DNB has no doubts about the resilience of Dutch banks

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DNB has no doubts about the resilience of Dutch banks

Banks and other financial institutions in the Netherlands are resilient, have sufficient money and can take a beating. This was announced by De Nederlandsche Bank (DNB) after the takeover of the Swiss bank Credit Suisse, which had hit hard times, by industry peer UBS.

Banks and other financial institutions in the Netherlands are resilient, have sufficient money and can take a beating. This was announced by De Nederlandsche Bank (DNB) after the takeover of the Swiss bank Credit Suisse, which had hit hard times, by industry peer UBS. (ANP/EPA)

We keep a close eye on developments and see no reason to doubt the resilience of the Dutch financial sector in the developments of last weekend.

The European Central Bank (ECB), to which DNB is affiliated, stated on Monday that the banking sector in Europe is resilient and has a ‘robust amount of capital and liquidity’. The ECB welcomes the measures taken by Switzerland ‘to ensure financial stability’

Collect

The European Union has clear rules about who should be the first to suffer the consequences if a bank runs into financial problems, the ECB emphasizes. First, these are usually the regular shareholders. Next comes the turn of bondholders, with the so-called Additional Tier 1 (AT1) carrying the most risk. At Credit Suisse, those AT1 bonds have become worthless at the time of the takeover. But that does not always have to happen, according to the ECB, which wants to avoid restraint among buyers of AT1 bonds.

Analysts from Bloomberg Intelligence found out that only Credit Suisse and UBS state that the terms of the AT1 bonds state that they can be written off in full. At other large European and British banks, these bonds can only be written off temporarily or converted into shares. The German financial market regulator BaFin also says that the banking sector in Germany is ‘robust and stable’.


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