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
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Annual Report 2010 Rabobank Group