In India too, Rabobank is keen to acquire minority stakes in local banks if and when the regulatory environment allows it. Currently it holds a minority stake in the Rana Kapoor-promoted Yes Bank. Heemskerk believes Rabobank can play a key role in improving the efficiency and effectiveness of co-operative banks in rural India.
“We were founded by poor farmers 140 years ago and we know what is needed to develop rural banks,” he says. Currently Rabobank is looking for opportunities to work as technical partners with co-operative banks helping them improve their systems, processes, IT and manpower issues.
But isn’t a singular focus on the agriculture business too risky and restrictive at the same time?
“When you talk of risk, Rabobank is the safest bank in the world. It has a AAA rating from not one but two agencies . In the long term, agri and food is the safest business to be in. It has been established that the loan loss ratio is the lowest for agriculture. If you are a global player, the risks in agriculture level out. Australia is currently facing a drought, while Chile has had bumper harvests,” he explains.
Heemskerk attributes the singular and long term focus of Rabobank to its origins. “Typically, the German-Dutch attitude is a very different compared to businesses in the Anglo-Saxon world. We look more towards the long-term and sustainable growth rather than become a slave of stock price and immediate shareholder value creation,” he adds.
That perhaps is another reason why Rabobank is bullish on microfinance for small farmers and rural communities . In Africa, it has an exposure of more than $100 million in microfinance. “Microfinance is not a commercial business but it can be useful in helping to create a fully fledged banking business, and developing a better agriculture ecosystem,” he says.