Dutch financial sector's foreign exposures rise

Statistical News Release
Date 27 June 2014

The Dutch financial sector's foreign exposures in the first quarter of 2014 rose by EUR 74 billion, having fallen by EUR 11 billion in the fourth quarter of 2013, partly as a result of improved market sentiment. The increase was primarily accounted for by Dutch banks and pension funds.

In the first quarter of 2014, foreign exposures of the Dutch financial sector rose by EUR 74 billion (up 4.1%) to EUR 1,858 billion, partly as a result of both improved market sentiment and more positive risk perception with respect to the euro area countries. 
Foreign exposures of Dutch banks increased by almost EUR 37 billion (up 3.9%). Exposure to euro area countries (excluding the Netherlands) and the United Kingdom increased especially (up EUR 18 and EUR 9 billion respectively), while exposure to the United States declined by EUR 3 billion.
Pension funds also substantially increased their foreign exposures (up EUR 35 billion, or 5.3%). This increase was primarily concentrated in the euro-area countries (up EUR 15 billion) and the United States (up EUR 10 billion). The increase among insurance companies was more limited (up 0.7%).

Dutch financial sector's foreign exposures rise
Foreign exposures of the Dutch financial sector increased sharply, owing to positive market sentiment. Exposures to Germany, France and Belgium increased in particular.  Exposures to the peripheral euro-area countries also increased, partly owing to improved risk perception with respect to these countries. The budding economic recovery and the successful conclusion of the Spanish and Irish support programmes pushed down government bond yields in the peripheral euro area countries. 
The increase in exposures to the United Kingdom was mainly attributable to banks. In the first quarter of this year, banks increased their exposures to the British government (including the Bank of England), following a reduction in the previous quarter. The exposure of pension funds to the United States increased as a result of purchases of equities and debt securities, and price increases in these securities. On the other hand, banks and insurance companies lowered their exposures to the United States.
In the light of political tensions, and possible economic or other sanctions against Russia, exposures to Russia and the Ukraine were down 3% and 11% respectively (EUR 590 million in total).  Banks lowered their exposures to Russia and the Ukraine in particular, while insurance companies and pension funds, which have only 0.3% of their total exposure invested in these countries, left their exposures virtually unchanged.
 
Broken down by counterparty sector, foreign exposure to sovereigns increased by EUR 34 billion. Falling interest on government bonds led to price gains on holdings of these securities, especially for pension funds. The increased exposures of Dutch banks were concentrated in the countries outside the euro area, the United Kingdom and the United States in particular. Exposures to the private sector continued to rise in the first quarter by EUR 18 billion. 
Exposures to the United States, Germany, France and Spain rose, whereas those to Belgium, Italy, and Ireland declined.
 
Exposures to the foreign banking sector climbed EUR 22 billion, following a reduction in the fourth quarter of 2013. This points towards increasing confidence of Dutch banks in their foreign counterparts. A comparable trend is visible in investor sentiment with respect to European banks, which was also reflected in higher price-to-book ratios.

Dutch financial sector's foreign exposures rise