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usiness, both complementary to and independent of the business of the local Rabobanks and is the holdingcompany of various subsidiaries.The local Rabobanks are organised as cooperative entities under the laws of the Netherlands and draw all oftheir members from their customers. Through mergers, the number of local Rabobanks has decreased from174 at 31 December 2007, to 153 at 31 December 2008, to 152 at 30 June 2009. At 31 December 2008, thelocal Rabobanks had approximately 1,731,000 members. Members of the local Rabobanks do not make capitalcontributions to the local Rabobanks and are not entitled to the equity of the local Rabobanks. Members arenot liable for any obligations of the local Rabobanks.For regulatory and financial reporting purposes, Rabobank Nederland and the local Rabobanks, as well as theparticipating subsidiaries, are treated as one consolidated entity.Internal liability (cross-guarantee system)Through their mutual financial association, various legal entities within Rabobank Group together make up asingle organisation. An internal liability relationship exists between these legal entities, as referred to inArticle 3:111 of the Financial Supervision Act. This relationship is formalised in an internal cross-guaranteesystem (kruislingse garantieregeling), which stipulates that if a participating institution has insufficient fundsto meet its obligations towards its creditors, the other participants must supplement that institution’s funds inorder to enable it to fulfil those obligations. Participating entities within Rabobank Group are:Rabobank NederlandLocal RabobanksDe Lage Landen Financial Services B.V.De Lage Landen Financiering B.V.De Lage Landen International B.V.De Lage Landen Trade Finance B.V.Rabohypotheekbank N.V.Raiffeisenhypotheekbank N.V.Schretlen & Co N.V.The local Rabobanks are also parties to several compensation agreements whereby shortfalls of localRabobanks with respect to equity, profitability, loan loss reserves and financing losses are financed bycharging all other local Rabobanks.403 DeclarationRabobank Nederland has assumed liability for the debts arising from legal transactions of a number ofRabobank Group companies under Section 2:403 of the Dutch Civil Code (Burgerlijk Wetboek).In addition, Rabobank Nederland provides (bank) guarantees in its ordinary course of business.250