Rise in the Dutch financial sector's exposures to foreign private parties

Statistical News Release
Date 28 June 2013

Foreign exposures of the Dutch financial sector rose by EUR 62 billion in the first quarter of the year. More than half of this increase was in the private sector and attributable to rises in the value of equities holdings and various other factors. The increase was primarily concentrated in United States, where exposures increased by almost EUR 22 billion.

The combined foreign exposures of Dutch banks, pension funds and insurers rose by 3.6% in the first quarter to EUR 1,781 billion. Each of these categories of financial institutions contributed to the rise, with the increase achieved by pension funds (+ 4.8%) being relatively the strongest. In terms of countries, the most substantial rise in foreign exposures was in the United States, which accounted for over one third (or close to EUR 22 billion) of the total increase. Pension funds saw their exposures to the United States increase by over EUR 13 billion. Most of this rise was attributable to the equity portfolios, and specifically to rises in equity prices and the strengthening of the US dollar. The Dow Jones index, for example, rose by 11% during the quarter. Dutch banks, too, increased their holdings in the United States through higher levels of treasury activities, including repo and securities transactions.
Foreign exposures of the Dutch financial sector within the euro area rose by EUR 17 billion. The largest contributors in this respect were banks, which increased their exposures to France and various other countries. Higher purchases of government bonds meant banks also increased their exposure to Belgium. Insurers increased their exposure to France and Germany by buying government bonds totalling EUR 3 billion. Pension funds invested over EUR 3 billion in fixed-income securities in the euro area excluding the Netherlands during the quarter, with most of their investments being in government securities. At the same time, insurers, pension funds and banks experienced slight falls in prices in their bond portfolios as a result of higher capital market interest rates. The Dutch financial sector's exposures to the United Kingdom fell by a total of over EUR 5 billion. This fall was wholly attributable to banks reducing their exposure to the UK private sector and government by a total of EUR 9 billion. Some of this decrease was offset by the fact that price rises and various other factors resulted in an increase of EUR 3 billion in the Dutch pension funds' exposure to the UK private sector.
As a result of the increase in exposure to the United States this country now once again represents the Dutch financial sector's largest single foreign exposure. This contrasts with the position at the end of 2012, when the list was headed by Germany (Chart 1). Pension funds in particular account for a relatively high share of the exposure to the United States.

Foreign exposures of Dutch banks, pension funds and insurers , March 2013

While Dutch financial interests in the United States are very largely in the private sector (82%), the share attributable to the German private sector is smaller (36%) because of the choice in the case of German investments to concentrate more on government bonds (Chart 2). This also applied in the case of exposures in France.

Exposures of the Dutch financial sector on foreign sectors, March 2013