29 Con tin gen t liabilities
30 Reserves and retained earnings
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
Credit related contingent liabilities
Rabobank enters into irrevocable loan commitments as well
as contingent liabilities consisting of financial guarantees and
standby letters of credit on behalf of its customers. Under these
contracts Rabobank is required to perform under an obligation
agreement or to make payments to the beneficiary on third
party's failure to meet its obligations. The following table shows
the amount of the maximum potential utilisation of credit
related contingent liabilities.
in millions of euros
2017
2076
Financial guarantees
3,406
4,550
Loan commitments
32,965
36,723
Other commitments
18,154
21,487
Credit related contingent liabilities
54,525
62,760
Contingent liabilities related to litigation
Rabobank is involved in a number of legal and arbitration
proceedings in the Netherlands and other countries, including
the United States, in connection with claims brought by
and against Rabobank Group arising from its operations.
The maximum amount of non-remote contingent liabilities
relating to claims is 74 (2016: 61). For additional information,
please refer to section 4.10'Legal and arbitration proceedings'.
Contingent liabilities related to income tax
The European Commission has addressed questions to the
Dutch government about article 29a of the Dutch Corporate
Income Tax Code. If the European Commission would decide
to start a formal investigation and ultimately would conclude
that this is a case of state aid, Rabobank may have to repay tax
benefits it enjoyed from 2015 onwards.
Article 29a of the Dutch Corporate Income Tax Code was
included in the Dutch Corporate Income Tax Code so that
capital instruments issued by credit institutions and which are
covered by EU regulation 575/2013 would be considered tax
deductible. In this context, Rabobank issued Capital Securities
in January 2015 and in April 2016, amounting respectively to
EUR 1.5 billion at a fixed interest rate of 5.5%, and EUR 1.25
billion at a fixed interest rate of 6.625%.The contingent liability
related to this matter amounts to 96 (2016: 54).
Liabilities relating to operating leases
Rabobank has concluded various operating lease contracts as
lessee, mainly with respect to properties, information systems
and cars. The future net minimum lease payments under non-
cancellable operating leases can be broken down as follows:
in millions of euros
2017
2016
Not later than 1 year
124
145
Later than 1 year but not later than 5 years
394
332
Later than 5 years
259
375
Total liabilities relating to operating leases
777
852
The expected future minimum lease payments receivable from
sub-leases are nil (2016: nil).The operating lease expenses
are 41 (2016: 98). These are included in 'Other administrative
expenses'in the statement of income.
Payments receivable from operating leases
Rabobank has concluded various operating lease contracts as
lessor. The future minimum lease payments receivable from
non-cancellable operating leases can be broken down as follows:
in millions of euros
2017
2016
Not later than 1 year
714
796
Later than 1 year but not later than 5 years
1,244
1,551
Later than 5 years
84
83
Total payments receivable
from operating leases
2,042
2,430
No contingent lease payments were recognised as assets
during the current year.
Other contingent liabilities
The contractual commitments relating to the acquisition,
construction and development of work in progress and
investment properties amounts to 784 (2016: 735).
in millions of euros 2017 2016
Foreign currency translation reserves (938) 203
Revaluation reserves - Available-for-sale
financial assets 464 571
Revaluation reserve - Cash flow hedges (42) (70)
Revaluation reserve - Assets held for sale (35) (70)
Remeasurement reserve-Pensions (225) (219)
(625) (303)
26,777 25,709
25,376 25,821
1 Prior-year figures adjusted due to changes in presentation
(see note 2.1).
Revaluation reserve - Fair value changes due to
own credit risk on financial liabilities designated
at fair value
Retained earnings
Total reserves and retained earnings
at year-end
Rabobank Annual Report 2017 - Consolidated financial statements
227
