Rabobank: Rabobank Settles Libor and Euribor Investigations

         Rabobank: Rabobank Settles Libor and Euribor Investigations

Rabobank to take strong remedial measures

  oRabobank has entered into settlements with various authorities and agreed
    to pay approximately EUR 774 million.
  oPiet Moerland resigns with immediate effect as Chairman of the Bank's
    Executive Board and is succeeded by Rinus Minderhoud on an interim basis.
  o30 Rabobank employees were in some way involved in inappropriate conduct.
  oRabobank did not sufficiently appreciate the risks associated with the
    Libor and Euribor submission processes.
  oThe Executive and Supervisory Boards of Rabobank sincerely regret these
    matters.
  oTop management was neither involved in nor aware of inappropriate conduct.
  oRabobank took strong disciplinary action.
  oRabobank has launched a comprehensive package of measures to enhance
    compliance, reduce risk and improve culture.
  oRabobank has taken extensive steps to strengthen systems and controls
    relating to its interest rate benchmark submission processes.
  oRabobank 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].

Findings of the Investigations

  oA number of employees inappropriately sought to influence certain Rabobank
    Libor and Euribor submissions between 2005 and 2010.
  oSome Rabobank employees also inappropriately communicated with employees
    at other banks and brokers about certain Libor and Euribor submissions
    between 2005 and early 2011.
  oIn 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.
  oDuring 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.
  oNone 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).
  oRabobank 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

  oRabobank 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.
  oThose 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.
  oRabobank 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.
  oA 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.
  oRabobank 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.
  oRabobank 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.
  oEven 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 EUR2million.
  oPiet 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.
  oRabobank has also revised its approach to remuneration in order further to
    de-emphasise 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, forward-looking 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.
Forward-looking 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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[1] Settlements per authority: DPP: EUR 70 million, FCA: GBP 105 million,
CFTC: USD 475 million and DOJ: USD 325 million.

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Source: Rabobank via Thomson Reuters ONE
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