ECB tests suggest further independence for Dutch ING and ABN Amro

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The results of the ECB comprehensive assessment among 130 European banks including 7 Dutch institutions suggests good news for the Dutch banking sector, including the nationalised ABN Amro and ING. All banks surveyed were found to comply with the ECB’s Common Equity Tier 1 capital requirements.

The ECB comprehensive assessment, which consisted of a balance sheet test and a stress test, was conducted among 130 European banks. Dutch banks included in the review were ING, Rabobank, ABN Amro, SNS Bank, RBS NV, BNG Bank and NWB Bank.

The banks did have to make adjustments to their core capital at the end of 2013, all seven exceeded the Common Equity Tier 1 minimum level of 5.5% and the more stringent level of 8% respectively. The ECB assessment of balance sheets also revealed a €3.8bn adjustment of risk weighted assets among Dutch banks.

The adverse scenario of the stress test for the Netherlands included a 5.4% drop in GDP growth, a 17% decline in housing prices and the stock market plummeting by 24%, leading to higher write downs of loans. The impact of the adverse scenario for the banks concerned would be €15.6bn, with an average impact of 2.82% of the banks’ capital ratios.

The news is particularly positive for banks which have been nationalised during the 2008 crisis, including ING and ABN Amro, both banks will see the results as a further step towards independence from the Dutch state. Ralph Hamers, CEO of ING said: “The clear results of the AQR and stress test represent a confirmation of ING’s prudent management approach.” ING confirmed on Sunday that it would repay the €1.3bn remainder of its €10bn government bailout by the end of the year.

Gerrit Zalm, chairman of the managing board at ABN Amro commented: “We are very pleased with the outcome of the ECB’s asset quality review. The 0.12 percentage point adjustment of our CET1 capital ratio is negligible.”

“The stress test also that the Dutch banks are able to absorb losses well, even though they would be affected, as may be expected in an adverse scenario, by assumed deteriorating economic developments” the Dutch Central Bank (DNB) commented.

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