Inhoudsopgave Bestuursverslag Corporate governance 6.2.2 Troubled debt Past due, non-performing loans, impairments and allowances for loan impairments EDTF27 For the purpose of reporting Rabobank distinguishes several types of troubled loans, like for example: Past due loans: Interest, repayments or overdrafts on a loan have been due for payment for more than one day. Non-performing loans: Loans that at least satisfy one of the following criteria. Material exposures which are more than 90 days past due or the debtor is assessed as unlikely to pay its credit obligations in full without realisation of collateral, regardless of the existence of any past due amount or the number of days past due. Please note that inflow criteria for classification in non-performing and default classes are mostly in line. Within Rabobank the Basel II default definitions are used for identifying an allowance for loan losses. However, exit criteria for forborne non-performing exposure are stricter than for defaulted exposure. Furthermore, recovered forborne non- performing exposure is bound by more rigorous inflow criteria and can be labelled as non-performing exposure once more, even if the default criteria are not being met. Loan impairment allowance The loan impairment allowance consists of three components: Specific allowance: For individual impaired loans a specific allowance is determined. The size of the specific allowance is the difference between the carrying amount and the recoverable amount, which is the present value of the expected cash flows, including amounts recoverable under guarantees, collateral and unencumbered assets, discounted at the original effective interest rate of the loans. If a loan is not collectible it is written-off from the allowance. Specific provisioning for every change that impacts the P&L by 7.5 or more is dealt with by the Provisioning Committee. Collective allowance: In addition to the assessment of individual loans, for retail exposures a collective assessment is made if it is not economically justified to recognize the loss on an individual basis. In these cases the collective assessment is made based on homogenous groups of loans with a similar risk profile with the purpose of identifying the need to recognize an allowance for loan losses. Jaarrekening Rabobank Groep Jaarrekening Rabobank IBNR (Incurred But Not Reported): For exposures in the portfolio that are impaired, but not yet recognised as such (i.e. incurred but not reported) a general allowance is taken. This allowance is taken because there is always a mismatch period between an event causing a default of a client and the moment the bank becomes aware of the default.The allowance will be determined based on Expected Loss (EL) data resulting from the Economic Capital models. Specific and collective loan losses for the period comprise actual losses on loans minus recoveries. Recoveries regard written-back amounts from actual losses in previous years. Expected Loss data for provisioning Expected Loss is a key risk component for determining the bank's general and collective provisions. EL parameters are used to determine general and collective allowances, adjusted in conformity with IFRS rules.The outcome is benchmarked with an alternative methodology, which uses historical provisioning data. One-obligor principle For exposures that, under Basel regulations, qualify as corporate exposures, exposure is measured at client group level, in line with the one-obligor principle as defined by Rabobank. The one-obligor principle implicates that the total of the approved exposure limit(s) of a debtor is combined with the exposure limits of the other debtors of the same client group within all entities. The client group of debtors includes debtors belonging to an economic unity in which legal entities and companies are organisationally connected, as well as majority shareholders of that economic unity. 344 Rabobank Jaarverslag 2015

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Jaarverslagen Rabobank | 2015 | | pagina 345