Answers to your questions - How safe is RaboPlus?
Added on 10/10/2008 16:40
Thanks for all your questions and comments submitted on the last couple of blog posts about the safety of RaboPlus. It's reassuring to see our customers are doing their research in these uncertain times! Instead of responding to each individual comment, I thought I'd address a lot of the common issues and questions in a new post.
Not surprisingly given the volatility we are witnessing on global stock markets we have had some questions from customers concerned about the guarantee of deposits held with RaboPlus, the importance of an AAA credit rating, and Rabobank's exposure to derivatives. Please read on for our response to these questions - and apologies in advance if it's a bit heavy going, but I think the topic warrants an in-depth response.
Rabobank Australia Limited, the issuer of RaboPlus deposits and products, is an ADI ("authorised deposit-taking institution") which is prudentially regulated by the Australian Prudential Regulation Authority. It is subject to the Banking Act and, as a result, its depositors’ claims would rank ahead of all other liabilities of Rabobank Australia Limited. Read the section of the APRA website which deals with the subject of depositor protection.
Please refer especially to the third paragraph, which in part states that: "Under the depositor protection provisions of the Banking Act 1959, depositors in Australia have first claim to the assets of an ADI in Australia should an ADI be unable to meet its obligations or should it suspend payment. To support depositors’ interests, ADI’s which take retail deposits in Australia are required to hold assets in Australia at least equal to their deposit liabilities in Australia”.
While we note a lot of your comments regarding financial ratings, it is a significant point that the liabilities of Rabobank Australia Limited are guaranteed by the bank's ultimate Dutch parent, AAA rated Cooperatieve Centrale Raiffeisen-Boerenleenbank B.A (known as Rabobank or Rabobank Nederland). In fact Rabobank has maintained an AAA rating consistently for the last 27 years from both Standard & Poor’s and Moody’s.
We take great comfort from the fact that Rabobank is a cooperative bank which allows us to take a longer term view in the markets we operate in. As we are not listed on stock exchanges we do not have to worry about share price fluctuations that many global banks have suffered. I hope you find this reassuring.
In the Investor Relations section of Rabobank's international website, you will find key documents on the international group's strong financial credentials and recently-released half-yearly results - these show that the bank has a Tier 1 capital ratio of 11.2% which provides strong support for its AAA rating. In fact our Tier 1 capital ratio places us among the world's fifteen largest financial institutions.
Many of our customers have made it clear to us that they would prefer to have their deposits with an ADI which is also supported by an ultimate parent guarantee from an AAA rated entity, rather than with an ADI which either has no parent guarantee or has a parent guarantee from an entity with an inferior credit rating. We sense that this is even more important to the vast majority of our customers than it was even a few weeks ago and we are very pleased to be in that position.
Whilst the Rabobank Group does have derivative risks exposure, the bank has other risk management strategies in place to mitigate against this. For those of you looking for a full understanding of the Group's current financial status, you can download the 2008 Interim Results and other key financial documents on the Rabobank.com website.
Or for a summary of the key points of the Group's 2008 Interim Results, read the media release.
Finally, you may also be interested to know that Rabobank has retained its ranking as the World’s Safest Privately-Owned Bank in the latest annual Global Finance magazine's ranking of the World's Safest Banks, which was published in September. Read more about it here.
I hope this addresses your concerns about these really important issues and reassures you that RaboPlus is a safe place for your money, especially in tough times like these.
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