Financing from alternative sources


Banks work increasingly with other financial players to provide financing. This is necessary due to more stringent laws and regulations that limit banks in their possibilities, such as the higher capital requirements for commercial real estate. These regulations force banks to limit their financing of commercial real estate or to considerably raise the price.

Alternative financing options

This is causing new players to enter the market that provide risk-bearing capital without banking supervision. This gives banks a wider range of possibilities to, for example, sell loans to institutional investors. As a result banks perform the role of financial linking pin in order to bring together the demand and supply of financing. Rabobank also offers this solution. We chart which financing options, guarantees and sustainable subsidies are available in addition to bank financing. We then arrange the combined financing and periodically assess the solidity of the company and the total financing solution. We are affiliated with various initiatives for crowdfunding, are in contact with regional investment funds and develop co-financing solutions together with (institutional) investors.

Rabobank and financing

Funds will always be needed in order to enable new initiatives and growth. There is also sufficient capital available in the market. But the role of banks is shifting – in part through changing legislation and requirements – with less scope for financing everything via the own balance sheet. This gives rise to new financing products and European banks increasingly act as a financial linking pin. Rabobank sold, for example, a portfolio of € 650 million in loans via its subsidiary FGH Bank to an institutional investor in 2016. This market still offers a great deal of potential in Europe. It will lead to greater standardisation of real estate financing. A strong improvement in the quality of data will provide better insight more quickly, which will in turn make risks more controllable.

Rabo & Co

While this primarily offers good prospects for larger loans, we also see new initiatives in the market for smaller loans. A compelling example of such an innovative financing solution is Rabo & Co. It enables high-net worth customers of Rabobank to participate in attractive loans.
Pilots are currently being carried out with entrepreneurs whereby they partially borrow funds from the bank's high-net worth customers. This equals broader access to financing for entrepreneurs and high-net worth customers in turn receive a new investment opportunity. 

This peer-to-peer lending is supplementary to existing forms of financing such as standard bank credit. The high-net worth customer pays Rabobank 1% of the borrowed amount per year in fees. The client consequently does not have to worry about the credit management.

Coming together

The aim of the pilots is to set up an online Rabo & Co platform that brings together entrepreneurs and Private Banking clients. Entrepreneurs post their request for financing on the platform and Private Banking clients state which loan they would like to co-finance. While there is only one high-net worth customer participating per loan during this pilot phase, this number may increase in the longer term. The minimum amount that high-net worth customers must invest is € 100,000. The first co-financing construction for an office building with a 10-year fixed interest term was recently realised. The entrepreneur purchased an office building with adjacent catering facilities that he previously leased. Rabobank sees an increasing need among high-net worth retail customers to invest in real estate. A specific challenge with real estate is to match the entrepreneurs' time horizon with that of private investors.