Governance

DNB is managed by a Governing Board formed by the President and four Executive Directors, each appointed by Royal Decree for a period of seven years. The Board operates to the principle of peer-based management. In a personal capacity, the President is a member of the Governing Council and the General Council of the ECB. The Supervisory Board supervises the management and general affairs of DNB and acts as advisor to the Governing Board.

Act strengthening the governance of financial supervisors DNB and AFM

On 16 February 2012, the Act strengthening governance of financial supervisors DNB and AFM came into effect. This Act amends several aspects of the Bank Act 1998 and the Financial Supervision Act (Wet op het Financieel Toezicht or Wft) and regards both DNB and the AFM. The intended aim of this Act is to strengthen the governance at the two supervisors. As a result of this Act, DNB’s governance structure will be changed in several aspects. The main changes are:
 
Chairman for Prudential Supervision & Prudential Supervision Council for Financial Institutions
Within the Board, two members are entrusted with microprudential supervision. The duties in this area are shared between these two Board members, of whom one acts as Executive Director of Banking Supervision and the other as Executive Director of Insurance and Pension Funds Supervision. One of these Board Members will be appointed Chairman for Prudential Supervision. He will be primarily responsibly for the supervisory duties stated and will thus act as first point of contact for external relations on topics related to those supervisory duties. In specific cases, the other Executive Director of Supervision may also act as a point of contact. The preparation of the deliberation and the preparation of the decision making of the Executive Directors of Supervision will be coordinated by the Prudential Supervision Council for Financial Institutions, a new internal organisational body.
 
Extension of the statutory duties of the Supervisory Board
The Act strengthening governance of financial supervisors DNB and AFM also provides for extension of the statutory duties of the respective Supervisory Boards. This means that in addition to the more operational and administrative aspects, supervision will also focus on (safeguarding the) policy aspects, i.e. the exercise of supervision in a general sense and the safeguarding of quality and effectiveness of that policy. The Council will appoint a Supervision Committee from amidst its members. The Supervision Committee will prepare decisions and recommendations of the Supervisory Board in the context of its supervisory duties.
 
Finally, the Act limits the number of times that Executive Directors can be reappointed in the same position to one. In addition, profiles, job descriptions and integrity and competence tests will be implemented for both Governing Board and Supervisory Board members.
 
The Act strengthening governance will be worked out in more detail in DNB’s Articles of Association and Rules of Procedure. The amended Articles of Association and the Rules of Procedure will soon be published on DNB's website. 

Governance structure

The management of DNB is in the hands of a Governing Board composed of the President and four Executive Directors, each appointed by Royal Decree for a period of seven years. The Governing Board operates to the principle of peer-based management, having due regard for the fact that the President, in a personal capacity, sits on the Governing Council and the General Council of the ECB.

The Supervisory Board has a minimum of seven and a maximum of ten members. The Supervisory Board supervises the management and general affairs of DNB and acts as an advisor to the Governing Board. The Supervisory Board’s tasks include the prior approval of the budget and the accountability report, and the adoption of the financial statements. From among its own members, the Supervisory Board forms an Audit Committee and a Remuneration and Appointments Committee.

The Audit Committee prepares decisions and recommendations of the Supervisory Board on matters such as supervision of the quality of external financial accounts, supervision of compliance with internal procedures and legislation, and the control of operational risks. The Remuneration and Appointments Committee prepares decisions and recommendations for the Supervisory Board on matters such as monitoring the continuity of management, remuneration of the members of the Governing Board, recommendations relating to the appointment of Governing Board members and internal regulations relating to insider trading, incompatible offices and conflicts of interest. The Supervisory Board has one government-appointed member, who may inform the Minister of Finance about the manner in which DNB performs its tasks.

The State is sole shareholder of DNB. The Minister of Finance represents the Dutch State as sole shareholder at the General Meeting of Shareholders. The powers of the General Meeting of Shareholders include the right to endorse the financial statements as adopted by the Supervisory Board and the right to amend DNB’s Articles of Association following a proposal from the Board of Management approved by the Supervisory Board. The General Meeting of Shareholders is also responsible for appointing the external auditors.

Finally, DNB also has a Bank Council. The Bank Council acts as a sounding board to the Governing Board and is composed of thirteen members. It consists of the government-appointed Supervisory Board member, one other Supervisory Board member and a maximum of eleven members appointed by the Bank Council on the recommendation of the Governing Board. The members are representatives of different sections of society, such as the social partners or the financial sector, and independent experts. The President reports to the Bank Council on the general economic and financial developments, as well as discussing policies pursued by DNB with the Bank Council. Other discussion topics are matters related to objectives, tasks and operations of DNB as put forward by one or more members.

Governance in a broad sense

As well as being a shareholder, the Minister of Finance is also involved in the governance of DNB in his ministerial capacity. The Minister is required, for example, to approve the budget and accountability report of DNB as an independent public body. Remuneration, pension commitments and expense account arrangements of Governing Board members are also subject to the Minister's approval, as are contributions to and withdrawals from reserves. 

At a European level, the Council of Ministers of the European Union (EU) must approve the appointment of the external auditors of DNB nominated by the ECB. DNB is also accountable to the Minister of Social Affairs and Employment for the performance of its tasks as an independent public body. The format and manner in which it accounts for its supervision to these ministers are specified in the Bank Act 1998 and the legislation on financial supervision. The draft budget for the supervisory part is submitted for consultation to panels of representatives of supervised institutions. Subsequently, the budget must be approved by the Supervisory Board. The supervisory part of the budget is then submitted to the Minister of Finance and the Minister of Social Affairs and Employment. DNB also draws up an annual account of its performance as an independent public body, the objectives achieved and the costs involved. This account is discussed by a panel and must be approved by the Ministers of Finance and of Social Affairs and Employment. Supervision of DNB's activities relating to the supervision of pension providers is carried out in part by the Inspection Service for Work and Income on behalf of the Minister of Social Affairs and Employment. This supervision involves regular spot checks and the exchange of information.

In addition to the reporting mechanisms referred to above, DNB maintains a dialogue with various stakeholders, including representative organisations. Subject to its statutory duty of confidentiality, DNB provides these parties with access to information on its tasks, specific products or institutions and the financial sector in general. The President of DNB also provides Parliament with information on systemic tasks insofar as permitted under the Treaty on the Functioning of the European Union and the Statute of the ESCB. 

Lastly, DNB also accounts for its performance to various external bodies, including the Netherlands Court of Audit, which has the right of access to information on DNB's tasks as a non-departmental public body.