Administrative fine for de Volksbank N.V. for failure to ensure sound business operations

Pursuant to the Wft, a bank must ensure the sound conduct of its business operations. This requirement covers the entire process of setting, governing, monitoring and adjusting objectives and processes. Among other things, a bank must have a clear organisational structure and have unambiguous reporting lines and policies in place aimed at managing relevant risks. Sound business operations are also important for providing insightful and reliable reports and for the efficient and effective conduct of supervision by the competent supervisory authority.

At least during the period under review, de Volksbank did not ensure the sound conduct of its business operations. Its non-compliance continued for a very long period – at least from 5 July 2018 to 11 October 2023. de Volksbank has failed to manage relevant risks, including credit and counterparty risks, capital risks and operational risks. In doing so, it acted in non-compliance with Section 3:17 of the Wft.

Underlying its non-compliance are significant deficiencies that go to the core of de Volksbank's business operations. Briefly put, there are shortcomings in the credit and counterparty risk management systems, the internal models for calculating own funds requirements, the remediation programme to improve the internal models, the internal capital adequacy assessment process and the management of risks related to outsourcing. 

de Volksbank’s non-compliance prevented it from having an adequate overview and understanding of the risks to which it was exposed and of the way to manage and mitigate those risks. It also called into question the reliability of the quantification of its required capital. The non-compliance is mainly due to an ineffective internal governance and internal control framework.

Fine

The administrative fine for de Volksbank’s non-compliance has been set at €15 million, in accordance with the DNB General fine calculation policy (Algemeen boetetoemetingsbeleid DNB). 

In determining the amount of the fine, DNB considered that de Volksbank is a large institution with considerable resources. It also took into consideration that the non-compliance is of a very serious nature and continued for a long period, and that significant deficiencies underlay it. DNB also took into account de Volksbank’s heightened culpability for the non-compliance. While de Volksbank has been urged over a very long period to address and remedy the deficiencies, it continued to experience delays in implementing its remediation measures. At the same time, DNB has been mindful of the measures that de Volksbank has initiated so far to address the deficiencies. Furthermore, the constructive and receptive attitude with which de Volksbank is focusing on remediation and the fact that its current management is prioritising remediation were given positive consideration. On balance, and taking into account these circumstances, a fine of €15 million is appropriate and warranted.

Objection 

de Volksbank has six weeks from receipt of notification of the fine to lodge an objection. 

Read the full decision below (in Dutch), excluding confidential information. For further information, please contact DNB’s Information Desk at telephone number 0800 - 020 1068 (free of charge) or +31 20 524 9111 (if calling from abroad). 

Current status

The table below shows the current status of this decision.