About this
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Chairman's
Foreword
Corporate
Management Report Appendices Governance
Consolidated Financial Company Financial
Statements Statements
of over fifty percent), Rabobank Group takes several factors into
account. These factors include (but are not limited to) the type
of claim and the underlying facts; the procedural process and
history of each case; rulings from legal and arbitration bodies;
Rabobank Group's experience and that of third parties in similar
cases (if known); previous settlement discussions, third-party
settlements in similar cases (where known); available (potential)
recourse; and the advice and opinions of legal advisors and other
experts. Similar types of cases are grouped together and some
cases may also consist of a number of claims. The estimated loss
for each individual case (for which it is possible to make a reliable
estimate) is not disclosed because Rabobank Group feels that
information of this type could be detrimental to the outcome of
individual cases.
The estimated potential losses and provisions, are based on the
information available at the time and are largely subject to
judgments and a number of different assumptions, variables and
known and unknown uncertainties.These uncertainties may
include the inaccuracy or incompleteness of information
available to Rabobank Group (especially in the early stages of a
case). In addition, assumptions made by Rabobank Group about
the future rulings of legal or other instances or the likely actions
or attitudes of supervisory bodies or the parties opposing
Rabobank Group may turn out to be incorrect. Furthermore,
estimates of potential losses relating to legal disputes are often
impossible to process using statistical or other quantitative
analysis instruments that are generally used to make judgments
and estimates. They are subject to a still greater level of
uncertainty than many other areas where Rabobankgroup needs
to make judgments and estimates. The group of cases for which
Rabobank Group determines that the risk of future outflows of
funds is more likely than not varies overtime, as do the number
of cases for which the bank can estimate the potential loss. In
practice the end results could turn out considerably higher or
lower than the estimates of potential losses in those cases where
an estimate was made.
RabobankGroupcanalsosustain losses from legal risks where the
occurrence of a loss may not be probable, but is not improbable
either, and for which no provisions have been recognized. For
those cases where (a) the possibility of an outflow of funds is not
probable but also not remote or (b) the possibility of an outflow
of funds is more likely than not but the potential loss cannot be
estimated reliably, a contingent liability is disclosed. Rabobank
Group may settle legal cases or regulatory proceedings or
investigations before any fine is imposed or liability is
determined. Reasons for settling could include (i) the wish to
avoid costs and/or management effort at this level, (ii) to avoid
other adverse business consequences and/or (iii) pre-empt the
regulatory or reputational consequences of continuing with
disputes relating to liability, even if Rabobank Group believes it
has good arguments in its defense. Furthermore, Rabobank
Group may, for the same reasons, compensate third parties for
their losses, even in situations where Rabobank Group does not
believe that it is legally required to do so.
Interest Rate Derivatives
Rabobankconcludes interest rate derivatives, such as interest rate
swaps, with Dutch business customers who wish to reduce the
interest rate risk associated with variable (e.g. Euribor-indexed)
loans. An interest rate swap protects businesses from rising
variable interest rates and helps them to keep their interest
payments at an acceptable level. In March 2016 the Dutch
Minister of Finance appointed an independent committee which
on July 5, 2016 published a recovery framework (the Recovery
Framework) on the reassessment of Dutch SME interest rate
derivatives. Rabobank announced its decision to take part in the
Recovery Framework on July 7,2016. The final version of the
Recovery Framework was published by the independent
committee on December 19, 2016. Rabobank is involved in civil
proceedings in the Netherlands relating to interest rate
derivatives entered into with Dutch business customers. The
majority of these concern individual cases. In addition, there is a
collective action regarding interest rate derivatives pending
before the Court of Appeal (for which a standstill was agreed to,
due to the Recovery Framework; the few remaining out-of-scope
customers will be assessed on an individual basis). These actions
concern allegations of misinforming clients with respect to
interest rate derivatives. Some of these actions also concern
allegations in connection with Rabobank's Euribor submissions
(as described below). Rabobankwill defend itself against all these
claims. Furthermore, there are pending complaints and
proceedings against Rabobank regarding interest rate derivatives
brought before Kifid (Dutch Financial Services Complaints
Authority, which, in January 2015, opened a conflict resolution
procedure for SME businesses with interest rate derivatives). With
respect to the (re-)assessment of the interest rate derivatives of its
Dutch SME business customers and the advance payments made,
Rabobank recognized a provision of EUR 316 million (2017:
EUR 450 million). At year-end 2018 Rabobank provided all
qualifying clients clarity on the outcome. At year-end 2018,
Rabobank's payments to clients under the Recovery Framework
amounted to EUR 532 million.
I m tech
On January 30, 2018, Rabobank received a letter indicating that
legal proceedings may be started at a later stage with respect to
a potential collective action in relation to certain share offerings
of Royal Imtech N.V. in which Rabobank was involved. This
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