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.
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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