Contents Introduction Management report Appendices Corporate governance Consolidated Financial Statements Company Financial Statements
These Basel proposals need to be transposed into European
law. Europe will start this process in 2019 and the proposals
could be adjusted to better reflect the European situation.
The ultimate impact of the reform of Basel III remains uncertain
for the next coming years given the inclusion of national
discretions in the proposals and the potential European changes.
It is not yet clear whether the Basel reforms will lead to
adjustments on the pillar 2 requirement, the pillar 2 guidance
and the Combined Buffer requirements. Obviously, the Basel III
reforms have a significant impact on Rabobank's capital ratios
itself and the management actions (on either the asset or
liability side of the balance sheet) that will be taken to respond
to the new rules.
Rabobank will continue to optimise its balance sheet in the
coming years to enable the bank to meet the new capital
requirements and to continue serving its clients. In July 2017,
we reduced our risk-weighted assets by approximately EUR 1
billion by transferring the risk on a part of our corporate loan
portfolio (involving approximately EUR 3 billion loans to
business clients in Europe and North America) to pension fund
Pensioenfonds Zorg en Welzijn. In September Rabobank sold its
remaining shares in Van Lanschot (9.8%) and in October 2017
we sold a share of our mortgage portfolio worth around EUR 0.6
billion to La Banque Postale. In December 2017 we sold our
Roparco mortgage loan business of around EUR 0.5 billion to
RNHB, a former label of Rabobank subsidiary FGH Bank. In that
month we also sold our share in Orix (2%) to several institutional
investors. Despite this divestment Orix/Robeco will remain an
important financial partner of Rabobank.
Credit ratings hold firm
Rabobank's credit ratings remained unchanged in 2017.
We maintained our credit ratings from S&P ('A+'), Moody's
('Aa2'), Fitch ('AA-') and DBRS ('AA').The Outlook remained
'stable'with Fitch and DBRS and'negative'with Moody's. S&P
upgraded its outlook from 'stable'to 'positive in September 2017
on the back of the broad-based economic expansion in the
Netherlands and further recovery of the housing market.
All the rating agencies view Rabobank's leading position in the
Dutch banking sector and the international Food Agri sector
as important rating drivers. Our large buffer of equity and
subordinated debt, which offers protection to non-subordinated
bondholders, also plays an important role in our ratings.
Rabobank remains one of the highest rated commercial banks
worldwide. Read more on Rabobank's credit ratings here.
Sustainability ratings
As a bank at the heart of society, we believe we should
contribute to sustainable development. Rabobank strives for
continuous improvement in sustainability performance. We value
our top position in the ratings of key agencies highly, which
validates our impact on sustainable development.Through our
Sustainably Successful Together Programme, we are integrating
sustainability in all our relevant policies, processes, products
and services.Two independent agencies rate our sustainability
efforts: RobecoSAM (Dow Jones Sustainability Index) and
Sustainalytics. Last year our RobecoSAM ranking changed to the
11th position (2016: 7)] and our Sustainalytics ranking changed
to the 7th position (2016: 2). For a more complete overview of
our ratings, please refer to Appendix 3.
Our progress on capital ratios
Capital strategy
Rabobank has set the following capital ambition as per the end
of 2020:
Minimum CET1 ratio of 14% plus an additional tier 1 layer of
roughly 2%;
Minimum total capital ratio of 25%.
With strong capital and liquidity buffers, Rabobank differentiates
itself as a bankthat is financially robust. These buffers are
indispensable to maintain our high credit ratings to ensure
good access to professional funding in the capital markets
and to reduce the risk of losses for our senior creditors in the
(unlikely) event of a bail-in.
Our capital strategy is designed to achieve high capital ratios
in anticipation of the consequences of the Basel III reform
(applicable as from 2022) and the future Minimum Requirement
for own funds and Eligible Liabilities (MREL) obligations. In 2018
more regulatory guidance is expected on Rabobank's MREL
requirement. Once the recently adopted EU credit hierarchy
directive is implemented in the Netherlands, Rabobank will
opt to issue Senior Non Preferred bonds to optimise its buffers
and prepare for future MREL requirements. Current MREL Eligible
Capital buffer related to the risk-weighted assets amounts
to 26.8%.
Our capital buffer consists of retained earnings, Rabobank
Certificates (togetherthe lion's share of CET1 capital), additional
tier 1 capital and tier 2 capital. Although Rabobank does not
seek to maximise profit, healthy profit growth is important for
ensuring continuity and financial soundness.The retention
of net profit after the deduction of payments on Rabobank
Certificates and hybrid capital instruments, and appropriation to
other non-controlling interests increases our retained earnings.
Rabobank Annual Report 2017 - Management report
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