Contents Management report Corporate governance Consolidated financial statements Financial statements Pillar 3
Commercial real estate
Due to weaker market conditions for both residential and
commercial real estate and the limited number of transactions,
there is increased uncertainty regarding property valuations
(i.e. land holdings, work in progress, completed developments
and investment properties) and property financing. Property
valuations are subject to a number of different assumptions
and valuation methods. The use of different assumptions
and methods may, due to their subjectivity, result in different
outcomes. More information on the developments in the real
estate portfolio are included in Paragraph 4.4.8.
Fair value of financial assets and liabilities
Information on the determination of the fair value of financial
assets and liabilities is included in Paragraph 4.9.
Impairment on goodwill
Goodwill is assessed for impairment losses by comparing the
recoverable value to the carrying amount.The most important
assumptions for determining the recoverable value are included
in Section 14.
Taxation
When determining the tax burden and the related current and
deferred tax due and tax credits estimates are used in order
to arrive at an estimate. The fiscal treatment of transactions
is not certain in every case and tax returns have in the past
required approval from the tax authorities in various countries
in some cases.The tax due and tax credits proposed are based
on all known information, and where relevant, external advice.
Differences between the final outcome and the figures adopted
here are shown in the current and deferred tax due and tax
credits for the period when certainty is gained as to the fiscal
treatment and/or when the tax assessments are imposed.
The other valuation principles that require critical estimations
are provisions (Section 23) and consolidation (Section 47).
2.2 Group financial statements
2.2.1 Subsidiaries
The participating interests over which Rabobank maintains
control are subsidiaries (including structured entities) and are
consolidated. Control is exercised over a participating interest if
the investor is exposed to, or is entitled to, fluctuating income
in respect of their involvement in the participating interest and
has the opportunity to influence this income by using their
control overthe participating interest.The assets, liabilities and
profit/loss of these companies are fully consolidated.
Subsidiaries are consolidated as of the date on which the
effective control is transferred to Rabobank and will no
longer be consolidated as of the date on which this control is
terminated. All transactions, balances and unrealised gains and
losses from transactions between Rabobank Group subsidiaries
have been eliminated during consolidation.
Internal liability (cross-guarantee system)
In accordance with the Dutch Financial Supervision Act (Wet
op het financieel toezicht), various legal entities belonging
to Rabobank Group are internally liable under an intra-group
mutual keep well system. Under this system the participating
entities are bound, in the event of a lack of funds of
a participating entity to satisfy its creditors, to provide the
funds necessary to allow the deficient participant to satisfy
its creditors.
As on 31 December 2015, the participants are:
The local Rabobanks, members of Coöperatieve Centrale
Raiffeisen-Boerenleenbank B.A.
Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.,
Amsterdam
Rabohypotheekbank N.V., Amsterdam
Raiffeisenhypotheekbank N.V., Amsterdam
Schretlen Co N.V., Amsterdam
De Lage Landen International B.V., Eindhoven
De Lage Landen Financiering B.V., Eindhoven
De Lage Landen Trade Finance B.V., Eindhoven
De Lage Landen Financial Services B.V., Eindhoven
On 1 January 2016, the local Rabobanks and the Coöperatieve
Centrale Raiffeisen-Boerenleenbank B.A. entered into
a legal merger. Furthermore, on 1 January 2016, the name
of the Coöperatieve Centrale Raiffeisen-Boerenleenbank
B.A. was changed into Coöperatieve Rabobank U.A.
More information on this matter is included in the Section
'Events after the reporting period'.
2.2.2 Investments in associates and joint ventures
Investments in associates are recognised in accordance
with the equity method. In accordance with this method,
Rabobank's share of profits or losses of an associate are, subject
to Rabobank's accounting policies, (after the acquisition)
recognised in the profit and loss account, and its share in the
changes in reserves after the acquisition are recognised in
reserves.The cumulative changes after acquisition are adjusted
to the cost of the investment.
181 Notes to the consolidated financial statements
