Funds entrusted
Debt securities
Reserves
67 Rabobank Group Annual Report 2004
Notes to the balance sheet
In 2004 funds entrusted, comprising savings, professional securities
transactions and other funds entrusted, grew by 11 to EUR 192.1
(172.6) billion. At year-end 2004, the professional securities transactions
amounted to EUR 4.1 (3.3) billion. Other funds entrusted increased by
13% to EUR 110.3 (97.7) billion, largely due to growth in deposits.
Savings
In the year under review, savings grew by EUR 6.1 billion to EUR 77.7
(71.6) billion, a rise of 9%. The economic uncertainty caused many
consumers to keep a tight hand on their purses. As a result, savings
showed relatively considerable growth once again. The share of Internet
savings in the total savings amount increased from 33% to 43% in
2004. This was at the expense of the traditional savings accounts and
Telesavings in particular, whose respective shares declined by 5% and
4%, to 22% and 17%.
Breakdown of Rabobank Group savings
Internet savings
43%
Savings accounts
22%
Telesavings
17%
Fixed-term deposits
7%
Roparco
6%
Other
5%
In the period under review, Rabobank concluded that, on the basis
of the most recent International Financial Reporting Standards (IFRS),
the Trust Preferred Securities that had been issued in 2003 and 1999 for
an amount of EUR 2.0 billion do not qualify as equity. For that reason, it
was decided to classify these Trust Preferred Securities as subordinated
loans as from 1 January 2004. This does not apply to the issue in 2004.
On account of other conditions, these Trust Preferred Securities can be
classified as equity. For supervision purposes, the Dutch Central Bank
will continue to recognise the Trust Preferred Securities of 2003 and
1999 as core capital (Tier I), even after the transition to IFRS in 2005.
Accordingly, the change in accounting policy will not affect either the
Tier I ratio (11.4) or the BIS ratio (11.4). Under IFRS, the members' capital
of EUR 3.8 billion qualifies fully as reserves. At the end of 2004, 68% of
reserves consisted of other reserves (mainly retained earnings), 21% of
members' capital, 10% of Trust Preferred Securities and less than 1% of
revaluation reserves.
Breakdown of reserves
Other reserves 68%
Members'capital 21%
Trust Preferred Securities 10%
Revaluation reserve 1%
In the year under review, the amount of debt securities grew by
EUR 11.9 billion to EUR 92.6 billion. Apart from Medium Term Notes,
more Certificates of Deposits were issued to finance the growth in
lending and to maintain the Group's good liquidity position.
In order to provide natural hedging of the growth of the international
retail and wholesale activities in US dollars, pounds sterling and
Australian dollars, Rabobank Group raised new reserves in the form of
Trust Preferred Securities for an equivalent amount of EUR 1.9 billion in
these three currencies in the final quarter of 2004. The successful issue
comprised 1.5 billion in US dollars, 350 million in pounds sterling and
500 million in Australian dollars, of which 250 million with fixed coupon
and 250 million with variable coupon. There was enormous interest
among institutional investors for this new issue of Tier I capital.
The issue was several times oversubscribed. In Insto magazine, Australian
institutional investors voted the emission the 'Hybrid deal of the Year',
while Euroweek awarded it the title of 'Best Financial Institution Bond'
in 2004.
