Dutch banks pass EU stress test

The Netherlands welcomes and adopts the outcome of the EU stress test.

The test performed by the Committee of European Banking Supervisors (CEBS) is intended to test the resilience of financial institutions by simulating a negative economic scenario for the period 2010-2011. The four Dutch banks that have participated suffer losses in this specific scenario but continue to be sufficiently capitalised.

The stress test is an indication of the possible future vulnerabilities of banks on the occurrence of very negative developments. When banks pass the test well, this means that they are sturdy and can stand the losses. But this is not a complete assurance. For it is a fictive situation and reality can be different. The most important matter is that it helps the supervisory bodies and authorities to be prepared, should such a scenario become reality.

Minister De Jager: “All Dutch banks have passed the test well. That is good news. It means that our financial sector is strong and can bear the brunt. This gives us faith in the future. But all the same, we have to be alert all the time and continue to be so. We will continue to work on a sound financial system.”

It cannot be guaranteed on the basis of the stress test that no institution will need any additional capital in the future. But the outcome of the stress test does not give reason to expect, except for extraordinary circumstances, that the financial sector will still need government assistance.

Minister De Jager: “It is a good thing that these tests have been jointly effected by the European Member States and supervisory bodies. Apart from that, I think it important that they have opted for a maximum transparency with regard to the method, content and outcome of the stress tests. It goes without saying that in particular the openness about the country risks with banks is exceptional.”

The Dutch Central Bank (DNB) uses the outcome of this stress test in the supervision of the institutions and determines the desired capital buffer also on the basis of this outcome. In the end, it will be determined for each institution separately, whereby the risks that are specific for an institution will be taken into account.