Notes to the Company Financial Statements
1. Basis of Preparation
2. Risk Exposure on Financial
Instruments
About this
Report
Chairman's
Foreword
Corporate
Management Report Appendices Governance
Consolidated Financial Company Financial
Statements Statements
The company financial statements of Rabobank, a credit
institution as referred to in Section 1:1 ofthe Financial Supervision
Act, have been prepared in accordance with accounting policies
generally accepted in the Netherlands and comply with the
financial reporting requirements included in Part 9 of Book 2 of
the Dutch Civil Code. In accordance with subsection 8 of section
362 of Book 2 ofthe Dutch Civil Code, the accounting policies in
the company financial statements are the same as those used in
preparing the consolidated financial statements of Rabobank
Group, reference is made to Section 2 "Accounting Policies ofthe
Consolidated Financial Statements", with one exception
regarding the measurement of interests in group companies as
these are measured at net asset value. The hedge accounting
entries ofthe consolidated financial statements are also applied
in the company financial statements by using combination 3
(Option 3 RJ).
Rabobank Group, the Coöperatieve Rabobank U.A. (Rabobank)
and the legal entitiesand companies thatform part ofthe group,
is an international financial services provider operating on the
basis of cooperative principles. Rabobank has its registered office
in Amsterdam and is registered under Chamber of commerce
number 30046259.
Rabobank Group manages risks at various levels within the
organization. Atthe highest level, the Managing Board (underthe
supervision ofthe Supervisory Board) determines the risk strategy
it will pursue, the risk appetite, the policy framework as well as the
limits.The Supervisory Board regularly assesses the risks attached
to the activities and portfolio of Rabobank Group. The Chief Risk
Officer, as a Memberofthe Managing Board, is responsibleforthe
risk management policy within Rabobank Group.
Rabobank considers risks at company level the same as risks at
consolidated level. We therefore refer to Section 4 "Risk Exposure
on Financial Instruments" of the consolidated financial
statements except the section regarding legal and arbitration
proceedings. Additional remarks on solvency on solo level are
disclosed below.
Solvency
Rabobank uses its own internal solvency objectives on a solo
level that extend beyond the minimum requirements ofthe
supervisors. It takes market expectations and developments in
legislation and regulations into account. Rabobank manages its
solvency position based on policy documents. The solvency
position and the objectives are periodically reviewed by the Risk
Management Committee and the Asset Liability Committee of
the Managing Board and the Supervisory Board.
Coöperatieve Rabobank U.A. (solo) must comply with a number
of minimum solvency positions as stipulated under law. The
solvency position is determined on the basis of ratios. These ratios
compare the qualifying capital (total capital ratio), the tier 1
capital (tier 1 ratio) and the core capital (common equity tier 1
ratio) with the total ofthe risk-adjusted assets. Effective January
1, 2014, the minimum required percentages are determined on
the basis of CRD IV/CRR. The buffers below are applicable as from
2016. These buffers will gradually increase until the year 2019.
Rabobank is already allowing for these changes in its capital
planning. The table below shows the minimum buffers based on
the planned final situation under CRD IV/CRR.
Minimum Capital Buffer
Total
CET1
Tier 7
capital
Pillar 1 requirement
4.5%
6.0%
8.0%
Pillar 2 requirement
1.75%
1.75%
1.75%
Capital conservation buffer 2016-2019
2.5%
2.5%
2.5%
The CET1-ratio of Coöperatieve Rabobank U.A. (solo) is 16.0%
(2017:15.5%).
Legal and Arbitration Proceedings
Rabobank considers risks regarding legal and arbitration
proceedings the same at company level as at consolidated level.
Rabobank Group is active in a legal and regulatory environment
that exposes it to substantial risk of litigation. As a result,
Rabobank Group is involved in legal cases, arbitrations and
regulatory proceedings in the Netherlands and in other
countries. The most relevant legal and regulatory claims which
could give rise to liability on the part of Rabobank Group are
described below.
Provisions for legal claims are recognized for obligations arising
as a result of a past event where it is probable that an outflow of
resources will be required to settle the obligation and a reliable
estimate can be made ofthe amount ofthe obligation. When
determining whether the probability that claims lead to an
outflow of resources is more likely than not (i.e. with a likelihood
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