High level of creditworthiness:
risk management
Rabobank Group pursues a prudent risk policy aimed
at maintaining a moderate risk profile. This is reflected,
for instance, in our comfortable liquidity position, our
robust capital position and our very limited exposure to
government bonds issued by GIIPs countries. In the year
under review, EUR 29 billion in long-term funding was
raised, which amply met the annual budget. Savings
deposits also increased. Despite this strong position,
Rabobank Group is susceptible to the effects of the current
economic situation. The economic developments led to
a worsening of the risk profile of Rabobank Group's
domestic loan portfolio in particular. Bad debt costs stood
at 52 basis points of average private sector lending.
General
Introduction
Risk management organisation
In addition to describing the principles underlying Rabobank's risk management policy and how
Rabobank organises its risk management, this section covers the specific risks that Rabobank
Group incurs, i.e. credit risk, country risk, interest rate risk, liquidity risk, market risk, currency
risk and operational risk. These risks will also occur in 2013. In addition, the bank is exposed to
other risks that may affect its earnings and equity, including risks attaching to the banking
environment, general economic conditions, government policies and regulations. Both
Rabobank itself and the Dutch Central Bank (DNB) have formulated standards concerning
Rabobank Group's organisation and control. Rabobank's organisation and control are subject
to the Dutch Financial Supervision Act, including subordinate legislation based thereon, and
regulations imposed by both DNB and the Netherlands Authority for the Financial Markets
(AFM) in their capacity as regulators. These legal and regulatory requirements form Rabobank
Group's framework for the design of the organisation and control of its activities. In 2012,
much focus was placed on the implications of future regulatory requirements, including those
of Basel III, the Foreign Account Tax Compliance Act (FATCA) and the Dodd-Frank Act.
Risk management is performed at different levels within Rabobank Group. At the highest
level, the Executive Board determines the risk strategy, risk appetite, policy principles and
limits under the supervision of the Supervisory Board and is advised by the Rabobank Group
Balance Sheet and Risk Management Committee as well as by the Rabobank Group Credit
Policy Committee and the Group Operational Risk Committee. The Supervisory Board
regularly reviews the risk exposure of Rabobank Group's activities and portfolio, with the
Audit, Compliance Risk Committee (ACRC) preparing the decision-making processes in the
Supervisory Board. The Chief Financial Officer (CFO) is responsible for the risk policy at
Rabobank Group. Two directorates share responsibility for risk policy. Group Risk Management
is responsible for overall risk management and more specifically for the policy regarding
51 High level of creditworthiness: risk management
