Off-balance-sheet activities Tier I ratio: 10.3 BIS ratio: 10.5 Change in accounting policy for pensions Notes to the balance sheet 51 Development in capital and solvency ratios Off-balance-sheet activities include guarantees, irrevocable facilities and derivatives. At year-end, the amount of guarantees was EUR 7.7 (9.7) billion and the irrevocable facilities were EUR 27.2 (25.7) billion. The notional value of the derivatives outstanding was EUR 1,700 (2,213) billion.The credit risk incurred on these instruments is com parable to EUR 34.6 (29.9) billion in loans. The Tier I ratio and the BIS ratio are the most common ratios used in the financial world to measure solvency. The Tier I ratio expresses the relationship between core capital and total risk-adjusted assets. At 31 December 2002 the Tier I ratio stood at 10.3 (9.9).This is higher than the long-term target of 10.The minimum requirement set by the external supervisors is 4. The high solvency ratio is one of the reasons for Rabobank Group's triple A rating by both Moody's and Standard Poor's. Total risk-adjusted items increased by EUR 13.0 billion to EUR 165.8 billion.This increase was largely due to the rise in lending.The Tier I capital increased by EUR 2.0 billion to EUR 17.1 billion. The BIS ratio is calculated by dividing the total of Tier I and Tier II capital by the total of risk-adjusted assets.The BIS ratio came to 10.5 (10.2).This comfortably exceeds the minimum requirement set by the external supervisors of 8.0. (in EUR millions) 2002 2001 Tier I capital 17,071 15,092 Tier I ratio 10.3 9.9 Tier I and Tier II capital 17,414 15,542 BIS ratio 10.5 10.2 The Rabobank Group's financial statements for 2001 stated that a change in the accounting policy for pensions would be implemen ted with effect from 1 January 2002.The change concerns the method of recognising pensions in the financial statements. It has been decided that recognising pension charges on a cash basis of accounting (with alternating repayment of pension contributions, zero pension contributions or very high contributions) is no longer suitable. It is not appropriate for short-term aspects of extremely long-term pension agreements to have a substantial effect on annu al results from one year to the next. In addition, the new method of accounting for pensions in the financial statements is in line with the approach adopted in other banks with international operations. The effect of this kind of change in accounting policy is required to be included in equity, with an adjustment of the comparative figures for the previous year. On 1 January 2002, EUR 1.9 billion was charged to equity. Under the new accounting policy, peaks in pension charges will be a thing of the past as from 2002.

Rabobank Bronnenarchief

Annual Reports Rabobank | 2002 | | pagina 53