Progress on the Single Euro Payments Area (SEPA) is a major European priority. Cashless payments
will migrate to a single European standard as of 1 August 2014. The payments departments of
all European businesses and banks will have to comply with the same European standards for
processing cashless payments and direct debits from that date. An enormous amount of work
has been done behind the scenes to make this a reality, comparable to the preparations for the
introduction of the euro. Another European directive that significantly affects banks is the
Markets in Financial Instruments Directive (MiFID).The European Commission has revised the
MiFID with a view to market regulation and investor protection. Key elements of the revision
include improved transparency and wider powers for supervisory authorities to enforce
regulations. Rabobank is open to the increased transparency and the changes in the MiFID.
Rabobank has however voiced criticisms of parts of the MiFID. For instance, providing written
statements of suitability on investment advice for all securities transactions carried out offers no
added value but does entail an added administrative burden that will drive up costs.
Extraterritorial application of US regulations
Rabobank is also faced with regulations in countries outside the European Union, principally
the United States (US).The main examples are the Foreign AccountTax Compliance Act (FATCA)
and Dodd-Frank. FATCA is designed to ensure that US taxpayers holding funds outside the US
file correct tax returns with the IRS. On 18 December 2013, the Dutch Ministry of Finance
announced that it had concluded an agreement to exchange data with the US government.
The FATCA legislation is enshrined in Dutch law as a result. Consequently, all Dutch financial
institutions are obliged by law as of 1 July 2014 to request data of clients who may be liable to
tax in the US and to pass them on to the Dutch tax authorities. The Dutch tax authorities will
pass this data on to the IRS with effect from 2015. Dodd-Frank, the second example, concerns a
federal update of regulations for financial institutions by means of new legislative initiatives that
resemble the European agenda for reform but differ in key aspects in terms of their form and
reporting requirements. These rules apply to a large number of Dutch institutions because they
operate in the United States or engage in transactions with US parties. Rabobank is evaluating
the consequences of Dodd-Frank for Dutch banks and for Rabobank. The US rules are highly
detailed and have implications for reporting, accounting and compliance.
Dutch measures and recommendations of the Commission on the Structure of Dutch Banks
In addition to the international agenda, Rabobank is also faced with the Netherlands' own
national agenda for reform, key elements of which are government proposals for the future of
the financial sector and the recommendations of the Commission on the Structure of Dutch
Banks (Wijffels Commission). The government proposals take account of the European agenda
and address the recommendations of the Wijffels Commission. The Commission's report
emphases the need to increase the banking sector's resilience by higher buffers and to provide
better protection for taxpayers. Rabobank has welcomed the report as a major comprehensive
contribution to the debate on reforms in the banking sector. For the financial sector, it is and
remains above all important to increase the buffers and to develop the bail-in proposition.
This means creating conditions in which lenders also contribute financially if a bank runs into
trouble. Given the internal market in Europe and the imperative of maintaining a level playing
field, this must be done at an international level. The Wijffels Commission rightly advocates this.
Rabobank is opposed however to going it alone in Europe by introducing a higher leverage
ratio in the Netherlands, which is one of the recommendations in the report that has been
adopted by the government.This measure will lead to a tilted international playing field, at the
very time when a European Banking Union is set to be introduced to apply uniform standards.
Annual Report 2013 Rabobank Group
