About this Report Chairman's Foreword Corporate Management Report Appendices Governance Consolidated Financial Company Financial Statements Statements extension of so-called "check-in" and check-out" sessions prior to and after meetings to create focus in the meetings on the critical issues, is welcomed; The board wants to devote adequate attention to the strategic topics, amongst others through the agenda setting and order, the setting ofthe meeting and the preparation of documents with key questions and dilemmas; The Supervisory Board intends to increase its role and responsibility in the process ofthe bank's transformation and evaluation ofthe long-term strategic objectives and cooperative principles and values. Supervisory Board as Advisor Strategy and Transformation The bank's strategy is a staple topic on the board meeting agenda. Every meeting addresses the relevant developments in financial markets, society, and in the bank's business sectors. The Managing Board and the Supervisory Board held two off-site meetings in 2018, both in a local office in the Netherlands: once in Limburg and once in Friesland.The off-sites provided in-depth sessions on the development ofthe business in the Netherlands and internationally, the organization, risk management, digitalization and innovation. Other visits were also organized with customers and local Rabobanks. Over the course of 2018, the Supervisory Board encouraged the Managing Board to prioritize the development of new business models. The Supervisory Board is also acutely aware ofthe need to manage a complex balance between time and investment in, on the one hand, to the comprehensive transformation of Rabobank's current processes and systems including enhancing the control framework, and on the other, innovation and digitalization that lead to new business models. The recurring discussions, especially those about the control agenda, address topics like leadership and ownership, setting challenging and realistic deadlines, and the required time and investment each target requires. New Operating Model in Local Rabobanks: Bankieren 3.0 The Managing Board was created in 2017 after massive changes to the organizational structure ofthe bank. With the transformation of Bankieren 3.0, 2018 brought further organizational changes to the Netherlands. Throughout the year, the Supervisory Board followed and discussed the proposed changes to the structure and management of our banking network in the Netherlands. The board encouraged a comprehensive consultation within the bank and with representatives of General Members Council Boards to improve the proposal and gain broad support. The board confirmed the proposal for an optimum number of local Rabobanks to be set at 90, including a network of 300 client contact points, and the concentration of certain specialized services in 14 network banks. In its decision-making, the Supervisory Board challenged and advised on various aspects ofthe proposed change. For exam pie, we debated whether it adequately fulfilled the purpose ofthe change: the continuation of banking nearby customers and the market while providing better service and high-quality advice. We also debated whether the bank can achieve its strategic goal of supporting customers' sustainable growth and financial health, while simultaneously adopting a digital-first strategy for a growing number of primary banking transactions. The Supervisory Board acknowledged that, while not a primary driver, the change will certainly support the required improvements to the bank's Cost/Income ratio and its compliance and control agenda. Moreover, the Supervisory Board stressed the importance of an appropriately timed and controlled transition period to minimize potential disruptions for customers and prolonged uncertainty for employees. Preparations for the transformation, and the evaluation of transition risks and mitigating actions received ample attention during 2018 meetings ofthe Supervisory Board as well. Since approving Bankieren 3.0, the Supervisory Board has acted in an advisory capacity in considering the thorough implementation plans, and is following the roll-out with interest. The Supervisory Board also welcomed a new initiative for product and systems simplification and innovation as well as new ways of working. The board supports the program, named Simplify@scale, and recognized the required investments as a necessary step towards innovation and digitalization, as well as cost control. Culture and Leadership The transformation of Rabobank requires the identification and promotion ofthe right leadership and culture for future-proof banking. The development and promotion of leadership and culture features in every meeting ofthe Supervisory Board's Remuneration HR committee, and it is a regular topic in discussions ofthe full board. Specific topics discussed in 2018 included the process of maintaining a delicate balance between risk and compliance on the one hand, which requires strict ownership and rigorous rules and procedures, and promoting craftsmanship and leadership on the other, which works best in an inspiring environment that embraces initiative taking. These two priorities can sometimes seem at odds with each other. The Supervisory Board participated in discussions about this balance of limited freedom.The board also welcomed the bank's progress in employee engagement and diversity and recognized it as a key aspect in supporting leadership and culture changes. In updates on the increased percentage of female managers in the bank, the Annual Report 2018 - Corporate Governance 110

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Annual Reports Rabobank | 2018 | | pagina 112