or return, we’ll take it from there whether we can implement the development with the company in question. We’ll look at the impact the company can generate, such as employment, for example. Every situation is different, which is what makes working in these countries so complex.” In combination with a report set up by the investment officer, who will have checked out a few things onsite, it’s decided with the aid of the criteria whether financing is eventually granted.

Negative Travel Advice

But how does that work, for example, in countries governed by ‘dubious’ regimes? “We have very strict and influential corporate governance and compliance officers,” says Buijze. “In that respect, our demands are uncompromising, and we carry out thorough research beforehand. We check, for example, to ensure a company has no ties with the government.” And what about companies in high-risk areas, such as a country embroiled in a civil war? "It’s absolutely essential that we have access to the country in question,” he answers. “We must be able to keep our finger on the pulse. If our government advises against travel to a particular country, funding will not go ahead. “However, if it’s already been extended, we cannot change it. Such a situation was created by the recent Ebola crisis; at one point, we could no longer travel to Liberia or Sierra Leone. “Of course, there are countries in which you are exposed to more risk, but our portfolio has a good spread and includes many countries which are now making good progress and where there is no political tension. “You’ll find savvy entrepreneurs in the most difficult of countries.”

According to Buijze, FMO has had to write off very few investments so far. “Every company experiences a hiccup from time to time, such as local demonstrations or disturbances. But at the end of the day, the situation usually sorts itself out. “Everyone needs energy, just like they need banks and telecommunications, for example. “And, of course, water too, although this issue is somewhat politically sensitive.”

Setting up authorizations

In many respects, FMO has a completely different risk profile compared to a commercial bank. “We don’t employ traders, and we are not subject to unrealistic financial pressures from shareholders,” says Buijze. “It allows us to be very focused on what we do. In my view, this doesn’t make our risk greater than that of a commercial bank.” Despite vastly differing missions and approaches, FMO nonetheless faces the same demands. “For example, DNB makes sure that our ICT architecture and its system administration comply with certain standards,” says Rolf Daalder, director of ICT & facility services at FMO. “Security must be paramount. FMO is free in its choice of cloud, but it must comply with certain DNB conditions. “We only do things we know about, and if we cannot do something ourselves, we have a number of partners we can fall back on for specific expertise.” Every year, FMO is audited by KPMG, which, in 2014, stipulated that the development bank should take a long, hard look at its internal authorizations and diverse roles and functions.

“Everyone in the bank has a certain function, to which certain rights are allocated,” explains Daalder. “You must know what you are approving. Some 10 years ago, we set up the WSS Suite (Finance Kit) system exactly for this purpose, but it had to be brought up to date.” What FMO needed was an independent party that also had expertise in how others approached this kind of task. “We had no intention of convincing ourselves that everything was hunky-dory; there was no point in the left hand checking what the right hand was doing!”

Four-eyes principle

How can you effectively monitor an existing system? “FMO wanted to be challenged and asked us for advice on best practices,” explains Zanders consultant Bart Timmerman. “During a regular update to a newer version, Finance Kit gained a new authorization functionality called Security Centre. It’s a completely separate module in which the organizational structure can be set up. It offers more possibilities and works differently, but that doesn’t detract from the fact that it must be checked to ensure that everything is set up properly.” The questions then were: what are all the processes, and what are they used for? “Supposing, for example, that one person was responsible for two processes, Zanders indicated what improvements should be feasible,” answers Daalder. In this way, it was possible to assimilate authorization profiles to the current systems and requirements. “It’s the best way: start from scratch, investigate who does what, who must be able to do what, and then set up the system on that basis,” says Zanders consultant Annelies Labots. The size of the development bank also plays a role, according to Daalder.

“We are a relatively small bank in which, in certain areas, a few people do relatively quite a lot. It makes the four-eyes principle more challenging than it is for larger banks, which have more people for the diverse functions. If one presses the button, another – and maybe even a third – has to check whether it’s all correct.”This is indeed a challenge for relatively small organizations, agrees Timmerman: “Processes must be flexible and easy to carry out, and this implies that there must be a sufficient distinction between functions.”

Knowledge Sharing

The authorization project, which ran from August 2014 to the beginning of 2015, was complex and comprised numerous small elements that had to be harmonized with one another. “It was completed successfully and to the satisfaction of KPMG,” says Buijze.

And what about FMO’s plans for the future?

“Our strategy is that by 2020, we want to halve our footprint and double our impact. Food production must be maintained at the right level if it is to keep pace with the enormous growth in population, a huge challenge in itself. The population of Uganda, for example, is burgeoning—from just 5 million people in 1950 to 32 million currently, and it’s projected to exceed 100 million by 2050. Another example is Nigeria, whose population will eventually surpass that of the United States. And all these people need to be able to live worthy and dignified lives.” It’s about more than just money, insists Buijze. “Knowledge sharing is also an extremely important way of ensuring that people can grow their own food. All this, combined with being commercially and responsibly active, appeals greatly to the people who work here.” The sheer extent of social engagement at FMO is clearly evident and often critically discussed. “We want to facilitate growth in a country, but this is often accompanied by tension between development and environmental interests,” assures Buijze. “For example, can the installation of a wind farm in a poor region where there is no electricity be seen as a sustainable solution? There will always be people who feel their voice is not being heard. We are not dogmatic, but the result must be the correct one.”

What Did Zanders Do for FMO?

Since 2006, Zanders has carried out projects for FMO in various areas, including:

• Shaping investment policy
• Providing advice on its property investment portfolio
• ALM (Asset and Liability Management) studies
• IRS rating
• WSS Suite (Finance Kit) implementation
• Assessing an update of the capital planning model
• IRRBB (Interest Rate Risk in the Banking Book) validation

If you’d like to learn more about authorization issues or any of the above-mentioned topics, you can contact us.

The Estée Lauder Companies (ELC) set out to change its European banking landscape and one of its first goals was to reduce its banking relationships in the EMEA region from 32 to two. The task required a rigorous request for proposals (RFP) process to select the banks. Writing more than 200 targeted questions for the RFP, with guidance based on Zanders' experience in this area, enabled the company to make a clear decision.

Born Josephine Esther Mentzer, Estée Lauder was raised in Queens, N.Y., by her Hungarian mother, Rose, and Czech father, Max. The name Estée was a variation of her nickname, Esty. In 1946 she and her husband, Joseph Lauder, officially launched the company and, almost 70 years on, the company still has an entrenched sense of family history. The Estée Lauder Companies Inc. is one of the world’s leading manufacturers and marketers of quality skin care, makeup, fragrance and hair care products. Its products are sold in over 150 countries under brand names including Estée Lauder, Aramis, Clinique and M•A•C.

As part of its growth cycle, in 2009, the company appointed an outside CEO – Italian business executive Fabrizio Freda. Since then, the company's net sales have increased from $7.3 billion to $10.97 billion in 2014. This growth cycle has necessitated a more efficient, streamlined way of managing cash flows.

From 32 to two banks

ELC's European operations cover 23 countries, had 32 banking relationships and approximately 200 bank accounts. This had several implications, including inefficient centralization of cash, increased counterparty risks and difficulty in implementing host-to-host connections. The set-up also meant there was less than optimal control and management of excess cash, as well as an opportunity to gain greater efficiency in payments and statement processing. Hence, ELC identified the need to significantly rationalize the number of cash management banks and bank accounts – so the 'Pan European Bank Structure Project' was born.

So how did the company approach the vast task of streamlining almost 200 bank accounts and its numerous banking relationships? It was decided that two or possibly three pan-European cash management banks should be selected. The project involved implementing a centralized liquidity structure for excess cash with a zero-balancing account (ZBA) structure.

Success is in the preparation

The first step of the project was an extensive request for information (RFI) project, which lasted 18 months. The company’s international treasury centre (ITC) began by gathering information from ELC's many affiliates in the region and then broadened the research to include current best practices for banking and cash management. Executive director for European treasury and accounting at ELC's ITC, Bart Taeymans, says: “During the RFI process we wanted to reach out to and learn from our relationship banks that participate in our revolving credit facility as well as other major banks. We were looking at what might be possible and wanted to learn best practices on how companies can manage cash in Europe.”

The RFI looked at all possibilities, from the best way to obtain a report on all balances, to ways of pooling or centralizing cash management in each country. It was a vital information-gathering stage to prepare specific, targeted questions for the RFP. Towards the end of the RFI, ELC invited Zanders to come on board to provide input for the next phase – choosing a long-list of banks for the RFP based on the RFI responses. Taeymans, who joined the company in early 2007, says: “Having a consultant next to you when you are learning about best practices is extremely useful. Banks will give differing opinions according to their abilities and strengths. Zanders provided a neutral view in that process of understanding best practice.”

Five banks were selected to participate in the RFP. “Zanders guided us from a structural perspective – they had the required knowledge and knew what questions to ask, as well as how to score and evaluate the replies. That definitely helped us – but it's not something you can completely outsource, so a lot of work was definitely involved internally,” notes Taeymans.

An eye on the road

Prior to starting the RFP process, ELC also developed a five-year strategic roadmap for treasury. “Zanders was helpful in putting that in place. The consultants' knowledge on treasury best practices helped us draw up a detailed plan on how to integrate treasury systems and processes more efficiently,” says Taeymans.

We wanted to learn best practices on how companies can manage cash in Europe

The treasury roadmap looks forward three to five years. The first step was to set out ELC's current position in relation to its peer companies and best-in-class treasury models. The second step was to decide where the company aimed to be in five years and to establish its short- and long-term priorities and objectives. A gap analysis of the current situation and the desired outcome was valuable in understanding what needed to be done. Finally, the roadmap set out a phased approach to implementing the sub-projects needed to achieve the goals.

Ask the right questions

A great deal of detail was provided to the banks at the RFP stage – something that many of the banks said they appreciated. The RFP document itself covered 39 pages and included more than 200 questions. As renowned author and professor Clayton Christensen once said, “Without a good question, the answer has no place to go.” This underlines that the preparation and drawing up of the questions is really a key stage in ensuring a positive outcome for the RFP. Taeymans notes: “The more information you provide and the more detailed the questions, the better the responses you receive from the banks. It's about letting the banks know how we operate.” It then took about six weeks from October 2013 to November 2013 to receive the responses from the banks.

ELC used a Six Sigma methodology to score the responses – an area in which Zanders was able to provide experienced guidance. The carefully weighted scoring allowed for banks that were the best fit for the customer's requirements to be differentiated in key areas, while responses to certain questions that did not meet ELC’s core requirements meant that a bank could be ruled out completely.

Hugh Davies, associate director at Zanders, was closely involved in this stage of the project. He explains that the Six Sigma methodology enables companies to have a consistent approach to evaluating and scoring complex data, providing a clear frame of reference which is particularly needed when several people are involved in assessing the RFP. Davies says: “This scoring methodology provides a completely objective, robust and defendable set of results. This is important if anyone – a bank or senior management – later ask questions on how the results were obtained.”

Following the evaluation of the RFP responses from the banks, a round of queries and responses clarified any outstanding issues, as well as further meetings with the banks where they could present their proposed solutions. Following that, reference calls with some of the banks' existing clients with similar requirements were made and the short-listed banks' operations and service centers were visited to validate certain aspects of their proposals.

A strategic view

As has been witnessed recently, some banks have been rationalizing or closing down their cash management operations completely, so it was also important to understand the bank's longer-term plans for its cash management business. Taeymans says: “We wanted to understand the bank's approach to practicalities such as pooling, accounts, implementation, contingency, data reporting, etc., but we also had an eye on its strategic vision of cash management. It's important to understand the strategic motivation from senior management at the bank, in the region and beyond. We gained an understanding of this from speaking to many different people at the bank, up to senior levels.”

It’s important to understand the strategic motivation from senior management at the bank, in the region and beyond

It was only in the very late stages of the selection process that negotiations on pricing began with the selected banks, while those that were not chosen were informed and given detailed feedback on the strengths and weaknesses of their proposals.

ELC reached its decision in April 2014 and finally, out of five short-listed banks, BNP Paribas and Citibank were chosen. What clinched the deal? Taeymans says it was very much based on the Six Sigma scoring method and the two best performers were chosen. However, the overall relationship was an important factor and services were allocated according to each bank's strength in particular regions.

Satisfying results

But far from being the end of the project, the bank selection was just the beginning, and in April 2014, the implementation of the pan-European bank project really began. Taeymans says: “Since then, Zanders has been involved on select occasions, in particular with workshops for affiliates because they know how banks operate in certain markets.”

You need to involve your people, including legal, local finance teams and IT

Some of the lessons learned from the project so far include getting early involvement from stakeholders, including the affiliates, as well as IT, legal and accounting departments. Taeymans adds that, when 23 countries are involved, one shouldn't underestimate the time needed for legal and documentary matters. He says: “You need to involve your people, including legal to help with documentary requirements, as well as local finance teams. I myself am definitely not an expert on some of the technical details regarding the file formats needed to integrate with SAP – so that is where cooperation with IT really is key.”

While more work lies ahead on ELC's treasury roadmap, the Belgian ITC can for the moment feel content with its achievements so far. Taeymans says: “It's fair to say, when you see the migration taking place, that's satisfying. It's great to see a workable solution within the company that is the result of a project that is steered from within treasury, but has impacts on affiliates and their financial departments, who all have other priorities. It's very satisfying to see the benefits for the whole company – monetary benefits but also a more efficient process.”

Would you like to know more about RFPs and/or bank selection? Contact us.

Wilfred Nagel is member of the executive board and chief risk officer (CRO) of the ING Group. He is also CRO of the Management Board Banking. Nagel joined ING in 1996, holding various positions: head of financial engineering at ING Bank, country manager Singapore, head of project & structured finance (Asia), head of regional credit risk management (Asia) and head of regional credit risk management (Americas). In 2002 he was appointed head of group credit risk management, followed by his appointment as CEO of ING wholesale bank Asia in 2005. From 2010, Nagel was CEO of ING Bank Turkey, until he became board member at Bank and Insurance in October 2011. Nagel started his career in 1981 at ABN Amro as a management trainee, after obtaining his degree in economics at VU University in Amsterdam.

This summer, William Coen, secretary general of the Basel Committee, said that the end is nigh for post-crisis reforms to banking regulations, and that the focus is now on implementing them. Do you agree?

"This is probably more wishful thinking than reality. Enthusiasm in politics, the media and academia, and as a spin-off also in the regulatory world, for creating ever stricter rules, has not yet diminished. But at the moment you can’t tell if it’s enough or not. What is important is to stop for a while, implement, look at the impact and then decide what’s missing. What we now have is a continuous introduction of new regulations while previous ones have not yet been implemented or their effect felt. A number of them have a phased timeframe, such as CRD4. The question is: are we giving ourselves enough time to discover what the impact is? The amount of time and work it takes to implement new rules and see what they do for your company is often underestimated. The current dilemma for ordinary banks in most countries is that the savings side is growing faster than the lending side, so there is excess liquidity. The future capital demands for interest risk in the banking book means that longer-term investing can put pressure on the capital position. On the other hand, short-term investment with the current interest rate is bad for results. In fact you should really turn your back on the savers. However that is not in line with our customer-oriented strategy and could eventually cause problems with the NSFR. This is a typical example of how different rules, market conditions and client satisfaction are difficult to unite."

Are Dutch banks still viable after introduction of the CRSA floor (Credit Risk Standardized Approach) which has a significant impact on capital requirements?

“Although I am a risk manager, I am also a bit of an optimist. There is a lot of opposition to the introduction on many fronts, and the impact on economic recovery in Europe could be enormous, so I don’t think that it will be introduced exactly as set out in the consultation papers. But I am fairly sure that something will happen with it and that the average risk weighting adopted will be higher. And then banks with (Dutch) property mortgage portfolios on their balance sheets will be fairly vulnerable. At ING we consider ourselves lucky, because this accounts for about 15% of our global balance sheet – other banks have a much higher percentage. So, can we continue banking? Yes but we will have to change our business model with regards to this point. The business model we use is basically: we grant a loan, keep it on the books for its whole duration and the client pays us back over a period of 15 to 20 years. This is no longer applicable to a large proportion of mortgages. After security checks, they will be passed over more often to institutional investors. The question is, how hungry are investors and how long will it take to turn the balance sheet around to what you want it to be. In the meantime, you, as a bank, are fairly limited in what you can do. Also, the ‘one size fits all’ attitude which is behind the latest proposals could be open to modification. Not everything with the same label is the same. Our Spanish mortgage book for example, is better than the German, Dutch and Belgian ones since in these last three countries a large proportion comes via brokers and in Spain it is only from our own savings clients; we know them. You have to keep your eyes peeled to find the hidden gems. While searching for those gems, we, as a sector, got ahead of ourselves and put too much faith in credit rating agencies such as Standard & Poor’s. But where we do succeed, it’s disappointing to see that the regulators don’t take that into account.”

But ESMA makes it compulsory to work with Moody’s, S&P and Fitch.

“As input it’s fine, but the last step in deciding on a credit rating has to come from the bank itself. Hedge fund critics often overlook the fact that a significant factor in their right to exist comes from being able to give their own independent judgement on a loan, and by doing so can come to other conclusions and other market behavior than the large regulated banks, who find deviating from the norm more difficult. Too much of the same spells danger.”

Although I am a risk manager, I am also a bit of an optimist

Wilfred Nagel, ING Group’s Chief Risk Officer (CRO)

What do you think about the Financial Stability Committee’s proposal for a gradual decrease in the LTV limit (LTV stands for loan-to-value and shows the relationship between the loan and the home value) for mortgages up to 90%?

“I imagine that this is a problem – in this phase of the housing market’s moderate recovery and all the political sensitivity regarding affordable housing for starters. But if you look at it from a normal banker’s perspective, then a prepayment of around 80% on a house is not so strange. The question is whether or not people themselves should take more responsibility for the financial choices they make and their consequences. To save for a number of years and then pay a deposit of 15-20% of the purchase price is not so strange, is it?”

Considering the current low interest levels, is a steep increase in interest not inconceivable at some point? What do you think the consequences will be?

“Banks’ interest margins are under pressure with the current low interest rates. Every time we reinvest the return is less. Up till now banks have been able to compensate in several ways, for example, by lowering savings rates and becoming more efficient. We are also seeing a somewhat increased interest margin by shifting new production to segments with higher spreads, such as project financing and trade financing of certain transfers. At the same time risk costs are showing a gradual improvement in line with economic recovery. The results show that we have been able to manage but decline in the reinvestment returns continues, while there is a limit to what you can do on the savings side. Added to this, the new regulations demand we do relatively more long-term funding. We don’t need this anymore for cash purposes, but we do pay liquidity premiums for it. What is strange is that the traditional balance sheet pattern, where liabilities are a little shorter than assets – the classic gap – is very limited. You see the balance sheet moving more naturally again, but relatively speaking our gap is still much smaller than in a normal interest climate.”

How has ING’s risk management developed since 2008?

"We have focused on mitigating remaining risks that had caused problems during the crisis. Where we ran up against problems was in a couple of large areas, like the Alt-A-portfolio in America, and the project development side of our property company. Our financial markets business also faced hard times, but finally showed a loss for one year only. As far as capital was concerned it has always been self-financing even though the ROI was not very strong. Even so we have radically reduced our trading activities in the financial markets business. An important deciding factor was our expectation that capital demands for this segment would gradually increase. We also looked closely at the global markets in which our position was strong enough to play a significant sustainable role. But the most important exercise since 2008 is that we have rigorously plowed through all large concentrations in the books. When Spain was hit by the euro crisis in 2012, we had EUR 54 billion-worth of assets against about EUR 14 billion-worth of savings. Now we have EUR 28 billion assets and EUR 22 billion savings.”

What impact will the possible introduction of the interest rate risk in the banking book (IRRBB) regulation from Pillar 2 to Pillar 1 have on ING?

“As I said, it will lead to a number of issues for liquidity management and for investment of our capital, which is the longest equity component a bank has. It is not something we are unduly worried about, but it is annoying that it costs capital and work again. Operational costs to comply with the regulations are considerable. The timing is also unfavorable. All banks are busy implementing an integrated finance and risk database. At the same time new regulations have to be implemented which can’t make use of that same database. So all sorts of parallel processes are being run that don’t link in to each other. What we learnt in our AQR (asset quality review) is that it’s not just an adequate database that’s important, but also the ‘query blanket’ on top of it, with which you can define search actions. We have upgraded it for the AQR and are trying to link it to the underlying data stream. We hope to complete the whole process, which was started in 2013, in 2018.”

And what are the priorities for ING for the future?

“The system that collects and invests savings, and another one that produces loans and tries to find funding are going to be more synchronized. We call this strategy ‘one bank’. Collecting franchise money country by country is fine, but if it is at all possible we will have to generate assets ourselves. We want to see a diversified balance sheet per country and are looking more critically at the impact of accounting treatment. If you study our own-generated loan books during the crisis, then they have done well. Of course there is extra pressure on the accounts in a crisis, but that is typical for banking. During the good years you have almost no provisions and a ROI of 20 and in a bad year you have considerably more provision and a ROI of 7. On average you make 13 and everyone is happy. What we have to avoid are large investment portfolios and asset concentrations.”

The new EU directive regulating alternative investment funds management (AIFMD) meant that asset manager ACTIAM had to make substantial changes to its risk management, a major operation that had to be carried out in a short period of time.

ACTIAM was founded on 1 July 2014 after a merger between SNS Asset Management (SNS AM) and SNS Beleggingsfondsen Beheer (SBB, Investment funds management). The company now has more than EUR 50 billion assets under management for insurers, banks and pension funds. Among them are Reaal, Zwitserleven, ASN Bank and SNS Bank. “Responsible asset management is our specialism,” says Rob Verheul, COO at ACTIAM. “We manage all our investment categories in a responsible fashion. We have made doing business in a responsible way core to our investment process. It is in our DNA and we are proud of it. “ACTIAM originates from the Hollandse Koopmansbank (Dutch Merchant Bank) and has more than earned its reputation as a responsible asset manager. It has managed the ASN equity fund for more than 20 years. In 2013, this fund was awarded the Golden Bull for the best investment fund, and in 2015 was deemed the best equity fund in the world. Verheul says: “We do not invest in companies who do not trade in a sustainable way and we let people know through our website which companies we exclude. The universe in which we invest is therefore not as big as that of many other players, but we have already proved that social and financial returns go hand in hand.”

According to Bart Harmsen, head of risk management at ACTIAM, it is not a question of just excluding the insufficiently sustainable companies. “We try to encourage these companies to become more sustainable. We keep many lines of contact open in order to bring about improvements in that area.”

Growth ambition

As a part of VIVAT Insurance, ACTIAM considers Zwitserleven and Reaal (also part of VIVAT Insurances) just as much a client as ASN Bank and SNS Bank, says Verheul. “We have also close commercial contracts with them, just as with our other external clients. We have seen that the combination of professionalism, flexibility and sustainability has created a lot of interest for our funds from institutional investors. The legislator gives us a helping hand here, since pension funds are required to use part of their capital for sustainable investments.”
As administrator of institutional investment funds, ACTIAM’s name is well-known in this market segment. Our ambition is to grow in the retail market as well, says Verheul. “We are investigating whether funds for institutional investors could also be made suitable for retail investors. Our name recognition among a larger audience will then grow as a matter of course.”

Tougher demands

Under VIVAT Insurances, ACTIAM operates independently, with its own license, policy and statutory board. “Even though SNS AM and SBB have worked together for years, with this merger we are creating one expertise centre for our clients,” Verheul explains. “By doing this, we are creating even more commercial and operational strength and we can more easily comply with legislation and regulations.” Tougher demands on fund management as a result of new legislation and regulations in the AIFMD (Alternative Investment Fund Managers Directive) were important reasons for the merger. This legislation requires that a fund manager may not outsource both its portfolio management and its risk management. Verheul explains: “The fund manager (SBB) would therefore have to go to great lengths to rig up its risk management. Asset management was already outsourced to ACTIAM (at the time SNS AM). If we had not integrated SBB and SNS AM, the cost to the client would have been much higher than it is now. The costs of the merger are small by comparison. We are trying to absorb these by working more efficiently.”

Gap analysis

The AIFMD legislation sets out best practices in the area of risk and liquidity management, among others. As far as ACTIAM was concerned, this guideline had an impact on many different levels. “Most of them were under control,” says Verheul, “but we were not able to make the changes for the risk management part on our own. We could see that the scale of changes necessary within risk management was too great for our own staff to contend with. We had discussions with a number of contenders, but Zanders was selected fairly quickly. During the very first meeting they showed their pragmatic, down to earth approach. No standard consultant-talk, but serious people who gave the impression they would get on with it and deliver something of real useful value.”

Time was of the essence: ACTIAM had to be AIFMD compliant by 22 July 2014 and have its risk policy implemented, otherwise obtaining the license would be under threat. So, article for article, a speedy start was made on analyzing the legal texts; what was written down exactly, and what is the impact of them for ACTIAM? And as far as the risk management parts were concerned, where were the gaps as far as the guidelines went? And that’s how the risk management and risk methodology were assessed, a process during which hundreds of pages were read and analyzed. Zanders consultant Mark van Maaren says: “Early on we involved the front office, as well as others, in the development of risk policies, risk methodology and risk reporting. They made a valuable contribution and their involvement facilitated the acceptance of the risk framework.” During the whole process the strategy was developed gradually and the levels of risk became clearer. Beforehand, Verheul expressed progress in terms of a target figure: “We wanted to achieve 6.5 on reaching compliance, then we wanted to take our time in order to make it an 8.” In that way the inaccuracies in some reports, which were a result of tight deadlines, were corrected, while the reporting process itself was speeded up.

With constant to-ing and fro-ing, i.e. by involving front office, a large number of issues were solved.

Jasper van Eijk, Partner at Zanders

This way most of the interest rate sensitivities on fixed interest instruments could be calculated, but a number of rates differed to what front office saw. By constantly going back to departments involved, the results were fine-tuned.

Internal involvement

In a short time frame a lot had to happen on both sides, but the interaction was ideal, Verheul thinks. “And what is so good is that we have improved the whole ACTIAM risk management framework. We are much more aware of the whole spectrum since it had much more impact than just the AIFMD part.” Harmsen nods in agreement: “The risk policy was also immediately adopted by the business and, as a result, the quality of thinking in terms of risk in the organization was given an enormous boost.” Van Maaren adds: “ACTIAM’s board’s strong commitment was an important factor in the success of the project. All directors gave up a lot of time to review and discuss the risk strategy, the preparation of risk reports and the development of risk methodology. Quick decisions were also made where there were issues within the project.” Van Eijk also felt the interaction within the organization was a success factor. “This was at all levels within the organization. The formulated policy had to take form by setting up models, methods and systems. But due to the limited timeframe we had to do this in parallel. This demands good co-ordination to get all cross-references tied in. Thanks to a pragmatic approach and the broad internal involvement, this was achieved.” The deadline was reached; ACTIAM was AIFMD compliant as of 22 July 2014.

Stick to the plan

For monitoring risk, ACTIAM used the existing risk management system, Dimension, from supplier Simcorp, of which Zanders implemented the new risk module. Verheul says: “We want the whole organization to use this system and the starting point was to include the whole risk reporting process in this system. Zanders firstly evaluated the suitability of this module for implementation of risk reporting together with ACTIAM and Simcorp before starting the implementation process.”
It symbolizes the secret of success of the whole journey, Verheul thinks: “Make considered choices and then stick to the plan. Don’t fall into the trap of implementing another system just because a report is easier to print for example, as this always leads to different problems. In retrospect, it all went very well, but there was a lot of pressure on everyone involved. All in all we are very pleased with the whole project. If we had to do it again then we would do it the same way.”

Want to know more about risk strategy and/or risk management systems? Contact us today.

In order to be able to integrate a number of activities and improve efficiency, the oil company Argos decided to implement a new treasury management system (TMS).They chose IT2 and were very satisfied with the result. This best-practice implementation provides an excellent example for other corporates, showing how such a project should be tackled.

Argos is a young oil company that combines the storage and distribution of oil with the international trade in, and sale of, mineral oils and biofuels. The roots of the company go back to 1918, when Ad van der Sluijs opened a bicycle shop in Geertruidenberg and decided to sell petrol there, too. This turned out to be a good business move because the Van der Sluijs Group went on to become a big player in the areas of sales, storage, and transport of mineral oils in the nineties.

In 2009, the group merged with FNR+, which, with its companies Frisol, North Sea Petroleum, and Reinplus Vanwoerden, is a market leader in bunkering and trading. Hence the North Sea Group came into existence. In 2011, the North Sea Group joined forces with Argos Oil. Since then, the logo is displayed at the head office in the Rotterdam harbor Waalhaven, as well as on the signs outside around 70 Dutch petrol stations and – due to the lubricants sold by the company – on the shirts of the Argos Shimano team during the Tour de France races in 2012 and 2013.

In the Western European downstream oil market, Argos is now the largest independent player (since it is not stock-market listed or state-affiliated).

More rigid

In 2015, Argos has more than 500 employees, with branches in several different European countries as well as offices in Brazil, Hong Kong, and Singapore. The turnover of the company lies between EUR 14 billion and 16 billion per year.

“Around the time of the merger between FNR+ and the Van der Sluijs Group, from which the North Sea Group was born, I started working here,” says Jan Tijmen Donkelaar, Argos’s manager of finance projects. “The market and the company have been constantly moving since then. New business was created by the merger and the internal structure also changed. In the treasury department, you need to keep up with all those developments, which entails a great deal of adjustment and steering. That requires flexibility in the set-up of your system.”

A treasury department was built up in the North Sea Group, whereby two activities needed to be integrated: the trade activities and the bunker activities, where all the LCs (letters of credit: the guarantees for oil products) were settled. That integration of the two activities gave rise to a department with a front office, a middle office, and a back office.

Donkelaar was given the task of supervising that process. “That concerned the middle office, involving setting up the processes, and I started there by implementing an online trading platform (FXall) for currency transactions.”

For the selection of a new TMS, Argos asked Zanders to advise during the request for proposal (RFP). Donkelaar notes: “The shortlist put forward by Zanders included IT2, Bellin, and SunGard. SunGard offered greater flexibility in the connection with third-party systems, while IT2 placed greater focus on the support of best-practice processes during the implementation. The latter was a better fit with our needs, and so finally we selected IT2.”

Near real-time

One important reason for choosing IT2 was that it is ‘near real-time’. Donkelaar explains: “The FX deals, for example, are fed into our system every five minutes. That isn’t live, of course, but it’s certainly fast enough for Argos.” Bart Timmerman, consultant at Zanders, adds: “Where banks require genuine real-time data, near real-time is fast enough for corporate treasuries. There are multiple currency dealers at banks, and every deal needs to be directly visible to the other traders.” At Argos, all the commodity traders are connected to FXall, an electronic trading platform for currency and money market instruments. Donkelaar says: “When our oil traders do a deal that requires FX risk cover, they put the deal into FXall. The transaction is then sent from there to treasury, which subsequently makes a transaction with a bank. The currency risk arising from oil trades is therefore covered by the traders themselves. In addition, treasury looks at the overall position on a daily basis, and the risk arising thereby is also covered. Cash optimization – if, for example, a swap needs to be made overnight – is carried out by treasury itself.”

Phased approach

Argos decided to take on the project leadership itself on the implementation of IT2. Zanders was asked to assist Argos with the implementation of the best-practice processes. The optimal set-up of the treasury processes in IT2 from a software point of view, while keeping in mind the demands from the business, is determined and fixed in the blueprinting phase – the first phase following the purchase and technical installation of the system. The oil company chose to implement a phased approach. Donkelaar says: “We started with the basics: the things we needed for our daily position management and for our LCs and guarantee summaries. This meant, for example, that we recorded all the FX deals and all the money market transactions with banks in IT2. We also wanted to build up all the historical data into the system from January 1, 2013, such as all the FX data, all the LCs and all the guarantees. From that point we could then continue to build further on the payment process and set up the accounting module, which links bookkeeping to the system. In addition, the introduction of a clear, logical division of functions and data integrity was high on the agenda.” It is an approach that is typical for this type of project, says Timmerman: “Certainly in situations where speed is needed and capacity is limited. There wasn’t a capacity problem at Argos, but treasury relied on Excel. The first thing you need to make sure of is that the basic functionality works quickly, so that the deals and cash management can be carried out well. You can then roll out the flow of payments, followed by coupling that to accounting.” “IT2 placed focus on the support of best-practice processes during the implementation” 5 Jan Tijmen Donkelaar (right) and Bart Timmerman The Argos head office in the Rotterdam harbour.

Intercompany efficiency

In this way, IT2 functions as a symbolic umbrella under which increasing numbers of functionalities can be introduced by making connections within the organization. Timmerman continues: “For the benefit of the set-up of your accounting module, you need to keep in mind that the codes you use within the organization – for example in the ERP system – can also be found in IT2. This means that during the first phase of such a project, you need to make choices concerning the set-up, which prove to be important at a later stage.” Treasury often has specific accounts, such as in-house bank accounts, and for specific products, such as interest-rate derivatives and LCs. All transactions in that area must be recorded in the general ledger and, with the accounting module, IT2 offers a means for generating the necessary journal entries in the system and exporting these to a general ledger such as Navision. “In addition, the system can also be used as a sub-ledger”, says Timmerman. “This means having your own general ledger system that, instead of journal lines, exports balance sheet items to the bookkeeping program – which can make it even easier for the accounting department.” Internal settlements can be made via an in-house banking structure, meaning that the cash management is far more efficient and savings are made on transaction costs. “The annual turnover of Argos is between 14 and 16 billion euros”, says Donkelaar. “There are around 3 billion euros of intercompany settlements. An internal structure has therefore been set up for this, and that is also picked up by the accounting module. Instructions are processed automatically; the straight-through processing (STP) has been improved enormously, which in turn leads to greater efficiency.”

Best practice

Argos’s treasury needed to change over from an Excel-based environment to a new treasury system. Within treasury there was already a lot of in-depth knowledge to set up treasury processes. However, there was also a lack of experience with system implementations. Donkelaar says: “IT2 was able to provide good support on a technical level, but we needed more substantive advice for translating the business processes and the reports. We therefore asked Zanders to help with the connection to the business, on the basis of best-practice principles. Once the blueprint had been set out and approved, we organized a number of work sessions for each different part under the supervision of Bart Timmerman, whereby firstly the system was set up and then an extensive users’ acceptance test was carried out.” Once this cycle had been completed, the system went live. “But even after the system had gone live, Zanders provided us with coaching in that area on a number of occasions, and we also received additional advice from IT2. This is a good example for other corporates as to how this should be approached.” The same approach was also applied with setting up the accounting module. Donkelaar says that the knowledge that was gained was subsequently documented. “We had three people who were directly involved with the implementation of the accounting module. This meant that all the accounting templates were tested extensively and we now have our own user’s guide of 175 pages, in which every type of transaction is described. This means that when new members of staff come to work for us, they can be trained more quickly and will therefore be able to use the module sooner.” According to Timmerman, that documented knowledge is one of the success factors of the project. “Argos also knew very clearly what it wanted. We were therefore able to carry out the set-up to a greater extent from the point of view of best practice. Still, the availability of people within the treasury organization can make or break a project such as this. Only the people who work at the corporate have the relevant specific knowledge. That is why the transfer of knowledge is so important; when a problem arises, you need to be able to solve that internally.”

More than expected

The efficiency achieved with the new system also implies a correlation between the purchase of IT2 6 “We now have our own user’s guide, in which every type of transaction is described” Jan Tijmen Donkelaar and Bart Timmerman and the number of staff in the treasury department. “No, that isn’t an immediate result,” says Donkelaar. “We wanted to achieve better capital management for treasury, meaning that we can look more strategically at the way in which money is handled; for example, the choice between paying in advance or giving guarantees in the form of LCs. And that also applies to financing arrangements: how do you deal with your working capital, and via which flows do you allow that to work? We previously did that far more on an ad hoc basis, but now with IT2 we have a much better view of that. This has meant that we’ve been able to greatly reduce the number of bank accounts. These are things that you may not immediately have in mind with a new system, but which that new system actually makes possible.”

Timmerman nods in agreement: “I often notice that many treasurers don’t immediately realize the full potential of a TMS. The implementation of a TMS usually leads to a high level of STP, which makes processes quicker, more efficient, and less subject to mistakes. The TMS offers the possibility of building more checks into the treasury processes, as well as regularly and simply being able to report on key performance indicators (KPIs). The focus shifts, as it were, from gathering data to analyzing data, not least of all, due to the time saved by the TMS. This leads to the creation of other possibilities for optimizing your working capital management. And that is an important advantage for every corporate.”

Would you like to know more about the TMS solutions of IT2? Contact us today.

At more than 275 years old, Van Lanschot is the oldest independent private bank in the Netherlands. With an eye on the rapidly changing market, last year the bank decided to change its strategy. Evi Van Lanschot is now the young face of the oldest bank and is focusing on the wealthy client of the future.

2013 was an important turning point in Van Lanschot’s development. Under Karl Guha, the new CEO, the bank implemented its new strategy for the coming five years based on three key points: focus, simplification, and growth. “Focus means that we concentrate on what we are really good at, i.e., the retention and growth of our clients’ capital,” explains Martin Van Oort, Van Lanschot’s financial risk management director. “Over the past few years we have increasingly become a ‘small large bank’, with a business banking portfolio. As a result of consolidation in the sector, this will be scaled down even more. As a specialist and independent wealth manager, we think we can really make a difference for our clients.” Customers also wanted simpler and more transparent products. “And we want to extend this line through our organization, in our IT systems and in operations – it has to be simpler and more efficient,” Van Oort continues. “That means rigorous internal reorganization in order to serve our clients in the best possible way. The growth we strive for has to come from the capital management area.”

Synergy with Kempen

Van Lanschot and Kempen are strong labels, which enables the bank to offer a combination of private banking, asset management, and merchant banking. “This offers clients huge advantages; they enjoy an even more tailor-made service,” says Van Oort. The bank’s changed service concept is particularly visible from the outside. For the personal banking segment, Evi Van Lanschot is a clear proposition targeting starters on the capital markets. With the idea that there is private banking potential present, Evi’s entry threshold is much lower. Van Oort says: “Medical specialists and business professionals have differing requirements over the course of their careers and we can assist them in the best possible way over the whole cycle. The Evi bid is going very well; in the Netherlands and Belgium we have approximately €1 billion in savings and managed capital.”

At the same time, clients who currently belong to the personal bank but who require private banking services can – if they pay for it – choose this option. Finally, the bank has a Private Office for extremely wealthy clients. “They too of course profit from the synergy between Van Lanschot and Kempen,” adds Van Oort. Van Lanschot is parting company with another section of the bank – the corporate banking portfolio, which includes commercial real estate financing. “We will do that in a respectable and professional manner. By winding down slowly but retaining service levels, losses can be minimized and clients will have enough time to get a new roof over their heads. Running down this portfolio is going according to plan. We are taking leave of something which no longer fits in with our new strategy and we are putting a lot of effort into private banking. This gives direction and clarity to all of our stakeholders.”

Shorter lines

 All of the bank’s departments are occupied with change. “It’s going well. The shop is open during the reconstruction phase and so customer experience should also stay at a good level. Even the balance sheet ratios – solvability and liquidity – which are so important for the bank, are ahead of our anticipated long-range targets.”

The bank’s culture is changing as well: the traditional bank, where change sometimes appears to be dragging its feet, is becoming younger and more modern. Van Oort explains: “The Evi customer needs a transparent digital service, preferably with a handy fancy app on their mobile. You can see that the bank is also changing in that respect into one with a dynamic culture. For professionals who embrace change, it’s a really great and exciting time. We hear more often that people would like to work for Van Lanschot since so much is happening and we are in the thick of it. Lines are shorter and your ideas have an impact. The fact that it is going well on the personnel front is, of course, important as after all, it is the people who make the bank.”

Parallel to strategy changes, the bank is also investing a good deal in specialist staff functions. Last year it was decided to revise the bank’s risk management; as of March 2013 Van Oort is in charge of a new department – Financial Risk Management. The creation of this department, which was an amalgamation of various teams, was the first step towards further professionalizing risk management. “This second-line department is responsible for consolidated financial risk management within the bank,” he explains. “Besides setting limits and the integral monitoring of the bank’s risk position, this department is also a negotiating partner and advisor to the bank’s senior management.” The department is made up of a group of young and highly educated professionals who are extremely driven. Van Oort adds: “Our traineeships contribute a great deal to recruitment and internal dynamism.”

Forecasting

It is important that the bank is now capable of looking ahead to future developments with the use of forecasting tools. “The classic risk management function of monitoring, reporting and, if necessary, adjusting risk is possible using models and systems, but the world is changing fast – that is a huge challenge,” says Van Oort. “In addition, there is a mountain of rules and regulations that continue to descend on us and which has a great influence on the playing field. As a bank, you have to be more and more critical of the various balance sheet components. Partly because of the low interest rates, it depends on basis points and it is essential to look ahead using various scenarios to see what the impact on the balance sheet ratios and profit could be. The basic model Van Lanschot deployed has to be developed still further, last but not least because of the implementation of Basel III. Therefore, as of 2013, the development of a new forecasting tool was initiated which generates an integrated capital and liquidity forecast based on the expected balance sheet developments. “Zanders made an important contribution here. The good thing about Zanders is that they are real specialists with insight and a lot of practical know-how. But their pragmatic approach also appealed to me. It has resulted in a tool where we can detail the expected development of core ratios and where we can easily and quickly analyze the impact of mitigating measures on these ratios,” Van Oort says. “We are going to continue fine-tuning the good foundations we now have and by constantly carrying out back tests we can see if the forecasts tie in sufficiently. Where necessary, we will adapt the tool. After that, we will further integrate the tool with our ALM systems.”

A more complicated playing field

Van Lanschot is listed on the stock exchange but a large proportion of the shares belong to large financial institutions. “We are active in the capital markets and rating agencies look critically at how our ratios develop and how we cope with risk management. The playing field has become more complicated and the supervisory body also makes its presence felt. Shareholders are of course critical and look at our figures differently to how they did in the past.” The question is whether or not the rapid regulation changes have not overshot their goal in some areas. Van Oort adds: “You see that in the current lending climate: the required growth of capital buffers puts the brakes on possible lending. A new balance has to be found. Extra regulations were necessary, but the amount and complexity of these regulations results in higher costs. Banks’ buffers have increased enormously and also the quality of these buffers has never been so high. The AQR (Asset Quality Review) has confirmed that most banks are on track on this point. Last year it was clear that this was also true of Van Lanschot.” The rating agencies have recently reconfirmed Van Lanschot’s rating, and S&P has upgraded its ‘negative outlook’ to ‘stable’. This is a clear sign that Van Lanschot is on the right track. “It is still closely monitoring the execution of the strategy, in which profitability will be an important factor. Wealth management strategy implies that the interest company reduces in value but is compensated for by increased commissions. In the meantime, we have to maintain our healthy capital and liquidity position. Over the next few years, we will have to prove that the new strategy has been a success.”

Excellent

In the new banking territory, Van Lanschot, with its new strategy, is focusing more than ever on the customer. “Customer satisfaction is up there on top, as it is a very competitive business and for our bank it is essential for us to be an excellent service provider and offer customer value. The strategy we have set out provides a clear answer to how we see ourselves in the future. Within the field of risk management and ALM we are looking for professionals who feel at home in a specialist and dynamic private bank. The added value of our department is to be a sparring partner and advisor to the bank, all the while keeping in mind our penchant for discerning risk. That is a role which will develop along those lines. With all these changes we have a wonderful challenging time ahead of us.”