Bulletin: Rabobank's Capitalization To Remain Strong If €1 Billion Certificate Buyback Materializes

PARIS (S&P Global Ratings) April 16, 2024--S&P Global Ratings said today that the €1 billion cash tender on Cooperatieve Rabobank U.A.'s certificates will only have a minor impact on the Dutch banking group's capitalization. Rabobank hopes such a tender offer will support its capital efficiency. However, we estimate that, if the maximum purchase consideration of €1 billion is reached, the group's CET 1 ratio will erode slightly by about 40 basis points (bps) to 16.7% at end-2023 on a pro-forma basis, from 17.1%. This means the group's CET 1 ratio would remain materially above its target of greater than 14%, as well as markedly higher than the 11% minimum capital requirement set for end-May 2024. In this scenario, S&P Global

...PARIS (S&P Global Ratings) April 16, 2024--S&P Global Ratings said today that the 1 billion cash tender on Cooperatieve Rabobank U.A.'s certificates will only have a minor impact on the Dutch banking group's capitalization. Rabobank hopes such a tender offer will support its capital efficiency. However, we estimate that, if the maximum purchase consideration of 1 billion is reached, the group's CET 1 ratio will erode slightly by about 40 basis points (bps) to 16.7% at end-2023 on a pro-forma basis, from 17.1%. This means the group's CET 1 ratio would remain materially above its target of greater than 14%, as well as markedly higher than the 11% minimum capital requirement set for end-May 2024. In this scenario, S&P Global Ratings' projected risk-adjusted capital (RAC) ratio for the group would contract by about 30 bps only to 12.0%-12.5% by end-2025, which is comfortably above our 10% threshold. We continue to think Rabobank's cooperative structure, absent pressure for investor returns,...

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