NEW GOVERNANCE STRUCTURE AT RABOBANK - CREDITOR POSITIVE MOVES

Dutch agri lender Rabobank has announced a new governance structure which is positive for creditors, according to a Moody's analysis. The bank (rated Aa2 stable) is a co-operative which has its own governance challenges and opportunities versus non co-operative firms.  The members of the Rabobank co-op gave unanimous support to merge the local banks and central body into one legal entity, and one banking licence, creating a new governance structure.  The new structure will come into effect January 1st, 2016.

Moody's explains the new structure is credit positive because historical in-inefficiencies and costs linked with the diversified model are now streamlined, with 106 licences now merging into one bank charter and licence. One set of financials will henceforth be published which simplifies the group reporting as well.  The firm's risk appetite framework and growing capital needs will be also more easily managed with this new governance model, just in time for TLAC and other other regulatory changes. Moody's reports further governance challenges remains for the group as with other banks, including the Basel IV framework for 2016/20 period, which for this lender means reducing assets by up to Euro 150 billion or circa 20% of total assets.  Such changes, embraced by Rabobank, will put pressure on other co-operative banking groups we can think of in France, Austria and Belgium to also raise their standards too.

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