Rabobank puts 2 billion in noose pot

Rabobank expects the economy to take a major hit as a result of the corona crisis. To prepare for this, the bank is setting aside €2 billion for loan losses. This is twice as much as normal. 

In the quarterly update, Rabobank indicates that profit will be significantly lower this year, as a result of the economic headwinds that are emerging. An exact estimate is not forthcoming, as are the results for the first quarter. It is striking that the bank assumes a relatively short crisis. The economic contraction for this year is estimated at 5%, but for 2021 the bank expects an economic recovery of 4,9%.

Sturdy buffers
The bank says it is in good enough shape. CFO Bas Brouwers: “We have strong buffers to absorb the impact of the crisis.” As a precaution, the bank has doubled the so-called noose pot, intended to absorb credit losses, to €2020 billion by 2. This reservation, together with the persistently low interest rates, is putting pressure on profits.

ABN Amro and ING Bank also have considerably more money for loans that will probably never be repaid. ING Bank reserved €661 million, while ABN Amro set aside €1,9 billion. This led to a loss of €395 million in the first quarter for the 'green yellow'.

Wouter Job

Wouter Baan is Head of Meat & Dairy at BoerenbusinessAt DCA Market Intelligence, he focuses on dairy, pork, and meat markets. He also monitors (business) developments within agribusiness and interviews CEOs and policymakers.

w.baan@boerenbusiness. Nl

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