compliance (CER), the focus on commercial and customer interests within that balance is subject
to pressure in practice. That represents a dilemma, since customers' interests deserve the
greatest possible attention. The Supervisory Board endorsed the wish of the Executive Board to
refocus the bank to a greater extent on commerce, innovation and customer requirements,
subject, of course, to the proviso that its own house is in order.
The Supervisory Board is aware that the role of assigned supervisor in the cooperative context
in combination with the role of providing support for the local Rabobanks is not always easy
and calls on all parties involved to switch appropriately between these roles. In 2014, the local
Rabobanks and Rabobank Nederland affirmed to each other that the present governance
insufficiently supports the external, customer-focused ambition of Rabobank and its role in
society. There is an excessive inward-looking orientation as a result of which the focus on the
customer is insufficient, external developments are absorbed at a slow pace and costs are
irresponsibly high. These issues are part of the debates on cooperative governance referred
to above.
Financial statements for 2013, interim report 2014 and budget for 2015
In accordance with the relevant provisions of the Articles of Association of Rabobank
Nederland, the Supervisory Board has reviewed the annual report and the financial statements
for 2013 of Rabobank Nederland and of Rabobank Group, and the other information added
thereto. The Supervisory Board discussed these documents with the Executive Board, the
internal auditor and Ernst Young Accountants LLP (EY), the external auditors, and took note of
the unqualified external auditor's report that EY issued on the financial statements 2013.
The management letter, including the management response, was also discussed at length.
Topics discussed included the development of the capital ratios and the liquidity position, bad
debt costs, real estate valuations, new IFRS rules and divestments and capital expenditure.
In August 2014, the Supervisory Board discussed the interim report 2014 of Rabobank Group, as
part of which it considered matters including the bad debt costs, in particular for commercial real
estate. In the autumn of 2014, Rabobank Group's budget for 2015 was discussed and approved
by the Supervisory Board. In a two-day off-site meeting in the autumn of 2014, the Supervisory
Board and the Executive Board discussed the effects of Vision 2016, the cost structure of
Rabobank Nederland and the development of profitable, future-proof earnings models in
depth. Approval was also given in the latter part of the year to the funding mandate 2015.
Asset Quality Review and stress test
The large-scale assessment by the ECB of over 120 of the largest European banks was
completed in 2014. The banks concerned, including Rabobank, were subjected, as part of the
transition to European banking supervision, to a stress test and an Asset Quality Review (AQR).
In the course of the year, the Supervisory Board very closely followed the progress of this
project and received information on the results on 26 October 2014. In the stress test,
Rabobank's capital buffer in the adverse scenario was found to be 8.4%, compared to an ECB
requirement of 5.5%.
Situation in the financial markets and the position of Rabobank
The Supervisory Board closely monitored the situation in the financial markets and its
consequences for Rabobank in 2014. This included a consideration of the capital ratio of
Rabobank Group and the Supervisory Board received information on the achievement of the
funding goals. The development of the rating, including the downgrade by S&P, was also
discussed.
Report of the Supervisory Board of Rabobank Nederland
