The Dutch giant Rabobank Group is under pressure from a California consumer group to devote more resources to small-scale farming in the state.
With the $740 billion-asset Rabobank set to close a deal that would increase its California assets 50%, the Greenlining Institute is asking it to step up its Community Reinvestment Act commitment and create loan programs to help turn farm workers into farm owners and help small, organic farms grow.
Specifically, the group is asking Rabobank to commit $7.5 billion over the next 10 years to such programs.
Rabobank, though, is balking at Greenlining’s demands.
Joyce Keane, the company’s CRA officer in California, said that $7.5 billion is far more than it can handle in the state, where it has just 40 branches. Rabobank may be one of the world’s largest banking companies, but even after its deal to acquire the $2.4 billion-asset Mid-State Bancshares of Arroyo Grande closes next quarter, it still would be a relatively small player in California, she said.
“They wanted us to go into an agreement like they have with the major banks,” Ms. Keane said. “They’re likening who we are and what our resources are to what the resources are in the Netherlands.”
Greenlining has a history of pressuring large banking companies to increase their CRA efforts. It has gotten 10-year agreements out of companies such as Wells Fargo & Co., Citigroup Inc., Bank of America Corp., and Washington Mutual Inc. to commit hundreds of millions of dollars for low-income housing, minority-owned small-business lending, and other community development programs.
Robert L. Gnaizda, the general counsel and policy director for the group, said it has had the most success in negotiating with companies when they are seeking regulatory approval to buy a bank. Greenlining opposes any merger in which the buyer does not agree to make some kind of commitment to community development lending, and it would oppose any future deals by Rabobank if it does not enter an agreement, he said.
Rabobank entered the American retail banking market in 2002 with its purchase of the $1.3 billion-asset VIB Corp. of El Centro, Calif. Since then the Dutch company has purchased Central Coast Bancorp in Salinas and two agribusinesses in the Midwest.
Mr. Gnaizda stressed that Greenlining is not asking Rabobank to commit $7.5 billion all at once.
“They can do it gradually,” he said, noting that Rabobank has said that it wants to have $15 billion of assets in the United States within 10 years.
Ms. Keane said that Rabobank already has initiated a number of community development programs in California, including helping nonprofits apply for Federal Home Loan Bank grants, making a $4.5 million investment in a multifamily affordable housing project in Brawley, and setting up a credit-scored small-farm loan program for loans of less than $100,000.
Still, Rabobank has not ruled out working with Greenlining. It is one of five bank sponsors of a conference scheduled for Friday and organized by leaders in the Hmong community to discuss ways to help more immigrants from Southeast Asia become farm owners. Mr. Gnaizda is scheduled to address the conference.
