5. Capital management This chapter describes the capital management and Regulatory and Economic Capital requirements of Rabobank.The CRR (CRD IV) framework defines capital requirements for banks as the absolute minimum amount of capital required to cover the financial risks that a bank faces. For Pillar 1 this is expressed in three major risk types: credit, operational and market risk. 5.7 Capital Management Inhoudsopgave Voorwoord Bestuursverslag Corporate governance Consolidated Financial Statements Company Financial Statements Pillar 3 The capital management framework supports the overall strategy of Rabobank to maximise long-term risk-adjusted returns on invested capital, guided by the following objectives: 1. A viable capital strategy in line with the overall business strategy, risk strategy, and supply side constraints 2. A feasible mid-term capital plan including an optimal capital allocation in line with risk appetite 3. Compliance with regulatory capital requirements and alignment of capital projections with regulatory guidance and expectation 4. Enabling risk-adjusted capital-based performance management to support the achievement of capital ratio targets 5. Enabling achievement of capital target ratios (a minimum CET ratio of 14%, and a minimumTotal Capital ratio of 25%) in line with the capital strategy plan 6. Accurate measurement and reporting of capital usage according to regulatory requirements and internal standards 7. Ongoing monitoring of capital limits and enforcement of compliance if breaches occur 8. Ensuring optimal mix of available capital across the group in light of regulatory requirements, capital market expectations and capital costs edtf 11 Capital risk appetite is set by the Board, reflecting the Group's strategic plan, regulatory capital constraints and market expectations. It is defined by a number of minimum capital ratios in normal and stressed conditions.. Capital is actively managed and regulatory ratios are a key factor in Rabobank's planning process and stress analyses.The capital plan is tested for capital adequacy using sensitivity analysis and a range of stress scenarios covering adverse economic conditions as well as other adverse factors that could impact Rabobank. Rabobank maintains a Recovery Plan which sets out a range of potential mitigating actions that could be taken in response to a stress event. The Executive Board has ultimate responsibility for ensuring that Rabobank maintains the targeted minimum capital levels above the minimum prudential capital levels as set by the European Central Bank (ECB). In the yearly Internal Capital Adequacy Assessment Process (ICAAP), Rabobank assesses the capital adequacy in the context of the current and foreseeable business and environment where it operates in and the associated risk exposures as part of the Supervisory Review and Evaluation process. edtf io The main differences are the regulatory and transitional adjustments in qualifying capital following CRR, such as intangibles, deferred tax assets, the Internal Ratings Based (IRB) shortfall and the phasing out of non-eligible additional Tier 1 capital instruments. The Tier 2 subordinated debt is accounted for as a liability under IFRS.Table 1 provides an overview of the changes in the different qualifying capital components. 320 Rabobank Jaarverslag 2016

Rabobank Bronnenarchief

Jaarverslagen Rabobank | 2016 | | pagina 321