Rabobank reluctant to specify interest rate swaps

Summer is already here and that means that interest rate swap customers are now receiving compensation offers based on the Recovery Framework for Interest Rate Derivatives ('Recovery Framework').

Despite the fact that a large part of the customers already an advance has received, many customers are still waiting for the final offer. The final offer is crucial, because upon acceptance the 'swap book' is definitively closed.

Delay for interest rate swap clients of ABN Amro and Rabobank
Most interest rate swap clients of ABN Amro and Rabobank are still waiting for a definitive offer based on the Recovery Framework. However, Deutsche Bank has already made a final offer to almost all of its customers. The Netherlands Authority for the Financial Markets (AFM) has announced in its third evaluation that there is again a delay at ABN Amro and Rabobank.

Where the banks thought they could quickly assess the files with automation, in practice this turns out to be very disappointing. According to the AFM reports, both banks will implement acceleration processes. This means, among other things, that offers no longer have to be checked in advance (by an accountant), but that this can also be done afterwards. The question is whether customers will benefit from this change.

Different working methods: attention to Rabobank interest rate swap customers!
There are major differences in the way in which banks have set up their processes, as well as in the provision of compensation offers. While Deutsche Bank's customers receive an extensive calculation of the various compensation elements, other banks are very reluctant (read: unwilling) to do so.

It is striking that Rabobank currently refuses to provide a specification of all compensation elements. A calculation of the leniency fee is now provided. For this, too, the supervisor, partly at the insistence of the undersigned, first had to call Rabobank to account.

Now it appears that if other compensation elements are involved in a file, Rabobank again refuses to provide the calculation. This with the message that if the customer does not trust it, the customer should check it himself. And the announcement that Rabobank is prepared to explain the offer in a personal meeting.

This is not only customer-unfriendly, but it also floutes the rules of the Recovery Framework (again). The Recovery Framework stipulates that banks are obliged to provide the underlying calculation. A customer is entitled to a specification, because this is necessary to gain insight into the way in which the offer is made.

I assume that, as requested again, AFM will ensure that Rabobank will provide a specification of all compensation components. I do advise any swap customer to insist that a breakdown of the offer is provided and not to settle for a chat from the bank man that everything is correct.

Incomplete file and check offer
It is now clear that where banks proclaim that the offer is always correct, because so many checks have been applied, it is not true. It is still a human job and banks do not always have their files in order. The offers that I have checked have shown that, despite these checks, faults are made and that customers will benefit from having this corrected. In some cases, it concerns tens of thousands of euros or more, which the customer would otherwise lose.

In addition, many files require legal knowledge to inform clients about the risks and opportunities. In particular, the possibility (or impossibility) of submitting binding advice to the Derivatives Committee is unknown. This is because this requires that the swap customer takes action and the terms that apply for this must be taken into account.

If the recent reports are correct, with the acceleration process the majority of swap customers may still receive a final offer before the end of the year. Take good account of the rights and possibilities that you have.

Marianne Adama

Marianne Adema is a lawyer at Adema Advocatuur and Advice. She specializes in financial law, agricultural law and real estate law. Adema assists many agricultural entrepreneurs and has an advisory and litigation practice. She is also a legal advisor on various wind turbine projects.

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