Dutch mortgages to be part of latest ECB banking stress test

Mortgages held by Dutch banks will be included in the latest Asset Quality Review being held by the European Central Bank (ECB), with results due at the end of October.

The Dutch banks have been lobbying the Dutch Bankers’ Association for some time to keep their enormous mortgage portfolios out of the latest stress test and under the current and relatively supple regime, even if the ECB takes over supervision.

However, Armand Schouten of the Dutch central bank told the Financieele Dagblad that nothing has been changed for the Netherlands and that the same rules will apply to everyone.

Banks which fail the Asset Quality Review will have six months in which to increase their capital reserves.

Low risk

Currently, Dutch banks need little in the way of capital reserves against their low-risk Dutch mortgages. But they are afraid that if their portfolios are judged under the new rules, they will need to find billions of euros more in capital.

The Dutch central bank says pushing for an exception raises too many questions. ‘Even though we think Dutch mortgages are low-risk, it attracts attention,’ Schouten told the FD.

The three biggest Dutch banks have already said they have confidence in the result of the stress test. Rabobank CFO Bert Bruggink said recently, for instance, that his bank will ‘easily jump through this hoop’.


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