Banks and insurance companies
For a long time, there have been no real newcomers to the banking and insurance markets. This year saw a change in that trend, however: DNB issued authorisations to banks and insurance companies that were set up by parties from outside these sectors and based on innovative concepts.
DNB, as the national prudential supervisory authority, is responsible for screening and for granting authorisations. The applications for banks and insurance companies used to be submitted almost exclusively by existing institutions, often as a result of organisational restructuring. This year, however, DNB held talks with various new parties planning to set up institutions based on innovative concepts. Innovative elements include alternative financing models such as contributions by members or policyholders, digital communication or extensive use of smartphone apps.
In addition, DNB sees more initiatives to boost lending to the SME sector, for example by means of crowd funding or by setting up credit unions. DNB is also holding talks with these parties, advising them on how to develop their activities within the existing statutory and regulatory framework.
New types of financial institutions
The changing financial environment too has led to new applications being submitted. Recent legislative changes have led to new types of financial institutions. For example, in 2011 the premium pension institution (premiepensioeninstelling – PPI) came into being, a new type of financial institution for accruing pension rights under a defined contribution scheme. DNB has now granted authorisations to 12 PPIs. In the near future a bill on the General Pension Fund (algemeen pensioenfonds – APF) is expected to pass, a type of pension fund that can administer multiple financially separate pension schemes at the same time. The introduction of the APF has met with considerable interest, and DNB is currently engaged in exploratory talks with possible applicants.
Many applications from the payment systems sector
There were many applications from the payment systems sector over the last few years, mainly as a result of legislative changes. Since 2009, 35 authorisations have been granted to payment service providers (parties responsible for organising transactions in the payment system), and 59 institutions were authorised as exempted payment services providers. In addition, in 2014 an authorisation requirement was established for settlement agents, institutions responsible for part of the daily payment system infrastructure. Two settlement agent applications are now under consideration, and several more are expected to follow.
Applications from other institutions
Not all financial sectors have seen an increase in the number of initiatives or new types of institutions. For example, applications for trust offices are still being submitted, but the growth in the number of trust offices has been slowing down over the past year. The decrease in the number of authorisations granted is partly due to tightening of the suitability screening pursuant to the Policy Rule on Suitability, combined with stronger emphasis on the assessment of the business plan.
In DNB's opinion, innovation, diversity and new initiatives from the financial sector perfectly tie in with maintaining a sound and stable financial sector. However, DNB must be convinced of an applicant's viability and applies a strict and rigorous consideration procedure to assess whether the institution complies with the requirements regarding its capital and the suitability and integrity of its board members. DNB wants to prevent situations in which a new bank or insurance company is unable to meet its obligations towards account holders or policyholders and takes the utmost care in considering applications. This is a meticulous process, involving many interviews and careful assessment of all relevant documentation, often even before the actual application is submitted. For example, DNB requests a resolution plan from the applicant, setting out how the institution may be resolved with minimum adverse consequences. With such a plan in place, the resolution of the institution can proceed as smoothly as possible in case of bankruptcy. As of 1 January 2015, DNB may set more specific requirements for the resolution of banks, both new and existing, as part of its new resolution remit.