4.5 (Regulatory) Developments Inhoudsopgave Voorwoord Bestuursverslag Corporate governance Consolidated Financial Statements Company Financial Statements Pillar 3 Volcker Rule As part of the Dodd-Frank Act, US regulators adopted a ban on proprietary trading and restricted investments in or sponsoring (or having certain relationships with) hedge funds and private equity ('covered fund activities') by banking entities and their affiliates, known as the 'Volcker Rule'. The entire Rabobank Group is in scope of the Volcker rule since it controls an FDIC insured bank ('Rabobank N.A.') and maintains a branch in the U.S. ('CRUA, New York Branch'). Market Making, Risk- Mitigating Fledging and Trading Outside the United States ('TOTUS') are examples of permitted proprietary trading activities under the Volcker Rule. As of 21 July 2015, Rabobank has an internal Volcker compliance programme, reasonably designed to ensure and monitor compliance with the Volcker Rule. On 30 March 2016, the first annual CEO-attestation to the US regulator (FED) was submitted based on the output of the Volcker Control Framework. Rabobank is in the process of further implementing the requirements and Control Framework with respect to covered fund activities. IFRS9 In July 2014, the IASB published IFRS 9 Financial Instruments as the replacement for IAS 39 Financial Instruments: Recognition and Measurement. The new standard becomes effective on 1 January 2018 and is endorsed by the EU in November 2016. IFRS 9 governs the accounting methods used for the majority of our statement of financial positions and consists of three main areas: Classification and Measurement, Impairments and Fledge Accounting. During 2016 Rabobank has progressed with the implementation of IFRS 9 towards the effectiveness date of 1 January 2018. During 2017 we are planning a parallel-run as from July 2017 onwards. For further information regarding the requirements and impact of IFRS 9 we refer to the consolidated financial statements of 2016. MREL Following the financial crises of 2007/2008, the FSB's recommended a framework on recovery and resolution measures. In April 2014 the European countries accepted the Bank Recovery Resolution Directive (BRRD) which largely reflected FSB's framework.The BRRD went into full force as per 1st of January 2016. Financial institutions have to hold a certain minimum required amount - Minimum Required Eligible Liabilities (MREL)- to have sufficient loss-absorbing and re-capitalisation capacity available to overcome challenging periods and to ensure for an orderly resolution that minimise impacts on financial stability, maintains the continuity of critical functions and avoids exposing public funds (and taxpayers) to loss. Rabobank is held to meet MREL requirements. MREL Requirements will be determined on a case by case basis by the SRB It is our current understanding that Rabobank's capital strategy is aligned with potential MREL requirements. If and when the ongoing dialogue with the regulators will indicate changes are needed, Rabobank will adjust its capital plan. Basel IV The Basel Committee is currently reviewing the whole Regulatory Capital Framework. In the market this overhaul is referred to as'Basel IV'given significance of the anticipated reforms. The new market risk framework was published in January 2016.The Central Bank Governors and Fleads of Supervision (GFIOS), which is the oversight body of the Basel Committee) agreed in January 2016 that the Committee would work to address the problem of excessive variability in risk- weighted assets by the end of 2016. Flowever, more time is needed to finalise some work. A meeting of the GFIOS, originally planned for early January 2017, has therefore been postponed and it is yet unclear when the committee will complete the programme. This programme will include the following key elements: Removal of internal model approaches for certain risks (such as the removal of the Advance Measurement Approach for operational risk). Introduction of additional constraints on the use of internal model approaches for credit risk, in particular through the use of input floors. And the revision of the standardised approach for credit risk. The main issue of the proposed capital framework: the potential introduction of an output capital floor based on revised standardised approaches. 319 4. Risk management

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Jaarverslagen Rabobank | 2016 | | pagina 320