On 6 April 2020, the Dutch Central Bank (De Nederlandsche Bank, DNB) published a news item containing an update on the measures taken by DNB in connection to the coronavirus pandemic.
DNB starts off by noting that the pandemic is having a significant impact on the economy and in order to minimize the situation, it is crucial that the financial sector continues to function properly. Despite the difficult times, the financial sector currently plays an important role in supporting the economy. Together with regulatory authorities at home and abroad, DNB is closely monitoring the situation and is promptly responding to developments.
In addition, DNB notes that the financial sector is currently affected in various ways. There are practical limitations that institutions themselves have to deal with (e.g. employees having to work from home) and institutions have activated their business continuity plans. In addition, there are financial consequences that are felt in their own way for each part of the sector. In recent weeks, measures have been taken by DNB, and other national and international authorities, to help the financial sector to continue to perform their critical role in these times, supporting the real economy, as best as possible. In addition, supervisory contact with institutions has been intensified. Institutions are also called upon to report any problems to the regulators in good time.
DNB summarizes a number of measures it has taken:
- Capital relief measures: important capital relief measures have been taken by DNB and the European Central Bank (ECB) (in consultation with, among others, the European Banking Authority and the Based Committee on Banking Supervision) to enable banks to provide additional financing to the economy. For example, it has been decided that banks can use their Pillar 2 Guidance, the system of capital buffers for large Dutch banks has been reduced and the implementation of a floor for the risk weighting of mortgages has been temporarily postponed. In addition, the ECB has decided to postpone its decision in relation to new a targeted review of internal models and give banks a further six months to comply with previously imposed improvements to their internal models. These measures are designed to make it easier for banks to deal with the consequences of the coronavirus pandemic. The capital released as a result of these measures should be used to support lending and not to pay dividends or variable remuneration or to repurchase own shares.
- Operational measures: various operational measures have been taken, such as postponing data requests, and banks have been given longer to deliver certain reports. DNB does, however, note that it remains important that risks are measured correctly, especially in these times. Banks should therefore continue to strive to report in a timely and complete manner. Banks are called upon to inform their regulator in good time of any problems they encounter.
- Ongoing responsibility for money laundering control: DNB notes it remains important for banks to ensure that the financial system is not misused for money laundering or terrorist financing. Therefore, it is important to take into account new financial crime risks and patterns arising from the coronavirus crisis.
- Further postponement of the submission deadline for the Questionnaire Integrity Risks 2020: the Integrity Risks Questionnaire 2020 was sent to all banks on 31 March 2020. Due to the coronavirus measures taken by the Dutch government, the deadline for replying was extended from 12 May 2020 to 26 May 2020. Seeing that these measures have been extended, DNB has decided to extend the filing period for all banks to 15 June 2020. It is expected that the extension will not require the individual option to submit a request for an extension of the term.
DNB maintains a dedicated coronavirus website providing for an actual overview of all measures taken at a national, European and global level: www.dnb.nl/corona.