Blossoming tulip fields are seen near Krabbendam, north west Netherlands, Tuesday April 27, 2010. Rabobank is one of the main lenders to the famous Dutch tulip industry, among others.The Associated Press
As most banks reel from the euro zone debt crisis and a wave of ratings downgrades, unlisted Netherlands lender Rabobank - known for old-fashioned businesses like funding the Dutch tulip trade - has blossomed by making a virtue out of being boring.
With financial turmoil sweeping across Europe, Rabobank's deposits have ballooned, thanks to an influx of capital from anxious savers in search of safety. This week it quietly launched a new retail banking business in Germany, targeting billions of euros from German savers.
Rabobank, the only major Dutch bank that did not need a state bailout or capital injection during the 2008-2009 global credit crisis, is reaping the rewards while once powerful rivals, ABN Amro, which had to be nationalized, and ING Groep, which is paying back state aid, slowly recover.
The decision to tap a new market came as Spanish banks sought emergency support, savings deposits drained out of neighbouring countries due to contagion fears, and Moody's downgraded 15 banks.
"We were always accused of being boring, ordinary. We made less profit than the listed banks," said Hendrik Jan Eijpe, a Rabobank spokesman.
"We all know what happened and things have changed."
Farmers' bank
Rabobank finances most producers of Dutch cheese and tulips exported around the world.
It emerged from modest roots in the country's rural south more than a century ago, when a group of farmers unable to access the capital markets banded together to form a cooperative.
With 10 million clients in 46 countries, Rabobank has booked net profit consistently for nearly three decades. In 2011, client deposits jumped 10 percent to €330-billion and it had assets of €731-billion.
With a logo in the national colour orange, Rabobank is known as the lender for ordinary Dutch families. Traditional service now means clients still get a cup of coffee when applying for a loan, even though cash is only available at an automated teller machine and not over the counter at branches.
Rabobank, owned by 139 rural bank members, does not release quarterly data, but Eijpe said it "is a safe haven for savers thanks to its high ratings, strong capital position. This is reflected in inflows of savings."
"It has limited exposure to the higher-risk economies of Europe, and even if the Netherlands' economy has its weaknesses, it's still obviously in better shape than most of southern Europe," said Simon Adamson, a credit analyst at CreditSights.
Moody's said Rabobank's new rating of "Aa2" meant it was still one of its most highly rated banks in Europe, singling out its "track record of satisfactory risk management" and solid earnings - a reflection of the land and agriculture-focused institution's strong position in its domestic market.
Despite these strengths, Moody's said Rabobank's dependence on wholesale funding from the capital markets was a source of risk in such a difficult European economic environment.
Exposure to the euro zone crisis was the reason Rabobank lost its coveted "AAA" rating last November, when Standard & Poor's downgraded it to "AA" with a stable outlook, still the highest ranking of 37 global banks.
Rabobank is selling some of its businesses to help shore up its capital base.
It hopes to raise as much as €2-billion for its Robeco fund management arm, and last year sold its majority stake in private Swiss bank Sarasin for 1.04-billion Swiss francs ($1.15-billion U.S.).
Rabobank, which sponsors the Dutch cycling team in the Tour de France, holds roughly a third of the Dutch banking market, is the single largest mortgage lender, and - sticking with its origins - commands a hefty 83 per cent of the food and agriculture banking business in the Netherlands.
The main factor sustaining Rabobank's Aa2 rating was an implicit government guarantee, said Christopher Wheeler, a financials analyst at Mediobanca.
"Politically it's hard to imagine that the bank funding farmers all across the country would be allowed to fail," he said.
The bank could expect further strong deposit inflows in the wake of the rating, he added.
"The difficulties faced by other Dutch banks in the financial crisis are still fresh in the mind, and that has a psychological impact."