The Dutch finance minister Jan Kees de Jager has called on the Dutch National Bank to formulate a remedial plan within the month, after a commission found their internal supervision wanting.
Investigating the bankruptcy of small Dutch bank, DSB, the Scheltema commission concluded that the DNB should never have issued them a banking licence in 2005. While the financial position of the bank was sound, the report concluded that fundamental improvements in corporate structure had been needed and should have been identified. (DNB aside, the 348-page report blamed unprofessional management and poor governance for DSB’s collapse.)
Responding to the commission’s report, Mr de Jager said: “The internal supervision within DNB needs to be changed, for instance via the supervisory board … the supervisory board needs to exercise more control of DNB’s supervisory tasks. The law needs to be changed and I will change the law.” Read more
The Dutch central bank will focus on ‘conduct and culture‘ at banks, rather (presumably) than focusing solely on reserve ratios and other capital requirements. This came out on February 8 (apologies) but a full English translation is not yet available.
So, ample room for weekend speculation on how the central bank intends to achieve their aim. Improving the integrity – not just of individuals within the system, but of the system itself – is the holy grail. Capital ratios are poor proxies toward this end. Read more
Brussels has just approved €6.9bn of ‘urgent rescue aid’ for ABN Amro and Fortis Bank. The cash is destined to separate Fortis from both its Netherland unit and its (2007-acquired) ABN Amro operations. The separated parts will then be merged. The various units have insufficient cash to achieve the reconstruction by themselves.
Meanwhile the Irish government is set to acquire further stakes in its top banks as a result of loans being transferred to the country’s “bad bank”, central bank governor Patrick Honohan said today. “It is pretty clear the government will be acquiring additional equity stakes,” Mr Honohan told an event at Trinity College Dublin.