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Supervision of financial institutions

You have entrusted your financial affairs to financial institutions such as your bank or insurance firm. You must be able to trust that your money is well taken care of. De Nederlandsche Bank (DNB) is committed to ensuring a safe financial sector. This is why we supervise financial institutions. We closely monitor risks to prevent things from going wrong.

The financial sector is at the heart of our economy

The financial sector is of vital importance to our economy. It comprises some 1,400 financial institutions. These include banks and insurance firms, but also pension funds, trust offices, crypto service providers, payment service providers and investment funds. The financial sector is at the heart of our economy. After all, we need money for everything, whether we want to set up a business, buy a home or take out insurance. So we depend on the financial sector. This is why it is so important that it is safe. To guarantee this, we supervise financial institutions.

Licence for financial services

If a firm wants to provide financial services, it must hold a licence. DNB and the Dutch Authority for the Financial Markets (AFM) grant those licences. Licensed firms are listed in public registers. You run serious risks if you entrust your financial affairs to an unlicensed financial service provider. If anything goes wrong, you may lose your money.

Monitoring financial soundness

We check that all 1,400 institutions comply with the law. We refer to this as “integrity supervision”. We also monitor the financial soundness of many institutions. Several times a year, they submit reports to us that contain key data, including their financial position. Our supervisors check that they have enough cash available. We also verify that they have reserves for a rainy day, which they need to meet their obligations. For example, so that your insurer can pay out your insurance claim. We look beyond mere profits and annual turnover. Other aspects are also important. For example, an insurance firm’s business model and a pension fund's investment policy.

Risks for financial institutions

It is also important that financial institutions do not take too much risk. They need to be and remain safe and robust. We expect them to have responsible risk management and pay close attention to the risks to which they are exposed, such as:

  • Credit risk: if firms cannot repay their bank loans, banks incur losses. This affects their profitability and could even lead to capital losses.
  • Liquidity risk: if banks find it more difficult to obtain funding, prices skyrocket. If customers withdraw deposits, banks can also get into liquidity problems. This may lead to liquidity shortages.
  • Integrity risks: criminals could launder money through financial institutions. This will result in financial and reputational damage.
  • Climate-related risks: risks related to climate change and the energy transition can pose a financial risk.

If we notice anything special we contact the institution in question. Our supervisors meet with the institutions several times a year to discuss current developments.

If problems should emerge, the customers’ interests always come first

Our supervision reduces the risk of an institution running into difficulties. But there are no guarantees. If something goes wrong, we stand ready to intervene in such a way as to minimise losses. If a large bank or insurance firm collapses, we want to ensure that its problems do not spill over to other financial institutions and that the government does not need to step in to save the firm with taxpayers’ money. If a bank goes bankrupt, we activate the deposit guarantee scheme. This means that, as an account holder, you will get your money back, up to EUR 100,000.

Supervision in tandem with the AFM and the ECB

As part of our supervision, we work closely with other supervisory authorities. In tandem with the AFM we supervise licensed financial institutions in the Netherlands. In addition, jointly with the AFM and the Central Bank of Curaçao and Sint Maarten, we supervise financial institutions in Bonaire, Sint Eustatius and Saba. While we focus primarily on an institution's financial soundness, the AFM looks at its market conduct.

The European Central Bank (ECB) supervises all large banks in Europe. Examples in the Netherlands include ING, ABN AMRO and Rabobank. We are actively involved in conducting this European supervision, as are the national supervisory authorities of the other euro area countries.