Rise in foreign exposures of the Dutch financial sector

Statistical News Release
Date 27 December 2013

Foreign exposures of the Dutch financial sector rose by EUR 21 billion in the third quarter of 2013. This rise was largely on account of pension funds. The rise in foreign exposures of the financial sector related to counterparties outside the euro area in particular (EUR 16 billion), but foreign exposures to counterparties inside the euro area also increased.

Total foreign exposures of the Dutch financial sector rose by EUR 21 billion (+1.2%) billion in the third quarter of 2013, in contrast to the second quarter of 2013 when they declined by EUR 29 billion (-1.6%). Total foreign exposures of the Dutch financial sector stood at EUR 1,771 billion at the end of the third quarter of 2013, with the exposure to the United States being the largest.
 
Two thirds of the increase in the Dutch financial sector’s foreign exposures in the third quarter of 2013 related to exposures of Dutch pension funds (almost EUR 14 billion), the remainder being on account of Dutch banks (EUR +9 billion); while foreign exposures of insurers saw a small decline (EUR –1 billion). However, developments were very heterogeneous across countries, with the strongest increase recorded for France (EUR +9 billion) and exposures to the United States falling by the same amount.

Graph 1

This quarter saw an increase in the Dutch financial sector’s foreign exposures to all three countersectors. Half of the increase related to exposures to foreign banks, which rose by EUR 11 billion (+3.9%) this quarter. The exposures to French banks and – to a lesser extent – British banks increased. It should be noted that such exposures can fluctuate considerably from quarter to quarter.
 
The exposures to foreign sovereigns also rose considerably by EUR 8 billion (+1.7%). However, the exposures to euro area sovereigns recorded a decrease. This development was entirely on account of the exposure to the German government declining (EUR -5 billion), as a result of both price losses and sales. On the other hand, the portfolio of French and Spanish government bonds saw an increase (totalling almost EUR +4 billion), mainly as a result of purchases. A lower spread between French and Spanish long-term interest rates and the German interest rate may have contributed to this net portfolio shift. The exposures to governments outside the euro area (UK and some Asian countries) also rose.

Graph 2

While foreign exposures of the Dutch financial sector were up, domestic exposures were down in the third quarter of 2013. The decline by EUR 23 billion (-2%) even exceeded the increase in foreign exposures. The decline was mainly on account of banks. Bank lending to non-financial companies declined, the outstanding amount of residential mortgages fell as a result of securitisation and the holdings of Dutch government bonds decreased. The latter was mainly due to sales, but price losses also played a role. Domestic exposures of Dutch insurers also decreased, mostly in the form of a decline in deposits and short-term loans.