Contents Management report Corporate governance Consolidated financial statements Financial statements Pillar 3
subject. In order to avoid a possible conflict between the
current practice of macro-hedge accounting and new hedge-
accounting rules, IFRS 9 provides the option of continuing to
use the current conditions governing macro-hedge accounting
from IAS 39.
Application
The rules governing classification, measurement and
impairments are applied retrospectively by amending
the opening balance sheet on 1 January 2018.There is no
obligation to amend the comparative figures.The outlookfor
the hedge-accounting conditions is that they will come into
effect on 1 January 2018.
Expected impact
Rabobank has started making preparations for the
implementation phase.The main impact is expected to be on
loan impairments. It is not yet possible to reliably estimate the
potential impact. More clarity on this subject is expected in the
2016 financial statements.
Other standards issued by the IASB, but not yet
endorsed by the European Union
IFRS 14 Regulatory Deferral Accounts
IFRS 15 Revenue from Contracts with Customers
Amendments to IFRS 10 and IAS 28: Sale or Contribution of
Assets between an Investor and its Associate or Joint venture
Although these new requirements are currently being analysed
and their impact is not yet known, Rabobank does not
expect the implementation of these other standards to have
a significant impact on profit or equity.
Judgements and estimates
These financial statements were prepared on the basis of the
principle of a going concern because there are no indications
to the contrary. The preparation of the financial statements
requires management to make estimates and assumptions
that affect the amounts reported for assets and liabilities, the
reporting of contingent assets and liabilities on the date of
the financial statements, as well as the amounts reported for
income and expenses during the reporting period.
Some accounting principles require critical estimates that are
based on assessments and the use of assumptions. Although
management bases their estimates on the most careful
assessment of current circumstances and activities on the basis
of available financial data and information, the actual results
may deviate from these estimates.The following accounting
principles have been identified as principles which lead to
a high degree of assessment and estimation uncertainty.
Loan impairment allowance
Loan impairment allowances are recognised if there is
objective evidence that Rabobank will not be able to collect
all amounts due under the original terms of the contract.
Determining a provision requires a significant degree of
judgement formulation, based on the evaluation by the
management of the risks in the loan portfolio, the current
economic circumstances, credit losses over the previous years,
as well as developments in financial credits, business sectors,
business concentrations and geopolitics. Changes in judgement
formulation as well as further analyses may lead to changes in
the magnitude of loan impairment allowance overtime.
Determining objective evidence for decreased creditworthiness
and determining the magnitude of the recoverable amount
form part of the processes that are surrounded by inherent
uncertainty and which involve various assumptions and factors
regarding the creditworthiness of the borrowers, expected
future cash flows and the value of collateral.
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.
2.2 Capital interests
2.2.7 Subsidiaries
The subsidiaries i.e. those companies and other entities
(including special purpose entities) in which Rabobank has
direct or indirect control over financial and operational policy,
are stated at net asset value. Subsidiaries are included from
the date on which Rabobank obtains control, and ceases to be
included on the date that this control ends.
2.2.2 Investments in associates and joint ventures
Investments in associates and joint ventures are measured at
net asset value. 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.
Associates are entities over which Rabobank has significant
influence and in which it usually holds between 20% and 50%
259 Notes to the financial statements of Rabobank
