Management Report Appendices Governance
Consolidated Financial Company Financial
Rabobank policy framework each type of collateral is addressed
separately. The main types of collateral that are recognized by
Rabobank are real estate, inventory (such as equipment,
machinery, stock etc.), commodities, receivables and guarantees.
With a substantial domestic mortgage portfolio, housing is
considered a concentration risk within the credit risk mitigation
that is taken. The quality of the collateral is assessed in the initial
credit request, and is evaluated within the credit revision process.
The frequency of revaluation depends on the credit quality of the
client and on the type of collateral and is in line with the
requirements set in the CRR.
The main types of guarantors are governments, local authorities,
(central) banks and corporate entities. For institutions, insurance
undertakings and export credit agencies, a minimum rating is
Credit Committees and Credit Approval
Within the boundaries set by the Risk Management Committee
the Managing Board has mandated decision-making authority to
transactional committees and to credit decision approval officers
that operate on an entity level, regional level or central level at
Rabobank. Credit committees review all significant risks in credit
proposals to arrive at a systematic judgment and a balanced
decision. Rabobank has various levels of credit committees.
Applications exceeding authority level of a credit committee are
complemented with a recommendation and submitted to a
'higher' credit committee for decision-making.
Within Rabobank the 'highest' transactional committees are the
Central Credit Committee Rabobank Group (CCCRG) - The
CCCRG takes credit decisions on credit applications subject to the
'corporate credit approval route' exceeding:
•the authority of Credit Approvals Local Banks (CA LB) - This
department is responsible for decisions on requests for non
classified (LQC Good or OLEM) obligors exceeding the authority
of Local Banks in The Netherlands.
•the authority of Credit Approvals Wholesale Rural Retail (CA
WRR) - This department is responsible for decisions on requests
for non-classified (LQC Good or OLEM) obligors exceeding the
authority of DLL or a Wholesale Rural Retail (WRR) office/region.
•the authority of the Credit Committee Financial Restructuring
Recovery (CC-FR&R) - This credit committee takes credit
decisions on proposals for classified (LQC Substandard, Doubtful
or Loss) obligors exceeding the authority of local credit
committees and the FR&R department.
Country Financial Institutions Committee (CFIC) - The CFIC
takes credit decisions on proposals exceeding the authority of
Credit Financial Institutions or Country Risk Research. These
departments are responsible for the risk management of
exposure on financial institutions and sovereigns/countries.
Loan Loss Provision Committee (LLPC) - The LLPC monitors the
development of qualified credit and asset portfolios and
recommends on impairment allowances for obligors exceeding
the authority of local credit committees or the CC-FR&R, to the
The Terms of Reference (ToR) provide the mandate,
responsibilities scope, hierarchical relationships, membership,
authority levels and modalities of these approval bodies. Credit
committees take decisions on the basis of consensus, unless local
regulation requires majority voting. Consensus is reached when
there is a general agreement and none of the members has
fundamental objections to the decision. When no consensus can
be reached, an application is considered declined. In case of
majority voting, the representative(s) from the Risk domain must
have a veto right.
For efficiency reasons Credit Committees can delegate part of
their authority. A single person may not take a credit decision
solely based on its own opinion; this means that a 4-eyes
principle applies or decisions are system supported, in which case
one person is allowed to decide as long as the credit is assessed
as acceptable by an expert system or meets predefined criteria
(the credit complies with decision tools). Fully IT supported
assessments and approvals are allowed under strict conditions.
The credit committees play a key role in ensuring consistency
among Rabobank standards of credit analysis, compliance with
the overall Rabobank credit policy and consistent use ofthe rating
models. The credit policy sets the parameters and remit of each
committee, including the maximum amount they are allowed to
approve for limits or transactions. Policies are also in place which
restrict or prohibit certain counterparty types or industries. As a
rule, all counterparty limits and internal ratings are reviewed once
a year (corporate clients) at a minimum. Where counterparties are
assigned a low loan quality classification, they are reviewed on a
more frequent basis. Credit committees may request for more
frequent reviews as well.
Rabobank has a significant market share in lending regarding
residential mortgages. These loans have a low risk profile as
evidenced by the net additions to allowances of minus 2 basis
points (excluding one-offs) in 2018. In 2018, the proportion ofthe
private sector lending allocable to the food and agricultural
Annual Report 2018 - Consolidated Financial Statements