Impact of Basel III on Dutch banks significant but manageable

Press release
Date 4 May 2011

The impact of the new regulatory framework for banks, Basel III, on the Dutch banking system is significant, but still manageable through earnings retention and gradual adjustments to funding profiles.

This emerges from a quantitative impact analysis conducted last year by De Nederlandsche Bank (DNB) in conjunction with the Basel Committee on Banking Supervision and the European Banking Authority (EBA, formerly CEBS). In the years ahead, DNB will closely monitor and, where necessary, guide banks in the transition towards timely compliance with Basel III.

Last year it was estimated how much capital and liquidity, compared with year-end 2009, would need to be built up during the multi-year transition period to BaselIIIin order to meet the new capital and liquidity standards. Eighteen Dutch banks participated in the Basel Committee analysis.

The impact analysis shows that if BaselIIIstandards were to be applied to the year-end 2009 figures, major  Dutch banks would see their most important core capital ratio, the so-termed common equity Tier 1 (CET1), decline from 9.3% to 5.8% (Table 1).  Although the average capital ratio of major banks still meets the new minimum requirement of 4.5% to be attained by 1 January 2015, it falls short of the additional capital conservation buffer of 2,5% above the new minimum requirement. To meet the capital conservation buffer requirement, around EUR 10 billion worth of additional CET1 capital would be needed. Systemically important banks will be subject to additional capital requirements that will be decided on later in the year. As regards liquidity, the impact analysis reveals that major Dutch banks have an average score of 81% in meeting the new liquidity coverage ratio (LCR), and an average score of 90% in meeting the net stable funding ratio (NSFR).  

For a more detailed report of the impact study see the Annex hereto, and for further comments see the enclosed interview with Paul Hilbers,DNB’s Division Director of Supervision Policy.

For more information, you may contact Tobias Oudejans (Tel. +31 (0)20 524 3100, +31 (0)6 524 96 961) and Kees Verhagen (Tel. +31 (0)20 524 2272, +31 (0)6 211 23 922).