Amid the European debt crisis and the debate in late 2011 concerning the AAA status of France, the Dutch financial sector actively reduced its exposures to some euro countries or saw the value of its exposures decline. Overall, the foreign exposures of the Dutch financial sector to the other euro countries came down by EUR 28 billion during the fourth quarter of 2011. While Dutch insurers and pension funds, on the whole, the reduction was made in the form of portfolio adjustments, Dutch banks reduced their exposures to nearly all countries within – but also outside – the euro area (see Table).
Exposures of the Dutch financial sector to the euro area decreased
- Statistical News Release
Date 10 April 2012
During the fourth quarter of 2011, the market value of the Dutch financial sector’s exposures to the euro area decreased by 4%. In particular, exposures to France (-16%), Italy (-9%) and Belgium (-4%) declined, mainly in favour of exposures to Germany (+3%) and the United States (+2%).
Exposures to France came down most steeply in absolute terms during the fourth quarter of 2011, by EUR 26 billion. This applies to Dutch banks (EUR -14.5 billion) as well as to insurers (EUR -6 billion) and pension funds (EUR -5.5 billion). Most of the decline resulted from across-the-board reductions of French government bond holdings, mainly through substantial divestments but also due to price falls caused by rising interest rates. In addtion, the exposures of Dutch banks to French banks also declined. A similar though less pronounced development took place vis-à-vis Italy and Belgium, with total exposures to governments and banks declining by EUR 4 billion and EUR 1 billion, respectively.
Exposures to the Greek and Irish governments declined compared to the preceding quarter. A slight increase in exposures to the Spanish government was wholly attributable to Dutch banks.
Partly offsetting the decreasing exposures to France, Belgium, Greece, Ireland and Italy are notable increases in exposures to the Netherlands, Germany and the United States. During the fourth quarter of 2011, Dutch insurers and pension funds further expanded their holdings of Dutch and German government bonds, while holdings of US equities increased as a result of price gains. Dutch banks, by contrast, reduced exposures to nearly all countries including the Netherlands, Germany and the United states.
Differentiation of exposures to the euro area by counterparty reveals another shift. During the fourth quarter of 2011, exposures to foreign banks and governments in the euro area declined by EUR 20 billion and EUR 14 billion, respectively, whereas exposures to the private sector rose by EUR 7 billion. This shift is apparent in Dutch banks in particular and to a lesser extent in insurers and pension funds. As a result, the weight of exposures to the private sector increased. At end-2011, 43% of the Dutch financial sector’s foreign exposures to the euro area was to the private sector, up from 40% in the preceding quarter.