Dutch financial institutions, many of which were hit in the 2008 crisis, are likely be on the list of global too-big-to-fail banks and will need to meet new extra capital requirements, the central bank said on Wednesday. Regulators and central bankers, headed by the Basel Committee on Banking Supervision, are still debating which global banks should be considered systemically important financial institutions (SIFIs) and therefore face extra regulations.
Although the Dutch financial sector in its totality has shrunk in size and connectedness since the start of the crisis, the Netherlands is still an important player, said the Dutch central bank (DNB) whose governor, Nout Wellink, is also chairman of the Basel Committee on Banking Supervision.
The biggest, internationally active Dutch banks are ING
Long-term financing and deposits would become more important under new capital and liquidity rules known as Basel 3, which will be gradually implemented from 2013 until 2018, but Dutch banks faced a 500 billion euro retail funding gap due the mismatch between deposits and lending, the central bank said.
Banks rely on market financing, rather than deposits, for their funding. Dutch consumers prefer to save through insurance and pension funds than in bank deposits, whereas borrowing for housing is relatively high because individuals can take out a mortgage for more than 100 percent of the property value.
Banks can make their financing profile healthier by choosing financing with a long maturity, DNB said.
As a result of state support for some of the country's large banks, their capitalization buffers are well above minimum requirements, according to the preliminary findings of a study by the IMF, released this week.
This capital position, in addition to a return to profitability, means Dutch banks are well placed to meet the increasingly robust capital requirements under Basel 3, the IMF said.
The recovery of the Dutch securisation market where debt, especially mortgages, is repackaged and sold on by the originator, was continuing, with about 20 billion euros sold in the first three quarters this year, the central bank said in its report.
While the volume has picked up in 2010 -- only about 1 billion euros of such deals were done in the preceding 18 months -- it is still below pre-crisis levels, DNB said.
The Dutch central bank also said investors had shown interest in November for Dutch life insurance portfolios but did not give details.
(Reporting by Gilbert Kreijger; Editing by Sara Webb)