in millions of euros
Loan
portfolio
Impaired
Allowance
Value
adjustments
Write-off
At 31 December 2013
- Property investments domestic retail banking
9,910
1,104
516
144
35
- Property investments Rabo Real Estate Group (FGH Bank)
14,446
2,410
788
485
23
Total property investments
24,356
3,514
1,304
629
58
- Project development domestic retail banking
1,942
793
396
168
48
- Project development Rabo Real Estate Group (FGH Bank)
1,041
357
30
29
11
Total project development
2,983
1,150
426
197
59
in millions of euros
Loan
portfolio
Impaired
Allowance
Value
adjustments
Write-off
At 31 December 2012
- Property investments domestic retail banking
10,346
908
389
103
14
- Property investments Rabo Real Estate Group (FGH Bank)
15,524
1,476
339
223
64
Total property investments
25,870
2,384
728
326
78
- Project development domestic retail banking
2,135
595
255
112
39
- Project development Rabo Real Estate Group (FGH Bank)
978
49
14
9
3
Total project development
3,113
644
269
121
42
Rabobank's Dutch commercial real estate portfolio continued to contract in 2013 as a result of
repayments and a lower risk appetite. Market developments are weighing down the quality of
the portfolio, which is reflected in a higher level of impaired loans, i.e. bad debt costs, over the
past few years. Significant mitigating factors for the quality of the loan portfolio are Rabobank's
focus on relationship banking and the fact that its financing policy is more customer than
property-driven. If the current economic developments continue, loan losses in the real estate
portfolio are expected to remain high in the years to come.
ACCBank accounts for the main portion (EUR 1.1 billion) of the international commercial real
estate portfolio. This portfolio is to be considered as run-off. Although the value of the real estate
in the prime locations in Ireland is stabilising to some extent, values at other locations are still
under pressure. Further additions of EUR 249 million were therefore made to the provisions for
this portfolio in 2013. More additions are likewise expected for the year ahead, albeit at a lower
level than in the past few years.
Country risk
With respect to country risk, a distinction is drawn between collective debtor risk and transfer
risk. Collective debtor risk is the risk that a large number of debtors in a particular country will
all be unable to fulfil their obligations owing to the same cause, e.g. war, political or social unrest,
natural disasters, or government policy that fails to create macro-economic and financial stability.
Transfer risk relates to the possibility of foreign governments placing restrictions on funds
transfers from debtors in their own country to creditors in other countries. Rabobank Group
uses a country limit system to manage collective debtor risk and transfer risk. After careful
review, relevant countries are given an internal country risk rating, after which general limits
and transfer limits are set. Transfer limits are introduced based on the net transfer risk, which is
defined as total loans granted less loans granted in local currency, guarantees, other collateral
73 High level of creditworthiness: risk management
