Notes to the company financial statements
Accounting policies
1 Basis of preparation
2 Risk exposure on financial instruments
Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
The company financial statements of Rabobank, a credit
institution as referred to in section 1:1 of the Financial
Supervision Act, have been prepared in accordance with
accounting policies generally accepted in the Netherlands and
comply with the financial reporting requirements included in
Part 9 of Book 2 of the Dutch Civil Code. In accordance with
subsection 8 of section 362 of Book 2 of the Dutch Civil Code,
the accounting policies in the company financial statements
are the same as those used in preparing the consolidated
financial statements of Rabobank Group, reference is made
to section 2 Accounting policies of the consolidated financial
statements, with one exception regarding the measurement
of interests in group companies as these are measured at net
asset value. The hedge accounting entries of the consolidated
financial statements are also applied in the company financial
statements by using combination 3 (Option 3 RJ).
Rabobank Group, the Coöperatieve Rabobank U.A. (Rabobank)
and the legal entities and companies that form part of the
group, is an international financial services provider operating
on the basis of cooperative principles. Rabobank has its
registered office in Amsterdam and is registered under Chamber
of commerce number 30046259.
Rabobank Group manages risks at various levels within the
organisation. At the highest level, the Managing Board (under
the supervision of the Supervisory Board) determines the risk
strategy it will pursue, the risk appetite, the policy framework as
well as the limits.The Supervisory Board regularly assesses the
risks attached to the activities and portfolio of Rabobank Group.
The Chief Risk Officer, as Member of the Managing Board, is
responsible for the risk management policy within Rabobank
Group.
Rabobank considers risks at company level the same as
at consolidated level. We therefore refer to section 4'Risk
exposure on financial instruments'of the consolidated financial
statements except the section regarding legal and arbitration
proceedings. Additional remarks on solvency on solo level are
disclosed below.
Solvency
Rabobank uses its own internal solvency objectives on a solo
level that extend beyond the minimum requirements of the
supervisors. It takes market expectations and developments in
legislation and regulations into account. Rabobank manages
its solvency position based on policy documents. The solvency
position and the objectives are periodically reviewed by the Risk
Management Committee and the Asset Liability Committee of
the Managing Board and the Supervisory Board.
Coöperatieve Rabobank U.A. (solo) must comply with a
number of minimum solvency positions as stipulated under
law. The solvency position is determined on the basis of ratios.
These ratios compare the qualifying capital (total capital ratio),
the tier 1 capital (tier 1 ratio) and the core capital (common
equity tier 1 ratio) with the total of the risk-adjusted assets.
Effective 1 January 2014, the minimum required percentages
are determined on the basis of CRD IV/CRR.The legal buffers
below are applicable as from 2016.These buffers will gradually
increase until the year 2019. Rabobank is already allowing for
these changes in its capital planning.The table below shows
the minimum legal buffers based on the planned final situation
under CRD IV/CRR.
Minimum capital buffer
Total
CET1
Tier 1
capital
Pillar 1 requirement
4.5%
6.0%
8.0%
Pillar 2 requirement
1.75%
1.75%
1.75%
Capital conservation buffer 2016-2019
2.5%
2.5%
2.5%
The CET1-ratio of Coöperatieve Rabobank U.A. (solo) is 15.5%
(2016:16.4%). Rabobank changed the risk weighting of its
equity exposures in group entities by applying the more
common IRB simple risk weight approach of article 155 CRR
as a result of which its solo CET1 ratio de-creased to 15.5%
(2016:16.4%).
Legal and arbitration proceedings
Rabobank considers risks regarding legal and arbitration
proceedings the same at company level as at consolidated level.
Rabobank Group is active in a legal and regulatory environment
that exposes it to substantial risk of litigation. As a result,
Rabobank Group is involved in legal cases, arbitrations and
regulatory proceedings in the Netherlands and in other
Rabobank Annual Report 2017 - Company financial statements
246
