Legal Aspects of Banking – Assignment 4

Banking System in Netherlands

Submitted By:
Amit Kumar Sindhu
PRN-18020942053
 The Netherlands Bank

Introduction :

De Nederlandsche Bank (DNB) is the Dutch central bank, financial sector supervisor and resolution
authority. DNB is a public limited company led by a Governing Board consisting of a President and three
to five Executive Directors. The Supervisory Board supervises the general course of business at DNB and
the Governing Board’s policy regarding the implementation of DNB’s national tasks.

De Nederlandsche Bank (DNB) is the central bank of the Netherlands. It is part of

the European System of Central Banks (ESCB). De Nederlandsche Bank is a public limited
company whose every day policy is overseen by the Governing Board. Being an NV, DNB has
a Supervisory Board (Dutch: Raad van Commissarissen). In addition, there is an advisory
body called the Bank Council (Dutch: Bankraad). As a public entity the DNB has a function as
both part of the European System of Central Banks (ESCB) and an independent public body

As a part of the ESCB, DNB is co-responsible for the determination and implementation of the
monetary policy for the Euro area, besides being a link in the international payment system.
As an independent public body, DNB exercises prudential supervision of financial institutions.

Functions of The Netherland Bank :

The functions of the central bank performs the Bank of the Netherlands (De Nederlandsche Bank)
founded in 1814, whose headquarters are in Amsterdam. It acts as a state-owned bank, as a lender and
“bankers’ bank”.

The Bank of the Netherlands ensures fiscal and operational supervision over the officially registered
financial institutions. Fiscal supervision includes monitoring compliance with the liquidity and solvency
of credit institutions prescribed level and licensing agencies after their foundation. The Central Bank has
the authority to license foreign exchange transactions, but in fact he communicated the functions of
commercial banks. The central bank act as intermediary in international payments, it also oversees the
issuance of securities in the domestic market (it doesn’t engage in commercial transactions)
DNB also has various national tasks, which are laid down in the Bank Act 1998. It supervises banks, trust
offices, pension funds and insurance companies, among other institutions. The supervision of banks in
the euro area is organised in the Single Supervisory Mechanism (SSM). DNB also safeguards the smooth
operation of the payment system in the Netherlands and manages the circulation of banknotes. It is
responsible for overseeing financial stability in the Netherlands and issues independent economic
advice. DNB’s other tasks include compiling statistics, discharging its national resolution tasks and
implementing the deposit guarantee scheme (DGS).In addition, DNB performs several public tasks
relating to coins. It is also responsible for banking supervision and ensuring an effective payment system
in the islands of Bonaire, St Eustatius and Saba (the Caribbean Netherlands). In respect of its
supervisory, resolution and DGS tasks, DNB is an independent public body, largely governed by the
Independent Public Bodies Framework Act

Banking Regulations of Netherlands :

The legal framework in The Netherlands for banks is predominantly included in the Dutch
Financial Supervision Act (Wet op het financieel toezicht) (FSA). The FSA came into force on 1
January 2007, replacing seven then existing financial supervision acts.
1.
The FSA consists of the following parts:
 Part 1: General Provisions, including tasks and responsibilities of the regulatory authorities
(see Question 2), together with their supervisory powers and the rules on their co-operation.
 Part 2: Market access of financial undertakings, setting out requirements in relation to
authorisations for financial undertakings wishing to operate in The Netherlands.
 Part 3: Prudential supervision of financial undertakings, including the prudential standards
which must be met by financial undertakings.
 Part 3a: Specific measures regarding financial undertakings.
 Part 4: Conduct of business supervision of financial undertakings, providing for various
conduct of business requirements applicable to financial undertakings

Regulatory authorities :
Lead bank regulators
The lead bank regulators are the:
 European Central Bank (ECB).
 Dutch Central Bank (De Nederlandsche Bank) (DNB).
 Dutch Authority for the Financial Markets (Autoriteit financiële markten) (AFM).
Screenshots
Types of Banking Services :
 Retail Banking
 Corporate Banking
 Investment Banking
 Private Banking
 Personal Banking
 Insurance
 NRI Banking
 Loans

Number of Banks Operating :

This statistic shows the total number of banks in the Netherlands from 2008 to 2017. At
the end of 2017, there were 44 banks in the Netherlands. Banking is an important
service industry in the Netherlands, being responsible for the funding of both
international as well as domestic trade.
Dutch banking has two important characteristics. Firstly, only a few large institutions
dominate its financial markets. In 2016, for example, the five largest Dutch credit
institutions, which includes the likes of ING, Rabobank and ABN Amro, held
approximately 85 percent of the total assets. Secondly, the Dutch banking sector is one
of the most concentrated in Europe.

In the period between 2008 and 2017, the total number of banks in the Netherlands
decreased from 93 banks in 2007 to 44 banks in 2016. In this period of time, the size of
the banking sector as a whole in the Netherlands decreased. The total number of bank
offices, for example, reached a total number of approximately 3,400 in 2008. In 2017,
this was around 1,600.

Leading Banks in Netherlands :

This statistic shows the leading banks in the Netherlands as of January 2019, by number of
bank branches. In January 2019, SNS Bank had the fourth-most number of offices, with
approximately 200. In the period between 2007 and 2016, the total number of banks in the
Netherlands decreased from 99 banks in 2007 to 50 banks in 2016. In this period of time,
the size of the banking sector as a whole in the Netherlands decreased. The total number of
bank offices, for example, reached a total number of approximately 3,400 in 2008. In 2016,
this was less than 1,700.

What licence(s) are required to conduct banking services and what

activities do they cover

Under the Capital Requirements Regulation, a bank is an undertaking whose business is to

receive, attract take deposits and hold other repayable funds from the public and to grant credits
for its own account. The FSA prohibits undertakings from pursuing the business of a bank
without a banking licence.
The prohibition on operating the business of a bank without authorisation does not apply to so-
called "central corporate treasuries", which are entities that:
 Take deposits and other repayable funds from the public by issuing securities.
 Hold an unconditional guarantee from the authorised bank of or their parent company with
respect to the obligations arising from the repayable funds received.
 Grant at least 95% of those funds as credit within the group to which they belong (section
3:2, FSA).
The parent company must ensure that the corporate treasury is able to able fulfill its obligations
with respect to the repayable funds received at any time. In addition, the parent company must
hold consolidated own funds that are positive (resulting in more assets than liabilities) for the full
duration of the guarantee. The central corporate treasury must at all times be able to show that
it complies with the conditions of section 3:2 FSA.