DNB publishes Statistical Bulletin September 2010

Press release
Date 29 September 2010

Articles: Solvency ratio of the Dutch banking sector, Stalling growth of 'Other financial intermediaries' in the financial sector, Selected financial assets of Dutch households, Collective pensions at insurers − over 900,000 participants.

 

Solvency ratio of the Dutch banking sector

The turmoil on the financial markets has led to tighter control on the solvency of banks, the extent to which their own funds 'cover' potential losses on (risk-weighted) assets and forms a sufficient buffer for setbacks. For Dutch banks, the actual ratio between the value of these assets and own funds, i.e. the solvency ratio, was 14% at the end of March 2010. Since the introduction in the Netherlands, in January 2008, of new international supervisory guidelines as laid down in the Basel II Accord the solvency ratio of the Dutch banking sector has increased. In part, this was due to the revised guidelines themselves, which now better match the developments of risk management in the banking sector. But even apart from this, in the period from 2008-I-2010-I, the solvency ratio increased by two percentage points. However, the insights gained during the financial crisis also made clear that in the future additional capital requirements for banks will be necessary. The recently concluded Basel III Accord meets this need.

Stalling growth of 'Other financial intermediaries' in the financial sector

Besides banks, insurers and pension funds, the financial sector in the Netherlands comprises a relatively large category of ‘other financial institutions’ (OFIs), such as special financial institutions (SFIs) and investment firms. These OFIs also include a small miscellaneous group referred to as other financial intermediaries (OFIMs). At the end of 2009, these intermediaries had a balance sheet total of EUR 350 billion. While is a modest amount compared to that for OFIs as a whole (EUR 2,300 billion), OFIMs still play an important role, especially for financial holdings. At the end of 2009, more than half (EUR 130 billion) of the share capital of bank and insurance companies to which they belong, was outstanding via these OFIMs. The balance sheet totals of OFIMs over the past years hardly changed, which contrasted with the increase at other financial institutions. In particular the decline by EUR 17 billion in credit supplied to Dutch companies since 2007 was the exact reverse of the increase of credit supplied by banks in this period (EUR 30 billion). The share of bank lease and finance companies in the total credit supply to Dutch companies in 2009 consequently decreased to 7 percent. In 2007 this was still 12 percent. Valuation losses on holdings by OFIMs, just as those by other financial institutions, were only partly offset.

Selected financial assets of Dutch households

At the end of the first quarter of 2010, financial assets of Dutch households stood at well over EUR 1,300 billion. Subtraction of liabilities, such as mortgage loans, left households with net financial assets worth almost 700 billion. On average, this is over EUR 53,000 per Dutch citizen over 18 years of age. These net financial assets are on a growing trend. In the three years up to the first quarter of 2010, this amount increased by EUR 105 billion. During the financial crisis households did lose a substantial amount on their securities holdings (EUR 21 billion), but this was more than offset by increases in pension entitlements of EUR 143 billion and savings of EUR 54 billion. For a more complete overview of households' assets, also home ownership should be taken into account. However, this factor is excluded from financial assets. Another relevant aspect would be to what extent the value of pension entitlements and rights are in line with (future) affordability.

Collective pensions at insurers − over 900,000 participants

Just as pension funds, insurers also offer collective pension schemes. Employers from small and medium-sized enterprises have arranged pensions with insurers for more than 900,000 participants and this number is still increasing. There are many parallels with pension fund schemes, but in general they are less generous. In the majority of cases, the risks rest more with employees. In particular for small companies the spread of risks is more difficult (almost 90% of the schemes are concluded by enterprises with fewer than 50 employees). Small enterprises usually opt for a type of contract in which the height of the pension benefits largely depends on the yields on the deposits made.

For more information, please contact Tobias Oudejans (Tel. 020-5243100, 0652496961) or Herman Lutke Schipholt (020-5242712, 0652496900).