Contents Management report Corporate governance Consolidated financial statements Financial statements Pillar 3
PD (Probability of Default):
The likelihood that a counterparty will default within one year.
Qualifying capital:
Capital determined based on the regulator's requirements. For Rabobank, this represents
the sum of the tier 1 capital, subordinated debts and share of non-controlling interests
less transitional provisions.
RAROC (Risk Adjusted Return
On Capital):
Risk-based profitability measurement framework which ensures that earnings and risks
can be consistently weighted against each other.
Regulatory capital or external capital
requirement:
Return on tier 1 capital:
Risk-weighted assets:
The total capital classified by the regulator as risk-bearing capital, consisting of the
tier 1 and tier 2 capital.
Net profit related to the tier 1 capital as at 31 December of the previous financial year.
The assets of a financial institution multiplied by a weighting factor, set by the
regulatory authorities, reflecting the relative risk related to these assets.The minimum
capital requirement is calculated based on the risk-weighted assets.
Sector policy:
Solvency:
Sustainability:
Policy related to specific socially and environmentally sensitive industries and chains.
A company's ability to meet its financial obligations.
We define sustainability as the quality of not being harmful to people, communities,
environment or depleting natural resources, and thereby supporting long-term
ecological balance.
Sustainability assessment:
In the sustainability analysis sustainability related risks assessed in relation to the
strategy and primary business activities of the client. These can, apart from being client
specific, also be related to the country or sector of the client.
Sustainability risk:
The likelihood of a business client causing, contributing to or being linked to adverse
social, environmental, or governance impacts.
Material sustainability risks: environmental, social and/or governmental risks that, if not
properly mitigated:
can have a negative impact on environment and people and/or;
have a negative impact on the clients credit risk profile caused by direct (e.g. fines)
or indirect (e.g. loss of market share, loss of operating license) financial damage for
the client;
can cause reputational risks for Rabobank.
Sustainable development:
Sustainable development is development which meets the needs of the current
generations without compromising the ability of future generations to meet their own
needs (United Nations Brundtland Commission Report, 1987).
Tier 1 capital:
This capital is determined based on the regulator's requirements. For Rabobank, this
represents the sum of the common equity tier 1 capital, grandfathered instruments
and share of non-controlling interests less transitional provisions and deductions.
405 Glossary of terms Annual Report 2015 Rabobank Group
