NETHERLANDS Trends and Developments Contributed by: Juliet de Graaf and Johannes de Jong, Osborne Clarke N.V.
The banking sector also anticipates major regu - latory updates with the new rules amending the CRR and CRD IV, of which the first will come into effect in January 2025. These updates will introduce significant changes to the regulatory framework, impacting various aspects of bank - ing operations and risk management of banks. In addition to changes in capital adequacy requirements, CRD VI introduces new regu - lations, most of which do not follow from the Basel III framework. These include changes in the supervision of branches of institutions from third countries, which are comprehensively revised to make supervisory arbitrage more diffi - cult and bring regulations for these third-country branches more in line with full banking license requirements for EU banks. Other such provi - sions concern, among other things, the suit - ability of directors (“fit and proper”), regulations around the Supervisory Review and Evaluation Process (SREP) and the integration of ESG fac - tors into risk management. Other key changes under CRR include, in par - ticular, the standardised approach to credit risk (CRSA), the internal ratings-based approach (IRBA), and the capital requirements for opera - tional risks. In addition, over a period of several years, the so-called output floor will be intro - duced in the EU, which will limit the use of inter - nal ratings and risk models in the future. Given the very rapidly approaching implementa - tion date, Dutch-licensed banks are advised to start preparations for implementation as soon as possible. ESG Regulatory Developments The European Central Bank (ECB) has been firm in its commitment to integrate climate and envi - ronmental risks into its bank supervision activities
since the release of its guide on climate-related and environmental risks in November 2020. This topic is now at the forefront of the Dutch super - visory agenda. While not all Dutch-licensed banks are directly supervised by the ECB, the DNB has committed to applying the same or a tighter approach as the ECB. This means that, regardless of whether a Dutch-licensed bank is significant or not, the expectations and enforce - ment measures related to meeting climate risk management are alike. The key aspects of the DNB’s application of the ECB guide include: • Self-assessment by banks: In early 2021, the DNB requested Dutch less significant banks to perform a self-assessment to evaluate their methods based on the ECB guide and develop action plans. These assessments and plans were then reviewed by the DNB as part of their supervisory process. • Guide’s role and recommendations: The ECB guide is not legally binding, but serves as a foundation for supervisory discussions. However, given that the DNB has adopted the guidelines in supervising less significant banks, Dutch-licensed banks should con - sider how to meet the ECB guide in 2024 and where proportionality can be applied by considering the institution’s specific nature, size, and complexity. • Alignment with good practices: The DNB’s implementation of the ECB guide is in line with its own published “Good Practices” document on integrating climate-related risk considerations into banks’ risk management, ensuring a coherent supervisory approach across different types of financial institutions. In 2023, the DNB started monitoring the pro - gress of addressing deficiencies identified in
423 CHAMBERS.COM
Powered by FlippingBook