Rabobank to Broaden Investor Base

AMSTERDAM--Rabobank Group will make privately-held certificates available to outside investors as the Dutch cooperative lender is forced to broaden its investor base in the aftermath of a rate-rigging scandal.

Rabobank plans to list 5.9 billion euros ($8 billion) worth of so-called member certificates on the Amsterdam exchange as of January 2014, Chief Financial Officer Bert Bruggink said Tuesday.

Investors have shown "considerable interest" in the bonds because of the annual payout, which Rabobank will increase to 6.5% from 5.2% currently, he said.

The move comes as Rabobank is dogged following a rate-rigging scandal, which led the bank to pay around $1 billion to settle accusations related to manipulation of the London interbank offered rate, or Libor.

The scandal and Rabobank's announcement in October that it would no longer support the price of the certificates triggered an unprecedented sell-off this month. Unable to buy back such large quantities of capital, Rabobank was forced to find outside investors for the certificates.

"Events in the last months have been extraordinary," Mr. Bruggink said.

The certificates, perpetual bonds with a subordinate status, form a key pillar of Rabobank's cooperative structure. Since the bank cannot issue stock to bolster its capital ratios, the bonds are an important alternative source of high-quality capital.

The certificates are owned by employees and clients and are tradable once a month on an internal market.

Mr. Bruggink said the certificates will continue to form a "crucial part" of Rabobank's capital base and that the listing will enable the lender to quickly access capital markets when needed, a move that should reassure rating agencies. "We have that access now," he said.

Rabobank has already managed to place forty million certificates--worth some EUR1 billion--with institutional investors, most of them outside the Netherlands, he said.

Write Archie van Riemsdijk at [e-mail]

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