Economic capital rose to EUR 22.8 (22.3) billion in 2011The interest rate risk was lower as a result of our interest rate risk policy that entailed a significant drop in net interest rate positions. This drop was cancelled out by an increase in credit risk due to developments in exchange rates and growth in lending at wholesale banking and international retail banking. There was also an increase in market risk. Rabobank developed a new market risk model that is in keeping with the regulatory capital methodology dictated by CRD III. Total economic capital was well below the available qualifying capital of EUR 39.1 (35.7) billion that is being held to cover any potential losses.This sizeable buffer underscores the solidity of Rabobank Group. Financial reporting controls Rabobank Group constantly seeks to improve its corporate governance and overall internal controls, with the aim of achieving an open, transparent culture of accountability in respect of policies and supervision, and keeping pace with leading international standards. In this context, Rabobank Group has voluntarily implemented internal financial reporting controls in a manner that is similar to how US-registered companies tend to apply Sarbanes- Oxley 404. Rabobank Group is under no obligation to do this, since it is not registered with the US Securities and Exchange Commission (SEC) and is therefore not subject to the related regulations and oversight. Rabobank Group believes that internal financial reporting controls increase the effectiveness of such reporting and offer opportunities to identify and rectify any weaknesses at an earlier stage. This improves the quality of Rabobank Group's financial reporting. Internal controls Rabobank Group uses internal controls to provide reasonable assurance that: - transactions are recorded as necessary to permit the preparation of financial statements in accordance with International Financial Reporting Standards as adopted by the European Union, and that income and expenditures are recognised only if approved by the management; - any unauthorised acquisition, use or disposal of assets that could have a material effect on the financial statements is prevented or detected. Rabobank Group's internal control framework is based on the framework developed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). As set out in the Executive Board Responsibility Statement, the Executive Board has concluded that the internal risk management and control systems are adequate and effective, and provide reasonable assurance that the financial reporting is free of material misstatement. 10 Annual Report 2011 Rabobank Group

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Annual Reports Rabobank | 2011 | | pagina 11