Risks
Rabobank comfortably complies with the minimum survival period of three months set for the
internal stress scenarios. This means that in times of very extreme liquidity stress in the financial
markets and Rabobank specifically, Rabobank has sufficient liquidity for a period of at least
three months, without government support.
In 2014, Rabobank will implement the stress test of the European Banking Authority (EBA) which,
according to the announcement, is set to start in March 2014. Prior to that test, Rabobank will
take part in various Asset Quality Reviews.
Credit risks
Prudent credit policy and embedding of credit risk management
EDTF recommendation 27 Credit risk is the risk that the bank will suffer economic losses if a counterparty cannot fulfil
its contractual or other financial obligations arising from a credit contract. Credit is any legal
relationship on the basis of which Rabobank, in its capacity as a bank, has or could have a
claim against a debtor as a result of providing a product. In addition to loans and facilities
(committed or uncommitted), credit used as a generic term also includes guarantees, letters
of credit, derivatives and the like. Rabobank Group has a robust framework of policies and
processes in place to measure, manage and mitigate credit risks.
Credit organisation
Rabobank Group has three Credit Policy Committees (CPCs): the Rabobank Group CPC, the
Rabobank International CPC, and the Member Banks CPC. The Rabobank Group CPC determines
the credit risk policy at group level. Within this framework, the group entities define and establish
their own credit risk policies. In this context, the Member Banks CPC is responsible for domestic
retail banking, and the Rabobank International CPC for wholesale banking and international
retail banking.The Executive Board is represented by three members in the Rabobank Group CPC.
This committee is chaired by the CFRO, as are the Rabobank International CPC and Member
Banks CPC. The other members of CPCs are representatives of Rabobank Group's most senior
management levels.
Credit acceptance
Rabobank Group's prudent policy for accepting new clients is typified by careful assessment of
clients and their ability to repay any credit that is granted (ability to continue as a going concern).
As a result, the loan portfolio has an acceptable risk profile even in less than favourable economic
circumstances. Rabobank Group aims to have long-term relationships with clients that are
beneficial for both the client and the bank. Approval of larger credit applications is decided
on by committees. A structure consisting of various committee levels has been established,
with the competent committee being determined by the amount of the credit application.
The Executive Board itself decides on the largest credit applications.
With regard to corporate loans, a key concept in Rabobank Group's policy for accepting new
clients is the 'know your customer' principle, which means that loans are only granted to
corporate clients if Rabobank Group believes their management has integrity and expertise.
In addition, Rabobank Group closely monitors developments in the business sectors in which
its clients operate and can properly assess the financial performance of its clients. Sustainable
business practices imply responsible financing and, accordingly, sustainability guidelines also
apply to the lending process.
68 Annual Report 2013 Rabobank Group
