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Dutch Governement issues Regulation amending some provisions of CRD and CRR 2019 on systemic risk buffer and Amendments to the Ministry of Finance budget statement about COVID-19 linked measures

On 16 April 2020, three amendments of the budget statement of the Ministry of Finance (IXB) for the year 2020 (Second incidental supplementary budget regarding COVID-19 crisis measure reinsurance supplier credits) were published in the Official Journal.

22 May 2020

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No. 5: Call on the Government, when concluding the reinsurance agreement, to make it a condition that the credit insurer refrains from paying dividends and bonuses at least for the duration of the agreement;

No. 6: The Chamber notes that many companies were very profitable in 2019, including the credit insurers; believes that we must show solidarity and share the costs of this crisis fairly, with the strongest shoulders bearing the heaviest burden; calls on the government to ensure that the business community will bear the damage suffered as a result of the crisis measure reinsurance supplier credits, and to inform the Chamber of how this will be organised, and proceeds to the order of the day;

No. 7: The government requests that, when concluding the reinsurance agreement, the Dutch branch of the credit insurer waives dividend and bonus payments at least for the duration of the agreement; and proceeds to the order of the day.

On 17 April 2020, Regulation of De Nederlandsche Bank NV of 8 April 2020 amending the Regulation specific provisions CRD and CRR 2019 in connection with the amended determination of the systemic risk buffer was published in the Official Journal.
The coronavirus outbreak has far-reaching consequences for the Dutch economy. The financial sector is also affected. In order to limit the economic damage as much as possible, it is crucial that the financial sector continues to function properly and that lending to businesses is not unnecessarily hampered. The Dutch Central Bank is doing everything in its power to continue to safeguard the stability of the financial sector. Against this background, DNB decided on 17 March to lower its systemic risk buffer requirement.

DNB is of the opinion that offering this extra margin is appropriate in view of current developments. This is also possible because banks have built up many additional buffers in recent years. The explicit intention is that this extra capital should be used to support lending and not to pay dividends or repurchase own shares. The desired reduction of the system buffers does not currently fit in with the current CRD and CRR 2019 Specific Provisions Regulations, because these stipulate the existing percentage of 3%. DNB is therefore amending the current scheme to allow for the announced adjustment of the buffer requirement per bank.
On Systemic Risk Buffer:

  • A bank domiciled in the Netherlands as referred to in Section 3:62a(1) of the Financial Supervision Act (Wft) which, in the opinion of DNB, has a dominant position in the financial system of the Netherlands or is otherwise exposed to systemic risks as referred to in Section 133 of the CRD, has a systemic risk buffer as referred to in Section 105(1)(d) of the Bpr.
  • A decision of DNB shall be taken to determine whether the first paragraph applies to a bank and to determine the level of the systemic risk buffer to be maintained by that bank, expressed as a percentage of the total risk items calculated in accordance with Article 92(3) of the CRR.
  • A bank shall meet the obligation under paragraph 2 on the basis of its consolidated position in accordance with Section 2 of Part One of the CRR. The systemic risk buffer shall be maintained at the highest consolidated level in the Netherlands.

Dutch Regulation amending CRD/CRR 2019 provisions on systemic risk buffer and COVID state budget

This article was originally published in the April edition of REGWATCH. Read the full edition covering the following jurisdictions:

  • European Union
  • Belgium
  • France
  • Germany
  • Hong Kong
  • Ireland
  • Italy
  • Luxembourg
  • Switzerland
  • United Kingdom

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