Following are excerpts from a CNBC interview with Wiebe Draijer, Rabobank Chairman and CNBC's Steve Sedgwick and Geoff Cutmore from the World Economic Forum 2018.
GC: Wiebe Draijer has joined us, he is the Chairman of Rabobank, good morning to you-,
GC: And welcome. Just-, you're in the financial markets, and around the markets, and in banking. Over the last 24 hours, we've had a flip-flop like we've never seen before, I don't think, from the American administration on the dollar, the world's reserve currency. Do you think you've come away with clarity, as to what the administration's position is currently, on the American currency? And how it views the prospect of trade and currency wars?
WD: Well, I was most impressed by the clear signal that Trump also gave, that he is willing to renegotiate, so, hence I think he's really made a statement that he is for trade, rather than against trade, and I think that is an encouragement, but we still need to renegotiate, after that. We, as a bank, Rabobank, are in the world of food, mostly, and-, and so we care about the trade-, impact that it has on the food supply, and we care deeply about it, and we think it's also a risky factor to start playing around with these trade agreements. So, I take this signal as an encouragement.
SS: Just on this, though, the bankers like volatility, they like two-way views, they like oscillation in price, so that they can make more markets, you know, and get more volume, and we've seen that FICC has struggled, for a whole host of financial institutions-,
WD: Yes. Yes.
SS: Because there's been a lack of volatility.
SS: So, dare I say it, Mr. Mnuchin, and Mr. Trump, have given the banks just exactly what they wanted. A two-way market, and a hint of volatility, as well.
SS: Is that generally good for the financial institutions, globally?
WD: I think it's generally good for general financial institutions. I lead a bank that is a cooperative bank, that is-,
WD: Sort of, deeper rooted in society, and so we take the opposite view on these volatility points. So, we think it's not good for our clients. Stability in the food supply chain is a good thing, and so we would argue, all of these factors that up volatility and uncertainty is actually not good for society, and-,
SS: But-, but then my follow on from that, and sorry for jumping in, but-, is, then, that commodity prices, generally, seem to work in an inverse reaction to the strength of the dollar. When we've got the DXY trading at 89, just back above it now, on the back of Trump, after going just below it, on the back of Mnuchin-,
SS: That sends commodity prices higher, across the spectrum, from ag to-, to precious metals-,
SS: So, that cannot be good for the world that you're talking about, the fact that ag is being moved so aggressively, on the back of a weaker dollar.
WD: Yes. It depends, it depends. Because we are on the full supply chain of food, and I think better commodity prices is good for the upstream part of agriculture and food, and so most of our clients in the agricultural space, farmers, are happy with these developments, and they would say now there is a place to invest. We are all for more sustainable practices that the up chain part of food has to adopt, and you need better commodity prices, to invest, to make those practices a reality. So, I think the general view is that volatility so good for banking and-, and commodity prices need to go down, good for trade, good for banking. If you put your position in the shoes of the clients, and the upstream manufacturers, the farmers-, the smaller farmers, but also the bigger farmers, the opposite might be true. And you need stability in the supply chain, you need stability to invest in a supply chain that stretches continents, and that stability is good for society.
WD: So, we take an opposite-, an opposite view-,
WD: On those developments.
GC: Talking of stability, Jes Staley was sat in that chair, yesterday, from Barclays, and said, all the bankers he knows are worried about bubbles emerging in asset classes-,
WD: Yes. Yes.
GC: All over the world.
GC: You have been a Chief Risk Officer-,
GC: You understand how you try to insulate a financial institution against kind of risks-,
GC: Are you worried that you see bubbles that could have a backlash, particularly in the work that you're doing in agriculture?
WD: Yes. Yes. Yes, we do worry about bubbles. We do worry about bubbles also in our retail banking side, on the housing markets. There are now pockets where housing prices are flying up the roof again. Also, if you add up the total debt in the economy that we are facing right now, it's higher than in the times when we were in 2007, 2008., So, we are, again, fuelling an economic growth on the back of a model of higher debt, and so, yes, we worry. I do also worry from the side of our clients, the food companies. They also need-, they need that stability. So, there are pockets that we now watching. Overall, we're quite confident that the financial system is stable, is stable, is in a different spot, with the buffers that-, the capital buffers that the banks have, and so forth.
SS: So, sir, we've only got 20 seconds-,
SS: Do you, then, believe, that Mr. Mario Draghi has too tight a remit, to look at a pure CPI inflation rate, and actually needs to think about some of the factors you just mentioned, and get money tighter than it currently is?
WD: Yes. With the aim of stability as a goal, good for the economy, good for our clients, and that's, ultimately, what we should want as a financial sector.
GC: We've got to wrap up with you. Nice to see you this morning, thanks very much for coming to us, Mr. Draijer, the Chairman of Rabobank.