Bad debt costs
in basis points of average lending
Domestic retail banking
2011
22
2010
13
Wholesale banking and international retail banking
73
64
Leasing
58
90
Real estate
69
36
Rabobank Group
37
29
Driven by the adverse economic developments due to the euro crisis, bad debt costs rose
relatively sharp in the last six months of 2011; they were 29 basis points in the first half of 2011
and 45 in the second half of the year. The ten-year average (period 2001 -2010) of bad debt
costs is 24 basis points. This pattern was seen across the organisation. On an annual basis, the
leasing operations were the only ones to show a reduction in bad debt costs compared to
2010.This was attributable in particular to a relatively high release and a substantial amount
in recovered bad debts in the first six months of the year. The real estate business suffered
from pressure on the property market, nearly doubling bad debt costs in that division
compared to 2010.
Impaired loans and allowance for loan losses (in millions of euros)
31 December 2011 31 December 2010
Impaired loans
Allowance
Impaired loans
Allowance
Domestic retail
4,559
1,543
3,577
1,376
Wholesale banking and international
retail banking
3,493
999
2,649
780
Leasing
832
474
960
464
Real estate
1,066
205
793
95
Other
8
1
70
64
Rabobank Group
9,958
3,222
8,049
2,779
Structured credit exposure
in billions of euros at year-end 2011
Non-subprime RMBS
1.8
CDO/CLO and other
corporate exposures
1.5
Commercial real estate
0.8
US subprime
0.3
ABS CDO
0.1
Other ABS
0.1
Structured credit
Structured credit exposure in the trading and investment books stood at EUR 4.6 (5.8) billion at
year-end 2011.
Structured credit exposure rating distribution
at year-end 2011
AAA
30%
A
26%
AA
23%
Below A
21%
Monoline insurers are counterparties in some credit default swaps used to hedge the credit
risk of certain investments. The counterparty risk on the monoline insurers before provisions
was EUR 1,313 (1,330) million at year-end 2011. The total allowance stood at EUR 1,140 (1,114)
million, reducing the remaining counterparty risk to EUR 173 (216) million. This counterparty
risk is caused by a drop in the fair value of the underlying investments or by the potential
emergence of a claim for payment against these insurers because of other insured investments.
In determining the economic counterparty risk, time aspects and the credit quality of the
investments have been taken into consideration. As the largest part of the counterparty risk
has been provided for, further downgrades have only limited impact.
47
Strategic Framework High level of creditworthiness: risk management