30. Contingent Liabilities
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Report
Chairman's
Foreword
Corporate
Management Report Appendices Governance
Consolidated Financial Company Financial
Statements Statements
Credit Related Contingent Liabilities
Rabobank enters into irrevocable loan commitments and
contingent liabilities consisting of financial guarantees and
standby letters of credit on behalf of its customers. Under these
contracts Rabobank is required to perform under an obligation
agreement or to make payments to the beneficiary on third
party's failure to meet its obligations. The following table shows
the amount ofthe maximum potential utilization ofcredit related
contingent liabilities.
Liabilities Relating to Operating Leases
Rabobank has concluded various operating lease contracts as
lessee, mainly with respect to real estate and cars. The future net
minimum lease payments under non-cancellable operating
leases can be broken down as follows:
Amounts in millions of euros
2018
2017
Not exceeding 1 year
120
124
Longer than 1 year but less than 5 years
361
394
Longer than 5 years
233
259
Total liabilities relating to operating leases
714
777
Amounts in millions of euros
2018
2017
Financial guarantees
3,377
3,406
Loan commitments
32,583
32,965
Other commitments
20,273
18,154
Credit related contingent liabilities
56,233
54,525
Contingent Liabilities Related to Litigation
Rabobank is involved in a number of legal and arbitration
proceedings in the Netherlands and other countries, including
the United States, in connection with claims brought by and
against Rabobank Group arising from its operations. The
maximum amount of non-remote contingent liabilities relating
to claims is EUR 197 million (2017: EUR 74 million). For additional
information, refer to section 4.10, "Legal and Arbitration
Proceedings."
The expected future minimum lease payments receivable from
sub-leases are nil (2017: nil). The operating lease expenses are
EUR 30 million (2017: EUR 41 mil lion). These are included in 'Other
administrative expenses' in the statement of income.
Payments Receivable from Operating Leases
Rabobank has concluded various operating lease contracts as
lessor. The future minimum lease payments receivable from non-
cancellable operating leases can be broken down as follows:
Amounts in millions of euros
2018
2017
Not exceeding 1 year
589
714
Longer than 1 year but less than 5 years
1,132
1,244
Longer than 5 years
107
84
Total payments receivable from operating leases
1,828
2,042
Contingent Liabilities Related to Income Tax
The Dutch government abolished article 29a ofthe Dutch
Corporate Income Tax Code as of January 1, 2019. Article 29a of
the Dutch Corporate IncomeTax Code was included in the Dutch
Corporate IncomeTax Code so that capital instruments issued by
credit institutions and which are covered by EU regulation
575/2013 would be considered tax deductible. As a result ofthe
abolition the payment on these capital instruments will not be tax
deductible anymore as from January 1, 2019.
The abolition appears to have no consequences for previous
years. However, if the European Commission would decide to
start a formal investigation anyway and ultimately would
conclude that this is a case of state aid for the previous years,
Rabobank may have to repay tax benefits it received between
2015 and 2018.
No contingent lease payments were recognized as assets during
the current year.
Other Contingent Liabilities
The contractual commitments relating to the acquisition,
construction and development of work in progress and
investment properties amounts to EUR 518 million (2017:
EUR 784 million).
In this context, Rabobank issued Capital Securities in January
2015, April 2016 and September 2018, amounting respectively to
EUR 1.5 billion at a fixed interest rate of 5.5%, EUR 1.25 billion at a
fixed interest rate of 6.625%, and EUR 1.0 billion at a fixed interest
rate of 4.625%. The contingent liability related to this matter
amounts to EUR 140 million (2017: EUR 96 million).
Annual Report 2018 - Consolidated Financial Statements
198
