Dutch banking giant Rabobank has announced its exit from the equity derivatives business, the bank feels the service does not constitute a core role in its overall strategy and its contribution to the banks bottom line is limited.
Rabobank Global Financial Markets have looked in great depth at the equity derivatives business and it is clear that it makes a limited contribution to Rabobank International’s key strategic goals of becoming the number one Wholesale bank in the Netherlands and the leading player in the food and agriculture industry. At the same time, the new regulatory and compliance rules surrounding structured products, especially when sold to private clients, have raised both the perception of potential reputational risk and costs. When combined with declining revenue opportunities, this makes the business’s likely future contribution to the financial performance of Rabobank International marginal at best. As a result the bank has decided to exit the business. This is subject to approval of the works council and other internal approvals.
Change in strategic direction
The equity derivatives business has been a positive contributor to Rabobank in the past. We are therefore proud of the staff who built this business. The decision to exit the equity derivatives business should be fully attributed to a change in the bank’s strategic direction brought on by the factors cited above.
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