About this
Report
Chairman's
Foreword
Corporate
Management Report Appendices Governance
Consolidated Financial Company Financial
Statements Statements
The Governance Bodies in Short
The governance of Rabobank has always been adaptive. Since the
establishment of the first credit cooperative in the Netherlands
in 1895, Rabobank has been able to change in response to
strategic considerations, to trends in society, as well as to
developments in banking and regulation. As with previous
governance regimes, the new governance structure is founded
on a balanced system of closely interrelated and interacting
bodies. This new structure was designed by an internal
Governance Committee created at the beginning of 2014. The
Committee consisted of representatives of local supervisory
bodies and chairs of local management teams, as well as
Managing Board members of Rabobank Nederland. Its ultimate
proposals had to satisfy several shared principles and rectify
shortcomings in the previous framework. The governance review
process took approximately two years.
A defining feature of the new governance is that the cooperative
division remains inextricably linked with the tactical and
operational banking business. The figure below shows the
cooperative governance bodies (LHS) and the banking business
(RHS). Bottom-up decision-making entails that member
representatives ultimately approve the bank's strategic
frameworks. In the following section we will elaborate on the
main roles and responsibilities of the two sides of the new
governance.
Cooperative Governance
Cooperatives are distinguished by the fact that clients can
become members, and members give cooperatives legitimacy.
Currently, more than 25% of our clients are members of a local
Rabobank. Their representatives in governance bodies exert an
important influence on the course of the local Rabobank as well
as of the entire organization. As a core feature of the cooperative
governance, membership has always led to divergent internal
dynamics and a different - strategic - orientation compared to
financial institutions with different ownership structures.
Members are divided into roughly 100 member departments at
the local level. Each department is assigned to one or more
delegates'election assemblies which appoint, suspend or dismiss
the members of the Local Members' Councils (LMCs). These
councils consist of 30 to 50 members who act as the eyes and
ears of the management teams of the local Rabobanks. By
bringing the outside world to the table, the members serving on
these councils help keep the local Rabobankfirmly on track. LMCs
have an important say in how cooperative funds are used. They
act as a sparring partner for the management teams of the local
Rabobanks, and have a number of formal duties and
responsibilities, such as the right to approve the merger or
demerger of a local Rabobank or to advise the chair of the local
Rabobank's managementteam on members' policy plan. LMCs
monitor the financial performance of local Rabobanks, the
policies as implemented by the chairmen of local Rabobanks'
management teams, as well as the supervision exercised by the
members of the Local Supervisory Body (LSB).
LSB members are appointed by and accountable to their LMCs.
An LSB does not derive its authority from law. The Managing
Board has instead delegated the LSBs specific local governance
powers under the Articles of Association of Rabobank.
LSB chairmen are key players in the collective governance as they
represent local members in the General Members' Council
(GMC). At the local level, the LSB supervises the execution of the
strategy. In this light, the general state of affairs and (social)
performanceofthe local Rabobank, including its internal financial
reporting, must feature periodically on the LSB agenda. The
internal financial reporting of individual local Rabobanks are also
compiled in the new governance structure to enable LSBs to
perform their roles accurately and adequately, furthermore, this
body is authorized to supervise the degree to which the local
Rabobank complies with external laws and regulations and the
Articles of Association.
Local supervisors are required to actively assess whether the
quality ofthe offered services meets the needs of clients and
members. They judge the extent to which the local management
team chair carries out his or her local responsibility to focus on
clients' long-term interests, to contribute to the sustainable
development ofthe local community and to strengthen ties
between the bank and the local community. The LSB is further
responsible for the local managementteam chair. This comprises
appointing, assessing and suspending the chair. The LSB is also
authorized to approve a number of important local decisions. It
must ensure that the local management team chair heeds its
advice in local policy making, furthermore, the LSB has an
advisory role with regard to the management ofthe local
Rabobank and fulfills an intermediary position between the
community and the local Rabobank. Lastly, it has a duty towards
contributing to the sustainable development ofthe district and
to strengthen its connection to the community.
In 2018, specific programs were developed and employed to
stimulate the diversity of LSBs. We consider it important that the
collective of local supervisors is an adequate reflection of our
customer and member base. Judged by the decline ofthe
average age of all local supervisors and the percentage increase
in the inflow of female supervisors, these measures already seem
to meet with success. In addition, special training is put in place
for young supervisors. New tools were developed to assess and
improve the functioning of individual LSBs.
Annual Report 2018 - Corporate Governance
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