Business and risk strategy
Rentenbank’s risk strategy is derived from, and is consistent with, the market-oriented business strategy and comprises, in addition to the overarching cross-risk strategy, sub-strategies relating to individual risk types as well as the Venture Capital Policy.
The Risk Appetite Framework comprises all strategies and guidelines, methods, processes, responsibilities, controls, and systems from which the risk appetite is derived, communicated, and monitored. In addition to minimum target values, warning thresholds and limit systems, this also includes appropriate compliance and an appropriate risk culture.
The Risk Appetite Statement describes the extent to which Rentenbank is willing to assume risks and allocate risk coverage potential in order to achieve its strategic objectives. Risk appetite is defined on the basis of quantitative requirements and qualitative statements. These requirements are specified through the determination of limits and warning thresholds within the framework of risk-bearing capacity.
Through the risk strategy, the Risk Appetite Framework and the Risk Appetite Statement, the Management Board defines the key parameters for risk management.
The credit risk strategy is shaped by the promotional mandate. To promote the agricultural sector and rural areas, financial resources are, in principle, provided only to banks established in the Federal Republic of Germany or another EU country that conduct business with agricultural enterprises, companies operating in upstream and downstream sectors, or companies active in rural areas. In this context, special promotional loans are restricted to Germany as the location for investment.
In addition, Rentenbank may enter into participations, acquire interests in venture capital funds and provide debt capital to German federal states and German municipalities in the form of promissory notes, registered securities or bearer securities.
Accordingly, lending business is limited to the refinancing of banks or institutions and financial institutions within the meaning of Article 4 CRR, as well as to the provision of capital to domestic public authorities.
As part of the credit risk strategy, it has been stipulated that lending to companies in the direct lending business may only be undertaken through a subsidiary of Rentenbank. No corresponding new business was concluded in 2025.
Derivatives are used exclusively as hedging instruments and are only entered into with counterparties with whom Rentenbank has concluded a collateral agreement.
Rentenbank’s credit risk strategy requires prudent selection of counterparties and products in all business activities. In line with its core competencies and business model, Rentenbank focuses on the banking sector and public-sector borrowers. Rentenbank has a sectoral concentration risk vis-à-vis the banking sector, which arises from its promotional mandate. As an indicator of Rentenbank’s risk profile, the average credit quality of the overall credit portfolio – taking product ratings into account – must be at least A+.
The principal objective of the market risk strategy is to avoid risks that could jeopardise net interest income and thus the fulfilment of the promotional mandate. At the same time, market risks are limited and managed from a present-value perspective within the framework of economic risk-bearing capacity. Foreign currency positions are generally closed out.
The objectives of the liquidity risk strategy are to ensure solvency at all times, including under stress conditions, and to optimise the refinancing structure.
Non-financial risks, which include operational and strategic risks, are managed with the objective of preventing losses and thereby ensuring the quality of all operational processes at Rentenbank Compliance with regulatory requirements and the minimisation of reputational risks through appropriate communications management and a code of conduct are also integral components of the risk strategy.