Banking and Securities Regulation in the Netherlands (Dutch Business Law)
Contents:
In practice, setting up a bank and obtaining a banking licence can take substantially more time over one year.
The supervisory boards of banks are required to establish certain committees. In line with the European Audit Directive, the appointed audit firm has to change after a ten-year period. As a result thereof they are permitted to operate their banking business in The Netherlands from a Dutch-based branch or by providing the services on a cross-border basis without a separate Dutch licence being required the European passport. The Wft includes provisions on market entry, the integrity and soundness of business operations and internal procedures, governance requirements, capital requirements, the conduct of business, the offering of securities and prospectus requirements. Regulation of systemically important financial institutions SIFIs. After a licence is granted, the bank is registered in the public register maintained by DNB. On application, the ECB can grant full or partial dispensation from certain licence requirements, if the applicant shows that it cannot reasonably comply with those requirements and that the objectives which such requirements seek to achieve are achieved in other ways.
Cost and duration Costs for the application for a banking licence from DNB are EUR31,, assuming the Dutch bank is not a subsidiary or the parent company of another bank or investment firm. The application for a declaration of no objection costs:. EUR1, if the assessment takes 15 hours or less. EUR5, if the assessment takes between 15 and hours. EUR30, if the assessment takes more than hours.
A licence is granted indefinitely, so renewal of the licence is not necessary. Can banks headquartered in other jurisdictions operate in your jurisdiction on the basis of their home state banking licence? As a result thereof they are permitted to operate their banking business in The Netherlands from a Dutch-based branch or by providing the services on a cross-border basis without a separate Dutch licence being required the European passport. The relevant bank must be duly authorised to pursue the business of a bank in its home member state and must properly notify the competent authority in its home member state under the notification procedure set out in CRD IV.
After the notification process is completed, the bank is registered in the public register maintained by DNB. The register states whether the bank is active in The Netherlands through a branch or on a cross-border basis, and which banking activities the bank is allowed to carry out in The Netherlands. However, a Dutch branch must comply with Dutch anti-money laundering and financing of terrorism and conduct of business requirements and is supervised for that purpose by DNB and the AFM respectively. Banks established outside the EEA.
The European passport is not available to banks established outside the EEA. A bank established in a country that is not an EEA member state can only pursue the business of a bank through a branch in The Netherlands providing services on a cross-border basis is not possible if DNB has granted that bank a licence to do so. The licensing procedure, including the decision term, and the licence requirements are to a large extent the same as those for Dutch-based banks see Question 4, Requirements.
These requirements, however, apply to the Dutch branch of the bank and not to the bank as a whole. In addition, a bank having its registered office in another member state with a branch in The Netherlands must keep at least one set of separate accounts relating to the branch, to enable DNB to supervise compliance with the liquidity requirements. On application, DNB can grant full or partial dispensation from certain licence requirements if the applicant shows that it cannot reasonably comply with those requirements, and that the objectives which such requirements seek to achieve are achieved in other ways.
After a licence is granted, the bank is registered in the public register maintained by DNB. Forms of banks 6. What forms of bank operate in your jurisdiction, and how are they generally regulated? Does the regulatory regime distinguish between different forms of banks? Although various forms of banks, such as universal banks that are engaged in both commercial and investment banking activities , savings banks, mortgage banks and securities institutions that have bank status "security banks" are active in The Netherlands, the Dutch regulatory regime does not distinguish between different forms of banks.
Banking regulation in The Netherlands: overview | Practical Law
The following are classified as O-SII's. Organisation of banks Legal entities. What legal entities can operate as banks? What legal forms are generally used to operate as banks?
Banking and Securities Regulation in the Netherlands
There are no specific regulatory requirements for the type of legal entity that can be used. Usually, a public limited liability company naamloze vennootschap or NV is used. What are the legislative and non-legislative corporate governance rules for banks? Various corporate governance rules apply to a bank's management, supervisory board and key functions, most of which are primarily based on the requirement to ensure sound and controlled business operations.
These rules are explained more fully in Questions 9 to Further, the ECB issued a supervisory statement on governance and risk appetite in June , in which it announced its expectations for the functioning and effectiveness of boards and the risk appetite framework. What are the organisational requirements for banks? Each bank is required to have a solid and adequate organisational structure, to ensure efficient and prudent management.
In light of that, various rules have been included in the FSA, such as:. The day-to-day policy of a bank must be determined by at least two natural persons usually the managing directors. These policymakers, who must perform these activities from The Netherlands rather than from abroad they do not have to be Dutch residents. The integrity of these day-to-day policymakers must be beyond doubt and they must be suitable. The latter means that they must possess sufficient knowledge, skills and professional conduct in a number of areas, such as: The day-to-day policymaker must have a good understanding of the envisaged business of the bank and the markets in which the bank operates.
This also requires understanding the relevant laws and regulations applicable to the bank. The integrity and suitability requirements also apply to persons who fulfill a management position directly below the management board, and who will be responsible for natural persons whose activities can have a significant impact on the risk profile of the bank the so-called Second Echelon.
The bank must have a separate compliance function, a risk control function and an independent internal audit function. Significant banks must, in addition, have a nomination committee, risk committee and remuneration committee in place. What are the rules concerning appointment of auditors and other experts? Under Dutch law, the main rule is that a legal person must give instructions for the audit of the annual accounts to an accountant registered in the accountants' register under the Auditors Profession Act Wet op het accountantsberoep or to a duly licensed firm of qualified accountants.
The general meeting is empowered to appoint auditors but if it fails to do so, the supervisory board or the management board is empowered to do so although this power is controversial and is the subject of debate. The appointment must not be restricted to a limited list of candidates. The instructions can be withdrawn at any time by the general meeting, the person who gave the instructions, or the supervisory board when given by the management board. Withdrawal of the instructions can only be made for well-founded reasons which do not include, for example, any difference of opinion on reporting methods.
As a bank is a public interest organisation within the meaning of the Act on the Supervision of Accounting Organisations Wet toezicht accountantsorganisaties , the bank must notify the AFM of the chosen auditor before such an auditor can be appointed. From 1 January , public interest organisations are under a duty to change their appointed audit firm on a regular basis. In line with the European Audit Directive, the appointed audit firm has to change after a ten-year period. Subsequently, a two-year cooling-off period is in place.
The auditor can only be responsible for the annual audit report for a period of five years. What is the supervisory regime for management of banks? As well as the requirement to have two day-to-day policymakers in place, the bank must have a supervisory board or a comparable body of at least three members.
- Banking Regulation 2018 | Netherlands.
- Time Isnt Money: The Best Kept Secrets that the Rich Wouldnt Want to Share with You and Your Boss Doesnt Want You to Know;
- Mayhem: When Lines are Crossed Lives are Tested.
- The House Without a Key?
- Cornsilk Casey.
- Vampires Dont Cry (Old Blood: Howard Weeks);
- Buy for others!
DNB must assess the integrity and suitability of these supervisory directors. The supervisory board must act independently. DNB assesses the independent functioning of the supervisory board, taking into account the nature, size, complexity and inherent risks of the bank, as well as the following requirements:. Members of the supervisory board must be able to act independently and balance competing interests independence of mind.
Members of the supervisory board must avoid or limit any semblance of conflicting interests independence in appearance. A member of the supervisory board is deemed not to be formally independent if he or she, or his or her spouse, registered partner or other life partner, foster child or relation by blood or affinity up to the second degree:. Has been an employee or director of the bank or its affiliated companies in the five years preceding the appointment. Receives a personal financial remuneration from the bank or its affiliated companies. Has had an important business relationship with the company or its affiliated companies in the year preceding the appointment.
Is a member of the management board of a company in which a member of the board of the company supervised by him or her is a supervisory director. Has temporarily acted for the management, due to prolonged absence or inability to act on the part of directors, during the preceding 12 months. An exception applies in group companies, provided that DNB exercises consolidated supervision over the group.
Banking regulation in The Netherlands: overview
This means that a member of the supervisory board who is also a director or employee of the parent company is deemed to be formally independent. Do any remuneration policies apply? The Wbfo applies to all persons working under the responsibility of the Regulated Entities and their respective subsidiaries. Publication and information requirements regarding the remuneration policy.
Legislation and regulatory authorities
A prohibition on guaranteed variable remuneration. In addition, specific rules of the Regulation on Sound Remuneration Policies Regeling Beheerst Beloningsbeleid apply to staff whose activities can materially affect the risk profile of the undertaking. This regulation has also implemented most remuneration requirements from the Capital Requirements Directive IV and the Capital Requirements Regulation.
What are the risk management rules for banks? Financial undertakings must have a good governance system which includes an adequate risk management system or effective processes for identifying, measuring or gauging, monitoring, mitigating and reporting on risks. A bank must have a policy aimed at managing relevant risks including:.
Interest-rate risk resulting from non-trading activities. Risks that follow from the macroeconomic environment in which the firm operates, and relate to the stage in the economic cycle. The risk policy must be integrated in the business processes, and contain procedures and measures aligned with the nature, size, risk profile and complexity of the activities, including:. The procedures and measures are recorded and communicated to all relevant business units of the bank.
Banks are now also increasingly involved in developing Fintech initiatives themselves to counter new competitive financial services providers. Dutch regulators appear to be open to such new initiatives. The largest part of the Dutch legislation on the financial services industry is derived from European legislation. The rest consists of specific national legislation. Regulatory rules are incorporated into the Dutch Financial Supervision Act Wet op het financieel toezicht Wft and further decrees and regulations. The Wft includes provisions on market entry, the integrity and soundness of business operations and internal procedures, governance requirements, capital requirements, the conduct of business, the offering of securities and prospectus requirements.
In addition to the Wft, many directly applicable EU regulations contain regulatory rules for Dutch financial institutions. We note that some of this EU legislation results from agreements within the Financial Stability Board or the Basel Committee on Banking Supervision, thus covering more jurisdictions than just that of the EU. As a result of the introduction of the Wft in , the Dutch supervisory structure has changed from the traditional sectoral model to a functional model on a cross-sectoral basis.
The Dutch Ministry of Finance is currently exploring the options regarding a revision of the Wft in the near future in order to resolve several identified shortcomings in the structure of the Wft. These two authorities cooperate in order to avoid overlap and to promote the efficiency and effectiveness of their supervision. The AFM is responsible for supervising the conduct of business of all financial undertakings that are active on the Dutch financial market. Conduct supervision focuses on ensuring orderly and transparent financial market processes and the exercise of due care in dealing with clients by financial undertakings.
The AFM is also responsible for the approval of prospectuses, market abuse supervision and matters regarding the trading infrastructure. The AFM is a strict supervisory authority that is not reluctant to impose formal measures such as fines or orders subject to a penalty when the proper treatment of consumers is at stake.
DNB is responsible for prudential supervision of financial undertakings. It also supervises compliance with the Anti-Money Laundering and Anti-Terrorist Financing Act Wet ter voorkoming van witwassen en financieren van terrorisme Wwft by financial undertakings standing under its prudential supervision.
DNB assesses and enforces the adequacy of the procedures and measures implemented by financial undertakings to combat money laundering and terrorist financing. DNB is also the central bank of the Netherlands and, in this capacity, is responsible for systemic supervision. DNB too is a strict supervisory authority which focuses not on formalistic compliance with rules per se , but on effects that it deems undesirable. As a result of the EU Banking Union, from 4 November the ECB is the prudential supervisory authority for all banks with a seat within the euro currency area.
This has significantly changed the role of DNB. Regarding other, less significant, Dutch banks, DNB remains the direct prudential supervisory authority. Nevertheless, the ECB continues to be of great influence due to its powers to adopt regulations, create guidelines, recommendations and take binding decisions, all of which have to be followed by DNB. In addition, the ECB decides on approvals for banking licences and declarations of no-objection regardless of whether the relevant bank is significant or not. As set out above, Dutch banking regulation is largely dictated by the EU.
After the credit crisis and the euro crisis, the EU found that the effects of a failing bank could not be contained within national borders. There was a tight nexus between national EU Member States and their local banks. Banks have a significant amount of sovereign debt on their balance sheet, whilst national governments would have to bail these banks out if they were to fail, resulting in a vicious cycle. As a result, there is a strong desire for one harmonised set of bank regulatory rules and methodologies at EU level, countering regulatory arbitrage and overly close ties between banks and their national supervisory authorities.
Those harmonised rules are laid down in the so-called Single Rulebook. The EU consistently uses the directly applicable regulations more often. Since the worst parts of the crisis seem to be behind us, the EU is increasingly looking for a consolidation, and even a clean-up of the regulatory framework for banks. The EU legislator is trying to perfect the post-crisis regulations, all the while looking for rules that may stimulate the economy.
Below we will list a number of current EU regulatory developments. Due to logistical reasons, financial services infrastructure, workforce, language skills, tax structure and quality of life, the Netherlands is generally considered a suitable option for an EU-based regulated subsidiary. There are currently several options still in discussion that would allow financial institutions to continue to sell their services throughout the EU. Even if there will be no EU passport into or from the UK, there may be regulatory equivalence designations.
That would allow for a lighter market entry regime for those banks.
Du kanske gillar
It is expected that these proposed measures will be reached at the end of , but will not enter into force before or even For example, the quality of capital that can be taken into account to calculate the large exposures limit only Tier 1 capital will be improved. This includes proportionality with respect to remuneration. One of the amendments consists of exempting deferred variable remuneration and pay-out in instruments with respect to: The resolution authority will draw up a resolution plan for every bank involved.
The bank can be asked to assist in drawing up the plan. Furthermore, banks are subject to a capital requirement relating to their capital that can be bailed in, known as the Minimum Requirements for own funds and Eligible Liabilities MREL. The suspension of termination rights is only allowed when the bank continues to perform its delivery and payment obligations, and lasts temporarily. The highlights of these amendments are as follows. By creating a Capital Markets Union, the EC is trying to stimulate the economic growth potential of Europe by strengthening and diversifying financing sources for European companies and long-term investment projects.
The subsequent CMU proposals are numerous and cover a broad area. For instance, the EU has already adopted a Regulation on securitisation in December In this manner, a safe and liquid market for securitisation is being promoted. Currently ongoing CMU proposals include:.
ESMA will have the right to act in specific cases, which have cross-border implications for the integrity of financial markets or financial stability in the EU. ESMA will also be able to require investigations. These powers are set out in the directly applicable Markets in Financial Instruments. Over the past few years, the Dutch government has been very critical of the banking sector. As a result, it has introduced a number of rules that are stricter than the EU standard or which are in addition to these EU rules.
Such an oath has been linked to a code of conduct, with disciplinary rules applicable to all employees in the Dutch banking industry. If such employees violate their oath, they can be sanctioned by a disciplinary board. It seems that the Dutch legislator has recently somewhat loosened its regulatory strictness, partly due to the new Dutch government coalition installed in the autumn of On an annual basis, the Dutch legislator proposed a set of new regulatory rules. The corresponding Financial Markets Amendment Decree has been proposed for consultation and will also take effect mid With respect to banks, the proposed novelties include the following:.
While it should have been implemented on 13 January , in the Netherlands it will likely be implemented mid In most countries financial regulation is not the easiest accessible area of the law and the Netherlands is no exception. For anyone involved in the Dutch financial industry this book will prove an indispensable toll to have some meaningful insights into the Dutch regulatory landscape.
The authors are experienced practitioners who have advised domestic and international clients on Dutch financial law for many years. Together they also have extensive transactional experience as well as considerable in-house experience at both the Dutch financial regulators. Bank and Financial Securities Regulation in the Netherlands will prove a practical and comprehensive guide for non-Dutch lawyers as well as businesses and individuals who are active in the Dutch financial industry.
It may also help- other Dutch lawyers to advise their non-Dutch counterparts on some of the intricacies of Dutch financial law. Read more Read less. Kindle Cloud Reader Read instantly in your browser. Product details File Size: Up to 4 simultaneous devices, per publisher limits Publisher: August 27, Sold by: Share your thoughts with other customers. Write a customer review. Amazon Giveaway allows you to run promotional giveaways in order to create buzz, reward your audience, and attract new followers and customers.