Rabobank Group Corporate Governance
Strategy
Over the past decade, Rabobank Group has paid a
great deal of attention to its corporate governance.
The desire for optimum implementation of
corporate governance within Rabobank Group
naturally implies that it closely follows the global
debate on this subject. As it is, financial institutions
such as Rabobank Group have been familiar for
years with many of the latest governance princi
ples. After all, the financial sector has always been
subject to strict regulation because of its social
and economic role. Given its firm roots in Dutch
society and its prominence in the international
capital markets, Rabobank Group endorses the
principles of the Dutch Corporate Governance
Code. However, Rabobank Group is not directly
subject to this code, as its structure is based on
cooperative principles and it is not listed on the
stock exchange. Nevertheless, it will apply the
majority of the code's elements.
Cross-guarantee system
Corporate governance at Rabobank
Nederland
Executive Board
50 Rabobank Group Annual Report 2005
Organisation and risk management: Rabobank Group Corporate Governance
Rabobank Group consists of the local Rabobanks, their central organisation
Rabobank Nederland and its subsidiaries and other affiliated entities.
Through their mutual financial association, various legal entities within
Rabobank Group together make up a single organisation. An internal
liability relationship exists between these legal entities, as referred to in
Section 12 of the Act on the Supervision of the Credit System 1992
(Wet toezicht kredietwezen 1992). This relationship is formalised in an
internal 'cross-guarantee' system, which stipulates that if a participating
institution has insufficient funds to meet its obligations towards its
creditors, the other participants must supplement that institution's
funds in order to enable it to fulfil those obligations.
The Executive Board is responsible for the management of Rabobank
Nederland and its affiliated entities. This includes responsibility for the
achievement of the objectives of Rabobank Group as a whole, its strate
gic policy, its results, the synergy within the Group, compliance with all
relevant laws and regulations, the management of business risks and
the financing of Rabobank Group. The Executive Board reports on all
these aspects to the Supervisory Board, the Central Delegates Assembly
(the organisation's 'parliament', which is authorised to take decisions on
behalf of the local Rabobanks) and the General Meeting of Rabobank
Nederland, which is formed by the members, i.e. the local Rabobanks.
Rabobank Group endorses the principles of the Dutch Corporate
Governance Code.
Members' influence is embedded in the cooperative structure.
