The Netherlands

How can international banks operate in your jurisdiction?

International banks can operate in the Netherlands as a subsidiary, through a branch or on a cross-border basis. The number of options available to international banks depend on whether it’s head office is established within the EEA or if any of it’s subsidiaries has a banking license.

Irrespective of whether an international bank is established in or outside the EEA, if it establishes a subsidiary (a separate legal entity from its parent) in the Netherlands and conducts its banking activities through that legal entity, such subsidiary will generally be subject to the full Dutch licensing regime for banks and as a result will need to apply for a license with the Dutch Central Bank (De Nederlandsche Bank, DNB).

Non-EEA banks

A non-EEA bank can operate in the Netherlands through a branch office (bijkantoor), but will need to apply for a license from the DNB. The requirements that must be met are similar to the requirements under the full licensing regime for Dutch banks.

Non-EEA banks are generally not allowed to conduct their banking activities on a cross-border basis in the Netherlands, as they are prohibited from attracting repayable funds (opvorderbare gelden) from the Dutch public without possessing a banking license. Without a subsidiary or branch office in the Netherlands, it is not possible for a non-EEA bank to apply for a banking license from the DNB.

EEA banks

An EEA bank can conduct its banking activities in the Netherlands by opening a branch office (bijkantoor) once it has notified its home state regulator of its intention to do so. The home state regulator will generally consent to this and inform the DNB, unless the home state regulator believes there are issues with the operations or financial position of the notifying bank. The DNB may impose certain conditions on the bank’s activities, but may not refuse permission in its entirety.

Another option for EEA banks seeking to conduct banking activities in the Netherlands is to operate on a cross-border basis. Similar to the procedure for branch offices, the EEA bank will have to notify its home statute regulator, which will subsequently inform the DNB. Neither the home state regulator of the EEA bank nor the DNB may refuse such a request or impose any conditions.

What considerations does your regulator take into account when an international bank wishes to open a branch in your jurisdiction?

For a Dutch branch of a non-EEA bank, a license will need to be obtained from the DNB and broadly the same authorisation requirements apply as when applying for a full banking license from the DNB. This includes requirements regarding the integrity and suitability of policymakers, governance and business operations, as well as capital, liquidity and solvability requirements. The requirements applicable in the context of applications for authorisation are identical to the requirements that banks will be assessed against as part of the DNB’s regular supervision.

In relation to Dutch branches of EEA banks, the bank’s home state regulator is primarily responsible for prudential supervision of the whole bank (including the branch). However, the DNB is responsible for supervising the branch’s compliance with liquidity and integrity requirements under Dutch law. These requirements also apply to Dutch branches of EEA banks. EEA banks which conduct their banking activities on a cross-border basis in the Netherlands are not subject to prudential supervision by the DNB.

Is resolution an important factor in your supervisor’s determination of a branch?

Resolution is an important factor for the DNB when assessing its risk appetite towards branches operating in the Netherlands. However, as the Dutch banking license system and its applicable requirements allow the DNB to exercise its investigatory and corrective powers in relation to branches of non-EEA banks, and also, to a certain extent, in relation to branches of EEA banks, there is no separate assessment of resolvability by the DNB.

The DNB has a number of instruments and powers at its disposal if a branch in the Netherlands does not comply with Dutch rules and regulations, but it may also use these instruments should it be necessary to protect the general interest. By way of example, if the DNB identifies worrying trends in relation to certain branches, while the rules and regulations are being complied with, it may under certain conditions issue an instruction to such branches. If such an instruction is not followed by a branch, the DNB is authorised to prohibit the branch from conducting any further transactions in the Netherlands. The DNB can also impose this prohibition to conduct further transactions if the regulator in the branch’s home state has not taken sufficient measures to address the issues identified by the DNB.

Furthermore, the DNB and the Dutch Minister of Finance have been assigned powers in respect of financial enterprises in difficulty, which permit early intervention if a bank is encountering problems. The DNB may, under certain conditions, petition for the application of so-called emergency regulations or for an adjudication of bankruptcy. In addition, when there are signs of a dangerous development with respect to the equity capital, liquidity, solvency or technical provisions of a bank and  it is reasonably foreseeable that this development will not be reversed sufficiently or in good time, the DNB may effectuate a sale of the bank experiencing problems through a share or assets/liabilities transfer. For branches of non-EEA banks such transfers: (i) can only relate to assets/liabilities in the Netherlands or which are subject to Dutch law; and (ii) cannot relate to shares issued by banks.

What are the regulatory reporting requirements placed on branches?

Branches of both EEA banks and non-EEA banks are required to at least keep  separate accounts relating to the branch situated in the Netherlands, in such a way as to enable the DNB to supervise compliance with the requirements relating to liquidity and maintaining adequate technical facilities.

In addition, so that the DNB may carry out liquidity and integrity supervision, branches of EEA banks are requested to submit so-called statements (staten), whether or not on a consolidated basis. If an event occurs or has occurred which seriously affects or may seriously affect the financial position of an EEA bank, the DNB may prescribe that one or more statements must temporarily be submitted with a higher frequency or within a shorter period of time. Branches of non-EEA banks are subject to the “full” regulatory regime and as a result have to meet all relevant reporting requirements.

Do you allow dual licenses whereby a banking group may hold a banking license through the branch and have a subsidiary also holding a banking license?

A foreign bank can set up a branch office in the Netherlands, without the need to establish a corporate subsidiary. It is not more difficult to obtain authorization when compared with a corporate subsidiary route. In the Netherlands it is allowed to set up a subsidiary with a banking license, while having a branch office of a licensed bank in the Netherlands as well.

Where can I find further information?