associated with the business. Where risk was concerned, discussions centred on the outcome of the Executive Board's assessment of the design and effectiveness of the internal risk management and control systems, and any significant changes in those systems. Other issues that were considered included the effectiveness of the compliance function in place at Rabobank Group, compliance with laws and regulations, the relationship with the local Rabobanks, and ICT. In the context of the Banking Code, the Supervisory Board - on the recommendation of the Audit, Compliance Risk Committee - approved the Risk Appetite Document, the Risk Charter, the Lending Policy Framework and the Product Approval Process at group level. Following upon the outcome of a study of balanced internal financial relations, which was completed in 2007, Rabobank Nederland increased its equity capital from EUR 4 billion to EUR 6 billion in 2010 by issuing shares to the local Rabobanks. This share issue does not affect group equity. The Supervisory Board devoted a meeting to sponsorship policy, addressed the risk assessment by DNB and took note of the outcome of the CEBS stress test, the annual report of the Confidential Committee under the Regulation on the Internal Reporting of Malpractice and the report on credit facilities issued to individual executive directors or other senior officers. In addition, the members of the Supervisory Board and the members of the Executive Board exchanged thoughts about the settlement of, and lessons learned from, a number of fraud cases that surfaced after Rabobank's acquisition of Bouwfonds (now operating under the name Rabo Real Estate Group), the progress on the OpMaatHypotheek file, and the fine that the Netherlands Authority for the Financial Markets (AFM) imposed in relation to mortgage advice. Areas of special attention for the Supervisory Board in 2010 Financial statements 2009, interim report 2010 and budget for 2011 The Supervisory Board discussed at length the Annual Report 2009 of Rabobank Nederland and Rabobank Group, including the management report, the accompanying independent auditor's report, the financial statements and the proposed profit appropriation. The management letter, including the management response, was also talked about in detail in the presence of both the internal auditor and the independent external auditor. In addition, the Supervisory Board extensively reviewed the interim report 2010 of Rabobank Group. Furthermore, the Supervisory Board discussed the budget for 2011, approving it in outline, and approved the Long-term Policy Agenda for Local Banks 2011 -2012, as well as the Annual Plan and the Rabobank Nederland Budget for Supporting Member Banks 2011. The Supervisory Board also consented to the increase in the funding mandate 2010 and approved the funding mandate 2011In reviewing the financial statements and the budget, the Supervisory Board considered the capital adequacy and liquidity requirements announced by the Basel Committee (Basel III), addressing specifically the importance of client deposits as a source of funding as well as the need for the balanced and varied composition of funding sources. The Audit, Compliance Risk Committee prepared extensively for the discussions on these issues. Re-appointment of independent external auditor On the recommendation of the Supervisory Board, the General Meeting re-appointed Ernst Young Accountants LLP, the independent external auditor, for a period of three years, i.e. for the audits relating to the financial years 2010 to 2012. A number of procedural changes were agreed with the independent external auditor in the process. The recommendation by the Supervisory Board came on the advice of the Audit, Compliance Risk Committee based on the periodic evaluation of the performance of the independent external auditor. In addition, the Supervisory Board approved the independent external auditor's budget for the audit 2010. Strategic developments In 2010, the Central Delegates Assembly adopted the updated version of the Rabobank Group Strategic Framework for 2009-2012. Already in 2010, however, the Executive Board decided to explore the options for strategic repositioning in dialogue with the Supervisory Board and the Central Delegates Assembly: the reasons being the drastic changes in the world of finance due to the financial crisis, which are reflected in Basel III, the changed structure and design of 102 Annual Report 2010 Rabobank Group

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Annual Reports Rabobank | 2010 | | pagina 103