Continuing pressure in the housing market and the industrial sector and the capital position of the banks will hinder a convincing economic recovery in the Netherlands until 2014, credit agency Standard & Poor’s said on Monday.
Although the banks have improved their liquidity and finances, their capital position is no better than ‘neutral’ in the current economic climate, the Financieele Dagblad reports S&P’s as saying.
This year they will have to write off an average 50 base points on their loans, compared with 44 base points in 2012. These losses will hit commercial property and small business in particular.
Losses are likely to remain high into the start of 2014, even if the economy begins to improve, says S&P’s. But the credit agency expects the government to continue supporting small savers for at least the next two years, as it did with the nationalisation of SNS Reaal in February.
That nationalisation, after the bank got into difficulties with its property division, illustrates the weakness of the Dutch property market, says S&P’s. More clarity on mortgages, government measurements to stimulate the market, the liberalisation of rents and growing affordability of houses will help stabilise the market and eventually see it recover.
S&P’s lowered the ratings of four Dutch banks in November and currently has a ‘negative’ forecast on seven banks.