Rabobank Settles Libor and Euribor Investigations

Rabobank to take strong remedial measures

Rabobank has entered into settlements with various authorities and agreed to pay approximately EUR 774 million.

Piet Moerland resigns with immediate effect as Chairman of the Bank’s Executive Board and is succeeded by Rinus Minderhoud on an interim basis.

30 Rabobank employees were in some way involved in inappropriate conduct.

Rabobank did not sufficiently appreciate the risks associated with the Libor and Euribor submission processes.

The Executive and Supervisory Boards of Rabobank sincerely regret these matters.

Top management was neither involved in nor aware of inappropriate conduct.

Rabobank took strong disciplinary action.

Rabobank has launched a comprehensive package of measures to enhance compliance, reduce risk and improve culture.

Rabobank has taken extensive steps to strengthen systems and controls relating to its interest rate benchmark submission processes.

Rabobank will remain financially stable despite the payment of these significant settlement amounts.

Rabobank today announced that it has entered into agreements with De Nederlandsche Bank (DNB), the Dutch Public Prosecutor (DPP), the United Kingdom Financial Conduct Authority (FCA), the United States Commodity Futures Trading Commission (CFTC), the United States Department of Justice (DOJ) and the Japanese Financial Services Agency (JFSA), in connection with their investigations into Rabobank's historical London Interbank Offered Rate (Libor) and Euro Interbank Offered Rate (Euribor) submission processes.

Rabobank has agreed to pay settlement amounts to the DPP, FCA, CFTC and DOJ totalling approximately EUR 774 million (1)

(1) 1 Settlements per authority: DPP: EUR 70 million, FCA: GBP 105 million, CFTC: USD 475 million and DOJ: USD 325 million.

Findings of the Investigations

A number of employees inappropriately sought to influence certain Rabobank Libor and Euribor submissions between 2005 and 2010.

Some Rabobank employees also inappropriately communicated with employees at other banks and brokers about certain Libor and Euribor submissions between 2005 and early 2011.

In total, 30 employees were involved in, aware of, or should have been aware of, the inappropriate conduct. Rabobank employs more than 60,000 people in 42 countries.

During the period in which the inappropriate conduct occurred, Rabobank did not sufficiently appreciate the risks associated with the Libor and Euribor submission processes and did not have sufficient systems and controls in place.

None of the most senior or executive managers were involved in the inappropriate conduct or were aware of it at the time. Nor did Rabobank engage in ‘lowballing’ (i.e. the artificial suppression of Libor submissions in order to present a more positive financial picture of the bank).

Rabobank cooperated fully with all authorities, and the DNB, DPP, FCA, CFTC, DOJ and JFSA specifically acknowledged Rabobank’s cooperation.

Piet Moerland

Chairman of Rabobank’s Executive Board, stated, “I sincerely regret that a number of Rabobank employees acted in an inappropriate manner. This should never have taken place at Rabobank. The conduct of these individuals, and the language of some of the individuals’ communications, has shocked me. Rabobank fully understands the sense of indignation that this will cause both within our organisation and more broadly. Such behaviour is entirely contrary to our core values, of which integrity is the most important. The public has to be able to trust that Rabobank employees operate with our core values in mind. That is why I have today decided that, as a matter of principle, it is appropriate for me to resign as Chairman of the Executive Board with immediate effect.”

“During the period in which the inappropriate conduct occurred, Rabobank did not sufficiently appreciate the risks associated with the Libor and Euribor submission processes, and we regret this. While that was an industry-wide shortcoming, it in no way excuses the inappropriate conduct of a number of Rabobank employees. Rabobank has now implemented robust systems and controls relating to its interest rate benchmark submission processes. We have also launched a series of measures which will further embed our core values and cooperative corporate culture, reduce risks and enhance compliance oversight. We have taken severe disciplinary measures against employees directly involved in or otherwise responsible for the unacceptable conduct.”

Wout Dekker

Chairman of the Supervisory Board, said, “I am deeply disappointed that a number of Rabobank employees engaged in unacceptable conduct and that our systems and controls were not sufficient to prevent this. I recognize the substantial efforts made by the Bank and its Executive Board, in full consultation with regulators, to investigate thoroughly our interest rate benchmark submission processes. We have also improved our systems and controls, both in relation to our submission processes and more generally. The Supervisory Board will continue closely to monitor the implementation of the comprehensive package of remedial measures that has been adopted.”

Dekker noted that the inappropriate conduct occurred in the international banking business and emphasized that no member banks were involved. Dekker also stated, “Rabobank is, and always has been, a strong cooperative bank with values of respect, integrity, sustainability and professionalism. I therefore support the efforts within the Bank to further embed these values into our business operations, in close consultation with DNB. The Supervisory Board has worked together with the Executive Board to bring the Bank’s remuneration structure into alignment with these values.”

“Rabobank is a strong and financially stable institution; the payment of these significant settlement amounts does not change that. The Bank is committed to learning the lessons from the past as we look towards the future.” Dekker added: “I understand the decision of our Chairman, Piet Moerland, to resign immediately. I would have preferred that he continue to lead our Executive Board but I have great respect for his personal decision. I want to emphasize that neither Piet Moerland nor any other member of the Executive Board had any involvement in these events.”

Measures taken by Rabobank

Rabobank has taken severe disciplinary measures against all of the employees who engaged in inappropriate conduct and who were still at the Bank during the investigation.

Those employees who were involved in serious misconduct have had their contracts of employment brought to an end. Other disciplinary action has included, in different combinations, formal warnings, financial sanctions, and the removal of managerial responsibilities. Bonuses have been partly or entirely reclaimed for the period 2009-2012, in the total amount of EUR 4.2 million.

Rabobank implemented systems and controls to govern its interest rate benchmark submission processes that reflect industry best practices, consistent with the most recent regulatory and banking industry guidance. This includes a requirement that the Bank’s submission processes be subject to regular internal and external audits.

A programme relating to conduct and culture, designed with the aid of external experts, has been rolled out globally within Rabobank International. This programme is aimed at enhancing the Bank’s client-centered focus and strengthening its emphasis on integrity and compliance. A comparable programme relating to conduct and culture will be implemented as soon as possible within Rabobank Nederland.

Rabobank International has reviewed, and continues to review, business activities within its Global Financial Markets division with an eye to reducing risks, including compliance risks. As part of this project, the Bank has already taken significant steps to discontinue certain product lines and exit certain markets where appropriate.

Rabobank also has made, and continues to make, significant investments to strengthen its compliance, risk management and internal audit functions in order to address certain deficiencies identified by authorities. This effort, also undertaken with the assistance of external experts, includes a focus on improving collaboration between risk management personnel at Rabobank Nederland and Rabobank International, substantial increases in compliance staffing and numerous structural enhancements to the Bank’s compliance function, and a review of its audit function with a focus on ensuring that audit findings are addressed in a timely and effective manner.

Even though no members of the Executive Board were aware of, or involved in, the inappropriate conduct, members of Rabobank’s Executive Board have, as the leaders of Rabobank, voluntarily forfeited their entitlements to remuneration in an aggregate of EUR 2 million. Piet Moerland has also resigned as Chairman of the Executive Board with immediate effect. Rinus Minderhoud, a member of the Supervisory Board of the Bank since 2002, and an experienced banker and executive, has today taken over as interim Chairman.

Rabobank has also revised its approach to remuneration in order further to deemphasise a focus on financial targets.

DNB conducted its investigation with assistance of the Dutch Authority for the Financial Markets. Rabobank has posted on its website (www.rabobank.com) the letter from the DNB stating its findings. The detailed findings of the investigations of the other authorities can be found on the websites of the various regulators involved, or via the Rabobank website.

This announcement contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including those related to Rabobank’s regulatory capital and liquidity positions under certain specified scenarios. In addition, forwardlooking statements may include, without limitation, statements typically containing words such as “intends”, “expects”, “anticipates”, “targets”, “plans”, “estimates” and words of similar import. These statements concern or may affect future matters, such as Rabobank’s future economic results, business plans and current strategies. Forwardlooking statements are subject to a number of risks and uncertainties that might cause

actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statements. Factors that could cause or contribute to differences in current expectations include, but are not limited to: legislative, technological, fiscal, judicial, and regulatory developments, exchange rate fluctuations, litigations (including pending interest rate benchmark litigation), regulatory investigations (including pending interest rate benchmark investigations), competitive conditions, and general economic conditions. These and other factors, risks and uncertainties that may impact any forward-looking statement or Rabobank’s actual results are discussed in the Interim Report 2013 Rabobank Group. The forward-looking statements contained in this announcement speak only as of the date of this announcement and Rabobank does not assume or undertake any obligation or responsibility to update any of the forward-looking statements contained in this announcement, whether as a result of new information, future events or otherwise, except to the extent legally required.

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