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footnotes to the audited consolidated financial statements incorporated by reference in this Offering Circularfor additional discussion of the application of Rabobank Group’s accounting policies.Value adjustmentsManagement regularly assesses the adequacy of the provision for loan losses by performing ongoingevaluations of the loan portfolio. Rabobank’s policies and procedures to measure impairment are IFRScompliant. Rabobank considers a loan to be impaired when based on current information and events, it isprobable that Rabobank will not be able to collect all amounts due (principal and interest) according to theoriginal contractual terms of the loan.Rabobank distinguishes:• Specific provisions for impaired corporate loans. For these loans, impairment is measured on a caseby-casebasis. Once a loan is identified as impaired, the impairment amount is measured as thedifference between the carrying amount and the recoverable amount of the loan. The recoverableamount equals the present value of expected future cash flows discounted at the loan’s effective rate.• Collective retail provisions for loans that are not significant enough to be assessed individually. Retailportfolios of loans that are not individually assessed for impairment are grouped into pools, based onsimilar risk characteristics and are collectively assessed for impairment.• An Incurred But Not Reported (“IBNR”) provision for losses on loans that have been incurred buthave not yet been individually identified at the balance sheet date. Non-impaired loans are included ingroups with similar risk characteristics and are collectively assessed for the potential losses, based onexpected loss parameters. Furthermore, a factor is used which assumes that within six monthsimpairment will be discovered.The impairment amount thus determined is recorded in the profit and loss account as a bad debt cost with thecorresponding credit posted as a provision against the loan balance in the balance sheet.A Provisioning Committee headed by a member of the Executive Board decides twice a year on provisiontakingfor all impaired loans above a certain threshold (currently over € 30 million).Trading activitiesRabobank’s trading portfolio is carried at fair value based on market prices or model prices if the marketprices are not available. The market value of financial instruments in Rabobank Group’s trading portfolio isgenerally based on listed market prices or broker-dealer price quotations. If prices are not readilydeterminable, fair value is based on valuation models. The fair value of certain financial instruments,including OTC derivative instruments, are valued using valuations models that consider, among other factors,contractual and market prices, correlations, time value, credit, yield curve volatility factors and/or prepaymentrates of the underlying positions.Change in accounting policiesAs a result of changes in accounting policies and presentation, certain figures for Rabobank Group as at andfor the year ended 31 December 2007 in this Offering Circular have been restated. See Note 2 to theconsolidated financial statements for Rabobank Group for the year ended 31 December 2008. Where the yearended 31 December 2008 is compared with the year ended 31 December 2007, the restated figures for 2007are discussed. Where the year ended 31 December 2007 is compared with the year ended 31 December 2006,the figures for 2007 have not been restated.255