Upload
others
View
3
Download
0
Embed Size (px)
Citation preview
Supervision Outlook 2019
Supervision Outlook 2019
1 Introduction 5
2 About this document 6
3 Risks, challenges and trends in the Dutch financial sector 73.1 Main risks 7
3.2 Tail risks 8
3.3 Long-term trends 8
4 New legislation and regulations 9
5 Supervision 115.1 Our approach 11
5.2 Key priorities in our Supervisory Strategy 2018-2022 12
6 Banks 17
7 Insurers 21
8 Pension funds 25
9 Investment firms and investment fund managers 29
10 Payment and e-money institutions 30
11 Trust offices 31
12 Supervision in the Caribbean Netherlands 33
Annex 1 Key Indicators 34
Table of contents
4
5
Supervision Outlook 2019
1 Introduction
Our Supervision Outlook outlines the priorities
we have set in our supervision of financial
institutions in 2019 with the objective of ensuring a
structurally and ethically sound financial sector in
the Netherlands. It serves as a supplement to our
regular supervision, which accounts for the lion’s
share of our staff’s work, but is not covered in this
publication. This Supervision Outlook is not set in
stone: our priorities may change in the course of the
year in response to changing circumstances.
The economic conditions are currently favourable,
but vulnerabilities in the financial sector often build
up especially in times of economic prosperity.
Sharp-eyed supervision therefore remains
necessary. That said, we are aware of the
heightened regulatory requirements following
the financial crisis, which, although necessary,
puts pressure on supervised institutions. We are
evaluating ways of increasing the efficiency of
supervision, and intend to continue on the chosen
path with respect to transparency, proportionality,
and the dialogue with our stakeholders.
To this end, we cooperate closely with fellow
supervisory authorities. We perform our prudential
supervision tasks as part of the Single Supervisory
Mechanism (SSM), under the final responsibility of
the European Central Bank (ECB). Internationally
speaking, we cooperate closely with the European
Supervisory Authorities (ESAs). Domestically,
we set great store by our partnerships with the
Netherlands Authority for the Financial Markets
(AFM), the Financial Expertise Centre (FEC) and
other supervisory authorities.
Our policy is to inform institutions about supervisory
examinations in advance. This year marks the
introduction of our new digital agenda for
supervisory activities, which will be placed on our
website in December. We will also regularly inform
the sector about the specific timing and progress of
examinations, also by means of newsletters.
6
2 About this document
Chapter 3 describes the main risks, challenges
and trends that we have identified for the Dutch
financial sector. Together with our Supervisory
Strategy 2018-2022 published last year, these three
aspects constitute the basis of our supervisory
agenda for the year ahead. Chapter 4 describes
the imminent changes in relevant legislation and
regulations. Chapter 5 discusses our approach to
supervision, and specifies how we fill in the details
of the focal points of our Supervision Outlook.
Chapters 6 through 12 discuss our supervision plans
and examinations by subsector.
In order to provide a better understanding of the
results of our supervision, Annex 1 includes a short
overview of our ambitions for 2019, including the
accompanying indicators and target values.
Please consult the 2019 Independent Public Body
(ZBO) budget scheduled for release in January 2019
for the financial substantiation of our supervision
programme. The activities described in this
Supervision Outlook serve as important input for
this programme.
7
Supervision Outlook 2019
3 Risks, challenges and trends in the Dutch financial sector
This section describes the main risks, challenges and trends that will have an influence on the Dutch financial sector. Some of these are new, and others already passed in review in last year’s Supervision Outlook and in our Supervisory Strategy 2018-2022 (see also paragraph 5.2).
3.1 Main risks
Some risks require our special supervisory attention in the year ahead. With the exception of the
vulnerabilities in the real estate markets, these risks already played a prominent role in our Supervision
Outlook 2018. They still prevail.
Political uncertainty
Brexit in particular is causing more than average uncertainty. This uncertainty is first and foremost affecting the institutions themselves, and also impacts supervision resources, due to a possible increase in the number of institutions having their registered offices in the Netherlands and the size of their activities.
Change capacity
It is important for institutions to anticipate on changing market conditions, regulatory requirements and new developments, including digitalisation. Financial institutions that are unable to adapt sufficiently to changing circumstances and do not manage risks adequately, could in due course face erosion of their earnings potential and, hence, their financial solidity.
Cyberattacks and IT disruptions
This has for some time been an important risk that is demanding a great deal of attention from supervision. The likelihood and impact of cyberattacks are most prominent at banks, due to the role that they play in payments and the risk that liquid assets are withdrawn from institutions. Insurers and pension funds are in danger of incurring damage to their reputation.
Financial and economic crime
Recent developments have underlined that involvement in financial and economic crime is still a realistic risk. Our examinations show that financial institutions across the board still need to make a considerable effort in order to manage cyberrisks adequately.
Repricing of risks and the changing yield curve
The trend of rising share and bond prices and the concomitant low level of risk premiums has increased the likelihood of a price correction. The impact of such a correction is strongly determined by the speed at which market prices change and may differ sharply between financial institutions.
Vulnerabilities in the real estate markets
The basis for future vulnerabilities is often formed in times of rising real estate prices. There is a risk of overvaluation for instance, which may induce future losses.
8 3.2 Tail risks
Tail risks, risks that have a relatively small likelihood
of occurring, or uncertainties that are impossible to
estimate, are important to supervisory authorities.
These risks may have a significant impact on
financial institutions or the financial system as a
whole. In 2018, we reviewed research methods in
consultation with the financial sector. We plan to
deploy these methods next year to identify actual
tail risks and uncertainties in order to take action
at an earlier stage if these risks and uncertainties
develop into a realistic threat to the financial
system. This is consistent with our ambition to
keep a close eye on vulnerabilities that may exist
or be building up in the financial system in times of
economic boom.
3.3 Long-term trends
Some trends and risks are familiar, but their main
impact is likely to occur after one or several years
have passed. Here you may think of fragmentation
of the value chain in the banking sector or growing
competition from other sectors than the traditional
ones. We are seeing this particularly in the payment
services segment where payment institutions and
FinTech market players are active. Competition in
the mortgage lending market from insurers and
pension funds is expected to continue. This is a
welcome development, but it may entail risks for
the continuity of individual institutions.
In addition to this, cryptos and the underlying
blockchain technology, as a decentral phenomenon
not subject to country borders, may potentially
have lasting impact on the financial system in
the shape of new forms of service provision and
value relocation. And last, but not least, we expect
climate-related risks to increase in the years
ahead. These include risks related to extreme
weather conditions, and transition risks caused by
governments taking the necessary measures to
achieve climate goals.
9
Supervision Outlook 2019
4 New legislation and regulations
For the year ahead, many changes in legislation and regulations are again on the agenda. This demands a strenuous effort from both the institutions and DNB.
Implementation of Basel 3.5Now that the Basel Committee has reached
agreement on Basel 3.5, the EU is preparing the
regional implementation of the agreed standards.
We are contributing to the European Banking
Authority’s (EBA) impact analysis and are making
an effort to steer the negotiations into the desired
direction together with the Dutch ministry
of Finance. We are promoting timely, full and
consistent implementation of Basel 3.5.
Evaluation of Solvency IIThe European Commission is to evaluate the
capital requirements and the long-term guarantee
measures of the Solvency II framework in the years
ahead. The European Insurance and Occupational
Pensions Authority (EIOPA) will advise the
Commission on these issues. We will free-up
resources next year to contribute actively to EIOPA’s
advice. We are committed to ensuring that Solvency
II continues to provide protection to policy holders.
Implementation of a new pension contractThe coalition agreement includes the intention to
thoroughly review the second pillar of the pension
system. On 20 November 2018, it was announced
that the cabinet and the two sides of industry have
been unable to reach agreement on the new pension
contract. We regret this outcome. It continues
to be necessary to review the pension system in
order to respond to the changing labour market,
ease tensions between generations and to regain
the trust of pension fund members. At the time of
writing this issue of our Supervision Outlook, there
was no certainty yet on possible subsequent steps.
Implementation of PSD2The revised Payment Services Directive (PSD2) is
expected to become effective in the last weeks of
2018 or at the start of 2019. It demands a great effort
from banks and payment institutions to comply
with the new legislation. PSD2 provides scope for
new market entrants and new business models. For
us, PSD2 means issuing new licences and adjusting
our supervision of the existing market players to the
new rules.
Implementation of IORP IIThe Institutions for Occupational Retirement
Provision Directive, IORP II, will be effectively
implemented in the Netherlands in January 2019.
From then on, DNB will supervise compliance with
IORP II. In 2019, we will continue our dialogue with
the sector on compliance with the requirements
of the Directive and perform several on-site
inspections to test the level of compliance.
10 Implementation of AMLD5In the course of next year, the most recent
amendment to the European anti-money
laundering and terrorist financing legislation
(AMLD5) will be transposed into Dutch law. With
the introduction of AMLD5, exchange platforms and
crypto wallets will become subject to anti-money
laundering legislation and registration or licence
requirements will apply. DNB will be responsible for
the AML supervision of these two parties and will
give further substance to this supervision in 2019.
AMLD5 also introduces the obligation to establish a
central bank account holder database. To this end,
a legislative proposal (Wetsvoorstel verwijzingsportaal
bankgegevens) is being prepared.
Act on the Supervision of Trust Offices (Wtt) The new Act on the Supervision of Trust Offices
(Wet toezicht trustkantoren – Wtt) 2018, which
is expected to come into effect in 2019, marks
a significant change for both trust offices and
DNB alike. The Wtt 2018 includes supplementary
requirements for trust offices. The new law will give
DNB additional powers, including that of imposing
higher sanctions and publication of sanctions
imposed.
11
Supervision Outlook 2019
5 Supervision
5.1 Our approach
DNB takes a risk-based and proportional approach
to supervision. We base our supervision on the
institutions’ own responsibility to comply with
legislation and regulations, and to manage risks
adequately. We perform in-depth research and
deploy our set of instruments to induce institutions
to change their behaviour if necessary. In case of
serious findings and if recovery is not forthcoming,
we will not hesitate to take strict enforcement
measures. We continue to concentrate on
our objective of ensuring a sound and ethical
financial sector.
In 2018, we evaluated the possible unintentional
effects of new regulations introduced after the
crisis (see our study entitled Proportional and effective
supervision). This has led to several specific action
points. We recently published guidelines for the
proportional approach of key functions for small
and medium-sized pension funds for instance. We
intend to apply the Own Risk and Solvency Assessment
(ORSA) reporting requirements proportionally for
insurers, so that not all institutions are by definition
required to submit a totally new report on their own
risk analysis every year.
A working group of sector representatives this year
issued advice on reducing indirect supervision costs
(the costs that institutions incur in order to comply
with supervisory requirements). In our response to
the working group’s report, we agreed to adopt a
number of recommendations and we are currently
in the process of taking action to this end.
▪ Insurers and pension funds will receive
customised calendars of supervisory
examinations and information requests planned
for 2019. For banks under our direct supervision
(known as less-significant institutions), we
intend to not only share our supervisory planning
during the annual discussions, but to also provide
these institutions with a hard copy.
▪ We will give institutions a longer time frame to
respond during holiday periods.
▪ We will explain even better to institutions the
reason and purpose of an examination, which
approach we intend to take, and the effects we
envisage. We will improve the feedback of our
findings and we will, where possible, ask for the
institutions’ feedback after completion of our
examinations.
▪ We have already put in place several digital
portals where institutions can upload documents.
Our Digital Reporting Portal for supervised
institutions is a case in point. In 2017, we
launched our Digital Supervision Portal, enabling
financial institutions to fill in and submit online
applications for fit and proper assessments of
board members, licences, and declarations of no
objection among other documents. We will also
fill in the information already known to us in our
requests for information.
12 5.2 Key priorities in our Supervisory Strategy 2018-2022
Last year, we published our Supervisory Strategy
2018-2022. Our supervision for the coming years will
focus on technological innovation, future orientation
and sustainability, and financial and economic crime.
This is how we will flesh out these priorities in 2019.
Priority 1: responding to technological innovation.
In order to allow for sufficient scope for innovation,
an easily accessible portal at the supervisory
authority continues to be of great importance. In
2016, DNB and the AFM together launched the
InnovationHub in order to provide support to
new and existing corporations having queries on
supervision and the rules and regulations pertaining
to innovative financial products and services. In
2017, we launched a joint regulatory sandbox to help
resolve unwanted obstacles for innovative financial
concepts. In 2019, we will continue, and if necessary
improve, our joint DNB-AFM InnovationHub and
regulatory sandbox.
The rise of cryptos demands an adequate response
from the supervisory authorities. New crypto
applications keep appearing and the crypto-
ecosystem continues to evolve. Due to the risks
for consumers associated with cryptos and as part
of counteracting money laundering and terrorist
financing, it is necessary to put in place a fitting and
proportional regulatory framework. This is why we
continue to be involved in exploring the introduction
of regulations for cryptos.
Many financial innovations are the product of new
or improved underlying techniques. We are seeing
an increasing number of financial innovations based
on artificial intelligence and distributed ledger
technology (DLT). As the supervisory authority,
we find it very important to understand these
underlying technologies and their implications
for applications based on these technologies. This
is why in 2019 we will launch a more in-depth
examination into artificial intelligence and DLT.
Digitalisation also offers opportunities for more
effective and efficient supervision, including quicker
and better insights from electronically obtained and
analysed data. Other examples of how we respond
to technological innovation include taking a more
risk-based approach, whereby relevant risks are
identified at acceptable costs, and improving our
response to the underlying coherence between risks.
Digitalisation also offers opportunities to improve
our own internal operational management.
13
Supervision Outlook 2019
By increasingly supporting operational management
by digital techniques, the quality of the supervision
process may be improved at unchanged, or lower
operating costs in the longer term. In order to seize
these opportunities, we launched a trajectory in
2018 to substantiate, plan and implement our
digital ambitions as described in our Supervisory
Strategy 2018-2022.
Priority 2: emphasising future orientation and
sustainability;
In a dynamic environment like the financial sector,
it is essential for institutions to be able to identify
in time the impact of changes on their own
organisation and to have the appropriate skills
to respond effectively. In 2019, we will examine
the capacity for change at a risk-based selection
of small banks, insurers, pension funds and trust
offices. We plan to zoom in on the capacity for
change at financial institutions with respect to
technological innovation and being able to resolve
persistent supervision problems. The examination
will focus in particular on the role of internal
supervision and middle management.
Over the past few years, we have examined the
climate-related risks to which financial institutions
are exposed. We also performed a stress test, which
revealed that a disruptive energy transition may
lead to substantial losses for financial institutions.
As the next step, we will embed management of
climate-related risks in the assessment frameworks
for our supervision on banks, insurers and pension
funds. We will actively seek a dialogue with the
sector in order to be able to learn from our mutual
experiences and best practices.
We will also devote attention to the requirement
for office premises to have at least energy label C
from 2023 forward. If owners are unable to prove
that their premises have energy label C or higher,
these premises may have to be closed down. This
means that this requirement will directly impact
investments and loans related to office premises.
It is therefore important for institutions to know
which part of their business loans with real estate as
collateral concerns offices and which energy labels
these offices have.
We will continue to devote ourselves in 2019
to increasing the role of the financial system in
managing climate-related risks and funding of
sustainable investments. This is also consistent with
the international, European and national trends. The
European Commission at the start of 2018 published
an ambitious plan for financing sustainable growth,
which will demand more action on the sustainability
front from financial institutions.
At an international level, we cooperate with central
banks and supervisors in the Network for Greening
the Financial System (NGFS). This network with
members from five continents aims to increase
the role of the financial system in improving the
management of climate-related risks and where
possible resolve obstacles to green investments.
14 There are also developments to report at national
level. Negotiations are under way about the
Climate Agreement, which is to facilitate halving
of carbon emissions from corporations, civil
society organisations, and local authorities in
the Netherlands. These measures may impact
corporations and the loans and investments that
financial institutions have outstanding to these
corporations.
Priority 3: Taking a hard stance against financial
and economic crime
Financial institutions are still not giving sufficient
expression to their gatekeeper role. The approach
our integrity supervision takes to improve this issue
consists of four components.
1. Supervision of individual institutions: we are
performing risk-based thematic and institution-
specific examinations into integrity risk
management at financial institutions. If breaches
of legislation and regulations are identified, we
take measures and enforce structural recovery.
We monitor and validate recovery progress and
impose punitive measures if necessary.
2. Calling responsible management to account:
board members and other senior management
(e.g. heads of compliance or audit departments)
and supervisory directors are called to
account with respect to their duty to embed
the gatekeeper function and to ensure the
correct attitude to compliance within financial
institutions.
3. Close cooperation with our partners within the
Financial Expertise Centre (FEC): the cooperative
network including the Public Prosecution Service
(Openbaar Ministerie - OM), the AFM, the tax
authorities, and the Fiscal Investigation and
Detection Service is intensively used to exchange
risk indications in time and to work together in
the area of enforcement.
4. Developing new prevention methods: In 2018,
we launched a new series of round table
conferences with board members and experts
employed by the FEC partner institutions, banks
and other directly involved parties. In 2019, the
initiatives explored should take shape. These
include a setting up a public-private taskforce
to counteract serious criminality, and interbank
cooperation in the area of customer due diligence
and transaction monitoring, should take shape.
Our thematic examinations will focus on three
specific areas, i.e. (a) the prevention of involvement
of financial institutions in money laundering
and terrorist financing, (b) tax risks and social
impropriety and (c) undermining and organised
crime. You will find more information on these
subjects in the dedicated sector chapters.
15
Supervision Outlook 2019
▪ We will examine at banks and money transfer
offices (exempted and not exempted)
whether these institutions are on top of basic
management of integrity risks in conformity
with the requirements set by the Financial
Supervision Act (Wet financieel toezicht – Wft and
the Anti-Money Laundering and Anti-Terrorist
Financing Act (Wet ter voorkoming van witwassen
en financieren van terrorisme – Wwft). At trust
offices we will perform a similar examination into
compliance with Wft and Wwft requirements.
▪ We will assess how banks and trust offices
specifically have fleshed out their policies and
procedures in order to get a sufficiently clear
perspective on the risks associated with socially
improper actions. The management of tax risks
associated with their customers will also be
subjected to examination.
▪ In consultation with our FEC partners, we
will launch an examination into how financial
institutions prevent involvement in socially
undermining and organised criminality in the
Netherlands. This involvement concerns both
knowingly and unknowingly facilitating money
laundering and processing of revenues obtained
from criminal offences (including corruption,
drugs and human trafficking).
16
17
Supervision Outlook 2019
6 Banks
Despite the low level of interest rates, banks have to date managed to keep their profitability at acceptable levels. However, it is exactly in times of economic tailwinds that the foundations for further problems are laid, e.g. in commercial real estate markets. In addition, there are significant risks at play in the near future, including Brexit and vulnerable emerging economies. Technological innovation and social changes also create opportunities and threats to business models.
This demands the appropriate capacity for change
of banks, and unabated alertness in regular
supervision (especially during the annual Supervisory
Review and Evaluation Process cycle), where the
supervisor assesses the risk management and risk
profile of banks and verifies whether these banks
have sufficient capital and liquidity. In addition to
this, we will pay special attention to a number of
specific risks in 2019.
Brexit The United Kingdom is set to leave the European
Union on 29 March 2019. Financial institutions must
prepare themselves for the risk of a hard Brexit. We
expect supervised institutions to map out the risks
that are relevant to them and to manage these
risks, ensuring that if the hard Brexit materialises,
the continuity of their services will not be in danger
and they will not be exposed to material risks.
This may for instance happen if problems with
the management of derivative portfolios arise,
or if derivatives transactions can no longer be
cleared via a central counterparty in the United
Kingdom. With respect to the latter, the European
Commission recently announced that – based on a
temporary equivalence declaration – it will establish
a transitional regime for clearing of derivatives
via central counterparties (CCPs) in the United
Kingdom in case of a hard Brexit. At the same time,
there is still uncertainty about the exact shape and
timing of this equivalence declaration if the hard
Brexit becomes a reality.
Even if an agreement is concluded about the United
Kingdom’s exit from the EU, institutions must still
continue to prepare themselves for a changing
financial landscape post Brexit: a gradual transition
to a new relationship with the UK will also be
accompanied by frictions and adjustment costs.
Governance and risk managementOur regular supervisory practice shows that internal
governance and risk management is in need of
improvement at a large number of banks. We
believe that it is necessary to improve the design and
effectiveness of governance and risk management
at banks. We intend to devote more attention to this
in the Supervisory Review and Evaluation Process
(SREP) and during the regular supervision meetings.
In addition, we plan to perform an examination into
the functioning of internal supervision at a number
of banks with a particular focus on its role as a
countervailing power.
Exposures to emerging marketsEmerging markets are under pressure, and Dutch
banks with large exposures to these economies
are potentially vulnerable. As a precaution, we
already asked banks in 2017 to maintain additional
18 capital buffers, which will remain in place as long as
necessary. We can also ask banks for supplementary
information, and if this information gives us cause to
do so, we will press for additional control measures.
Mortgage portfoliosWe are observing easing of lending conditions for
mortgage loans at several banks. Banks are also
targeting new market segments like loans to self-
employed people and buy-to-let mortgages. It is
important for banks to keep managing adequately
the credit risks arising from these loans. These
developments will therefore be included in the
stress test that we are set to perform in 2019.
Interest-only mortgage loansA proportion of households holding interest-only
mortgages are exposed to the risk of defaulting on
their debt, or have difficulties refinancing this debt
when their mortgage expires, or when they retire.
We want to ensure that money lenders clarify this
risk to their customers, that they control it, and
actively approach their customers and point out
their future liabilities and possibilities to them. We
are closely cooperating with the AFM and the ECB
from the angle of our different responsibilities to
force money lenders into action. We are cooperating
with the ECB in order to better identify and monitor
prudential risks.
Targeted Review of Internal Models (TRIM)The SSM will continue its Targeted Review of
Internal Models (TRIM) project in 2019. TRIM is the
SSM’s initiative to examine the internal models for
determining the required capital buffers for market
risk, counterparty credit risk, and credit risks of 68
significant banks in Europe. In total, 206 on-site
inspections will be performed. The ECB coordinates
these inspections and ensures quality assurance,
but the majority of inspections will be performed
by NCAs like DNB. ECB Banking Supervision aims to
complete the TRIM project in 2019. We will increase
the number of our credit risk examinations in the
coming year. Here again, the ECB will be responsible
for coordination and quality assurance, but the
NCAs will perform the examinations.
Simple, transparent and standardised securitisationsOn 1 January 2019, new European legislation
will come into effect with more stringent
requirements and higher risk weights for all
European securitisations. At the same time, a
specific framework will come into effect for simple,
transparent and standardised (STS) securitisations,
the risk weights of which will be increased less
sharply. DNB will become responsible for “product
supervision” when the STS framework comes
into effect. This means that we will, for now
independently of the SSM, be responsible for
determining whether securitisations that the issuing
party qualifies as STS actually comply with the
set criteria. This is a new task for which a limited
increase in staffing is foreseen.
19
Supervision Outlook 2019
Capacity for changeThe playing field for banks is changing rapidly.
New players are entering the market, partly
driven by changing regulations, such as PSD2, and
technological innovation. This may potentially have
a big impact on the business models of banks. It
demands sufficient capacity for change at banks to
anticipate and respond to the developments that
they are faced with. In 2019, we intend to examine
the main developments for business models and the
future role played by banks.
ECB Banking Supervision In 2019, ECB Banking Supervision will continue
implementing thematic on-site campaigns,
involving similar examinations at different banks.
We are taking part in these campaigns.
Integrity supervisionDNB assesses whether banks are on top of the basic
management of integrity risks, and consequently
comply with the amended Wwft. In addition to this,
we examine how banks give substance to their
legal duty to design policies and procedures to the
effect of minimising the risk of becoming involved in
socially improper actions. At banks, we also assess
to what extent they control the tax integrity risks
associated with their customers, and the risks of
becoming involved in socially undermining crime.
In 2019, we will also examine the progress and
implementation of the recovery and improvement
programmes that banks have developed to
prevent involvement in financial crime. In case of
serious findings or failing recovery, we will take
enforcement action if necessary.
In 2018, we organised a series of round table
conferences on the theme of Future State AML/
CFT. Both public and private parties committed
to the intention of further developing a number
of initiatives in 2019. These initiatives include
intensifying the operational cooperation between
banks and promoting ongoing cooperation between
public parties and banks.
We are in favour of intensifying European
cooperation to counteract money laundering and
terrorist financing. This is why we support the
European Commission’s proposals to concentrate
the relevant supervisory authorities with the
EBA. We will include the impact of European
developments in our supervision.
20
21
Supervision Outlook 2019
The insurance sector continues to face serious challenges. In 2019, we will therefore challenge insurers on their strategies for the future, their ability to adjust to a rapidly changing environment, and the state of their risk management. This will be done by devoting specific attention to scenario thinking, to Insurtech, and to risks in the underwriting channel. The results of the EIOPA stress tests will be published at the end of 2018 or in early 2019. We will address any actions following up on the results of the stress tests in our 2019 supervision plans for individual insurance companies. And last, but not least, the implementation of the Act on the recovery and resolution of insurers (Wet herstel en afwikkeling van verzekeraars), which is expected to come into effect on 1 January 2019 is high on our agenda.
The wave of consolidation in the insurance sector
is also still playing an important role. In the light of
the above challenges, consolidation in the insurance
sector may certainly have its benefits, for instance
in terms of cost saving and innovation clout.
Consolidation also brings risks, however. In short,
this is an important focus area to which we will
again devote a great deal of attention in 2019.
Scenarios in own risk solvency assessment (ORSA)One of our ways of assessing insurers’ strategies
for the future is reviewing their ORSA scenarios.
Scenario thinking is a highly suitable method for
anticipating on an uncertain future, which makes it
an important risk management tool for insurers. We
want to increase our understanding of how insurers
select the scenarios that they use in their ORSAs.
In 2019, we will primarily focus on the sensitivity of
baseline and stress scenarios for different sources of
profit and parameters. An important test question is
whether the stress scenarios are sufficiently heavy
and varied. Between April and August 2019, we will
analyse the ORSA reports submitted by a selection
of institutions. The results of our analyses will be fed
back to these institutions in September 2019.
Control of underwriting contracts (non-life insurance)Distribution of insurance through underwriting
has increased over the past few years. Adequate
risk management of underwriting is essential as
underwriting constructions can be considered the
most extreme form of outsourcing. Insufficient risk
management of underwriting may have severe
financial consequences and cause reputational
damage for insurance companies. In addition, we
are getting signals that underwriting portfolios
with Dutch insurance policy holders are increasingly
being placed with foreign insurance companies.
7 Insurers
22 In 2019, we plan to establish whether Dutch
insurance companies are on top of underwriting
risks. We will pay specific attention to risks related
to data quality and outsourcing. If the results of
our examination show that risk management is
insufficiently effective across the sector, we will,
together with the Dutch Association of Insurers
(Verbond van Verzekeraars), and the Dutch Association
of Authorised Agents (Nederlandse Vereniging van
Gevolmachtigde Assurantiebedrijven - NVGA) issue
supplementary guidance, or use other instruments
to induce improvement in the sector.
Ongoing attention to InsurtechThe impact of Insurtech – technological innovation
in the insurance sector – continues to be among
our supervision priorities. Insurtech is also getting
growing international attention, e.g. from EIOPA
and the European Commission. It is important for
insurance companies to have a clear understanding
of the impact that technological developments may
have on their business models and to anticipate
adequately on these developments.
Insurtech offers insurers great opportunities, but
it may also lead to new forms of competition and
new entrants on the insurance market. It also
entails new operational risks or makes the existing
operational risks more relevant. Heavy or growing
dependence on IT and data is an important driver
here. Our 2019 thematic examination will therefore
devote attention to data quality management and
IT risks like cyber risks.
We want to achieve that insurers have a clear and
verifiable picture of the impact of technological
developments on their business models, innovations
and the competition, and that they are able to
motivate and implement their strategic decisions.
In 2017 and 2018, we examined the sector-wide
developments and embarked on identifying
opportunities and risks at a number of individual
insurance companies. We will continue this
examination in 2019 and will also focus on including
the concomitant risks in our regular supervision.
Recovery and resolution of insurersThe Act on Recovery and Resolution of Insurers is
expected to come into effect in the Netherlands on
1 January 2019. The purpose of the Act is to improve
the resolvability of insurers. The act gives DNB the
responsibility to order insurance companies to
submit their preparatory crisis plans and to exercise
resolution or resolution plans. The former qualifies
as a supervisory responsibility, and the latter is a
resolution task.
We are committing ourselves to achieving a
seamless transition to this new regime and aim to
achieve in 2019 that the insurance sector becomes
aware of the necessity of compiling preparatory
crisis plans. We will compile a good practices
document on preparatory crisis plans, taking
proportionality into account, and we will ask a risk-
based selection of insurance companies to draw up
draft preparatory crisis plans in line with these good
practices. We will assess these plans and feed back
our findings to both the companies in question and
the sector as a whole.
23
Supervision Outlook 2019
Integrity supervisionIn 2019, we will focus on conflicts of interests for
policymakers at insurance companies. As part of
this effort, the results of the annual survey on non-
financial risks and data analyses stemming from
other sources will be used to clarify our perspective
of the risks of conflicts of interest.
24
25
Supervision Outlook 2019
8 Pension funds1
Pension funds are facing some of the same developments as banks and insurers, but there are also specific developments at play for pension funds, including the new regulatory and legislative requirements for the pensions sector. Having sufficient capacity for change also remains a relevant theme for pension funds, due to the constantly changing sector environment.
The consolidation trend in the pensions sector is
continuing, including the trend towards establishing
general pension funds (Algemene Pensioenfondsen
– APF). At the same time, we are observing that
institutions wanting to liquidate are sometimes
experiencing difficulties in achieving this. In 2019, we
will devote attention to identifying these difficulties
and address them where necessary. Our purpose
is to enable institutions to achieve their objectives
with respect to their business models in time.
We devote a great deal of attention to effectiveness
and efficiency in supervision of pension funds by
taking a proportional approach to supervision
and by being transparent to the sector about our
supervisory activities. In addition, we intend to
explore together with the sector the opportunities
for realising direct supervision via pension providers.
This is also in line with the recommendations made
by the working group on indirect costs.
1 The themes are also relevant for pension premium institutions. The text below is tailored specifically to pension funds.
New pension contractThe preparations for the introduction of a new
pension system are also playing a role in the sector.
This includes preparing decision trajectories,
how pension fund bodies are involved and the
implications that the new system has for pension
administration organisations. The operational and
administrative transition to a new system will
demand a great deal of preparatory effort. The
necessary attention for the operational framework
is amplified by the complexity of the current
contracts and the presence of legacy systems.
This requires even more attention for effective
management of IT and operational risks.
Implementation of IORP IIIORP II will be effectively implemented in the
Netherlands in January 2019. From then on, DNB will
supervise compliance with IORP II. An important
element of IORP II is that pension funds will be
required to install different key functions: a risk
management function, an actuarial function and
an internal audit function. IORP II also includes the
requirement to set up an Own Risk Assessment
(Eigen Risico Beoordeling). There is a risk that
institutions will not be able to comply with the
new requirements in time, also due to the short
time to implementation. In 2018, we raised the
issue of the IORP II requirements in several ways.
We gave addresses at different seminars and sent
out a survey for instance. We will continue our
efforts into the first half of 2019 by discussing the
implementation of IORP II with pension funds.
26 In the second half of the year, we plan to launch
a number of in-depth examinations in order to
bring into focus the extent to which institutions
comply with the new requirement. The selection
of institutions to be examined will be based on
risk. In addition, board members proposed as key
function holders will be subjected to fit and proper
assessments in 2019. Large and medium-sized
pension funds have until 1 September 2019 to notify
DNB of proposed appointees. Small funds will get an
extra year and have until 1 September 2020.
Financial position of pension funds and preparation for possible curtailments Most pension funds are currently able to index-
link pensions partly and sometimes wholly again,
although it should be mentioned that this is not the
case for several large pension funds. Some pension
funds have not managed to meet the minimum own
funds requirement, however. If they do not manage
to recover in time, these funds will have to curtail
pensions in 2020 or 2021 as they will by then have
failed to meet the minimum own funds requirement
for five consecutive years. The recovery plans reveal
that, unchanged from previous years, the successful
recovery of the majority of pension funds strongly
depends on their investment results. DNB monitors
that these funds continue to state their financial
position correctly also in the run-up to a potential
curtailment announcement. We intend to devote
extra attention to unacceptable valuations and
balance sheet movements, and will discuss possible
findings with these funds. In addition, several pension
funds are in line for the 2019 EIOPA stress test.
Sustainable investmentClimate risks have an impact on the investment
portfolios of pension funds. Office premises in the
Netherlands will have to carry energy label C by
2023. This is already impacting the valuation of real
estate and, by extension, the investment portfolios
of pension funds. We want pension funds to make
conscious decisions with respect to sustainable
investment and we want them to act on these
decisions. They should also have Environmental,
Social and Governance (ESG)-related risks under
control. Under IORP II, ESG considerations must
be included in risk management from January 2019
forward.
In the first half of the year, we will concentrate
on information supply aimed at medium-sized
and smaller pension funds in particular. This
for instance includes sharing good practices or
organising round table conferences. We will also
devote attention to sustainable investment at our
seminar on supervision of medium-sized pension
funds. We also intend to perform a sector-wide
analysis. In the second half of the year, we will
incorporate ESG in our supervision approach,
e.g. in our risk management on-site inspections and
our investment surveys. Our on-site inspections
will also include the underlying asset managers
to see whether they provide sufficiently detailed
information to the pension funds to enable
management of climate risks.
27
Supervision Outlook 2019
Cyber risks and data quality in an environment of digitalisationDigitalisation is changing operational management.
Pension funds for instance make an increasing
amount of information available to their members
by digital means and through online channels.
This entails new risks in the area of identity theft
and cybercrime. Cyberattacks on the whole are
increasing. Effective management of operational and
IT risks is therefore becoming increasingly important.
We want to achieve that pension funds and pension
providers are adequately equipped to manage
their operational and IT risks effectively. We are
demanding structural attention to this by means of
our surveys and examinations into cybersecurity and
specific outsourcing risks for instance. And finally,
together with the InnovationHub, DNB is evaluating
the impact of new technological developments in
the pensions sector, such as applications of robotics
and blockchain technologies.
Integrity supervision and behaviour and culture supervisionIn 2019, we will continue to highlight the risk of
conflicts of interest among pension fund board
members. We will use the outcome of our sector-
wide analysis and data analyses from other sources
in order to enhance our perspective on the risk of
conflicts of interest.
28
29
Supervision Outlook 2019
9 Investment firms and investment fund managers
In view of Brexit, our focus in 2019 will be on
a controlled transition of activities and the
question whether new licence holders comply
with the prevailing rules and regulations. Since
the introduction of MiFID II in 2018, operating
an organised trading facility has been subject to
a licence requirement in addition to operating a
multilateral trading facility. Hence, a larger number
of institutions have come under the supervision of
DNB and the AFM. We will continue monitoring
prudential risks and potential prudential risks
emanating from trade platforms subject to a licence
requirement.
30
10 Payment and e-money institutions
Prudential supervision on payment institutions in 2019 will be largely predominated by licensing as part of PSD2 and ensuring that new entrants comply with the legal requirements. We will also devote substantial resources to countering financial and economic crime.
New technological developments have enabled
money transfer organisations to facilitate efficient
money transfers, e.g by using smartphone
applications or blockchain technology. These online
services are increasingly being offered across
borders by players from different countries. This
is why, in addition to our periodical transaction
analyses and incident-driven examinations, we
will specifically investigate compliance with the
Wwft and the Sanctions Act with respect to online
services offered by money transfer organisations.
In 2018, we launched a sector-wide identifying
examination into the risk profile of currency
exchange offices. Based on the outcome of this
examination, several on-site inspections will be
performed in 2019 at currency exchange offices with
elevated inherent risk of involvement in financial
crime. These inspections will zoom in on unusual
transaction patterns and compliance with the
Wwft and the Sanctions Act.
31
Supervision Outlook 2019
11 Trust offices
In 2019, we will continue our intensive risk-based monitoring of the trust sector. Based on different data sources, we identify the offices with elevated risk of involvement in financial and economic crime for instance. In addition to institution-specific supervision, we will take a broader view of integrity risk management and the way in which trust offices ensure compliance with the requirement of social propriety. Important ongoing examinations include the systematic integrity risk analysis by trust offices and socially undermining organised crime. We also assess to what extent trust offices have incorporated the good practices on aggressive tax planning issued in 2018 in their risk management.
The new Act on the Supervision of Trust Offices
(Wet toezicht trustkantoren 2018 – Wtt 2018),
which was accepted by the Dutch House of
Representatives on 5 July 2018 and is expected
to come into effect in 2019, marks a significant
change for both trust offices and DNB alike. The
Wtt 2018 includes supplementary requirements for
trust offices. For example, they must have a second
policy maker and an internal compliance function
in place, and they are required to submit obligatory
supplementary reports to DNB. The new Act will
provide DNB with more powers, it will allow us to
impose higher sanctions and we will be authorised
to publish imposed sanctions.
In addition to supervision and more stringent
legislation, trust offices have a definite role
in mitigating risks of knowing or unknowing
involvement in financial crime. The trust sector will
have to demonstrate its own responsibility, both
individually and collectively, for complying with the
new requirements. Trust offices that fail to meet
the stricter requirements because they are unable
or unwilling to boost their professionalism will
have to cease their operations (either by means
of enforcement or of their own accord). The trust
sector is expected to continue on its path of gradual
shrinkage in 2019.
32
33
Supervision Outlook 2019
12 Supervision in the Caribbean Netherlands
DNB is responsible for supervising financial institutions in the Caribbean Netherlands. Especially with respect to exercising prudential supervision on branch offices in the Caribbean Netherlands, we must be able to rely on an effectively and ethically operating Centrale Bank van Curaçao en St. Maarten (CBCS). We have been expressing our concerns about this for several years. Our approach aims to achieve constructive cooperation with the CBCS based on common ground. In the meantime we exercise our supervisory duties in the Caribbean Netherlands in the best possible way. In view of the possible introduction of a registered office requirement (the requirement that a financial institution genuinely has its registered office in the Caribbean Netherlands), we will prepare for a significant expansion of our prudential supervision of financial institutions in the Caribbean Netherlands. The subject of “outsourcing” is also expected to demand extra attention.
Ethical operational managementIn 2019, we will continue working on improving
awareness and mitigation of integrity risks in the
financial sector in the Caribbean Netherlands,
specifically risks associated with financial crime,
money laundering, terrorist financing, sanctions
regulations and corruption (bribery and conflicts of
interest). Our examinations at banks and money
transaction offices will emphasise adequate risk-
based transaction monitoring and compliance with
the notification duty for unusual transactions.
Cooperation with Financial Intelligence Units (FIUs) in the Caribbean NetherlandsThe close cooperation in 2018 between DNB and
FIU-the Netherlands (FIU-NL) and other countries
within the Kingdom of the Netherlands culminated
in a joint analysis by DNB and FIU-NL of relevant
integrity risks. We also cooperated closely with FIU-
NL in the area of information provision on concrete
risks of money laundering and about the notification
duty pertaining to unusual transactions. We are set
to continue cooperating with FIU-NL in 2019, and
plan to continue providing joint information.
34
Annex 1 Key Indicators
Priority 1 – Responding to technological innovation in the financial sector*
Ambition KI Target values 2019
Effective supervision by applying technological innovation DNB applies technological innovation to structured and unstructured data in order to identify and monitor risks.
▪ DNB has demonstrated that it is technically possible to have access to real-time data at supervised institutions. DNB translates this into a vision on the potential for both supervision and financial institutions for applying this technique.
▪ Two pilot projects directed at data-driven supervision, including experiments with application of machine learning launched. ▪ Concrete schedules and processes in place for upscaling of successful pilots. ▪ DNB has further developed its internal process to facilitate a case-oriented approach in order to further enhance the
reliability and efficiency of the primary supervision process. ▪ DNB stimulates exchange of knowledge in the field of artificial intelligence and other advanced data techniques with the
financial sector.
DNB is engaged in and acts on the impact of digitalisation on the financial sector, both in terms of opportunities and threats.
DNB has developed a vision on digitalisation and the concomitant risks. DNB translates this vision into supervisory actions where relevant. DNB seeks a dialogue with the financial sector on opportunities and threats, including possible obstacles to innovation in the current rules and regulations.
▪ DNB has identified the main vulnerabilities in changing value chains, and how it translates this into its supervision. ▪ DNB has translated its vision on the impact of digitalisation on the financial sector and the concomitant risks to supervisory
actions where necessary. ▪ DNB participates in pilots and projects together with the financial sector in order to build its knowledge of the impact and
opportunities of technological developments. Two pilots have been launched for the regulatory sandbox.** ▪ DNB has launched an iForum with representatives of DNB itself and the sector in order to boost the dialogue on technology. ▪ The DNB Academy has developed a technology training course in order to build and boost relevant knowledge among our staff. ▪ DNB has expanded its strategic secondments policy in order to ensure that knowledge on new technologies is acquired across
the board. At least one of these strategic secondments has knowledge acquisition of new techniques as its primary goal.
Enhancing the efficiency of supervision in DNB’s business management by implementing new technological developments where possible together with the financial sector.
DNB computerises and digitalises processes in order to maintain effective and efficient supervision and curb indirect costs where necessary.
▪ New technologies have been implemented in the ongoing development of the supervision methodology. DNB is making optimum use of univocal data definitions and re-use of data retrieved.
▪ Investments and improvements of business processes are aimed at achieving a demonstrable reduction of direct and/or indirect supervisory costs. Together with the sector, we have sharpened our insight into the supervision processes that lead to indirect costs. We have formulated business cases to assess where indirect expenses may be cut and which investment this would require.
▪ A pilot has been run with a supervised institution to test data access. This pilot also charted the cost gains for the institution and the general conclusion of the exercise was discussed with the sector.
▪ Our Digital Supervision Portal facilitates supervised institutions in reporting their outsourcing and cloud outsourcing activities to us.
* The ambitions and KIs relating to this priority area are provisional. As far as information technology is concerned, we are working
on formulating a digital ambition. We are making progress on this point, and will continue working on specifying the details in 2019.
** The AFM and DNB have launched a joint regulatory sandbox to ensure that market operators are enabled to market their
innovative financial products, services or business models without unnecessary obstacles. Our regulatory sandbox for innovations
is available to all financial enterprises wanting to launch an innovative financial concept.
35
Supervision Outlook 2019
Priority 1 – Responding to technological innovation in the financial sector*
Ambition KI Target values 2019
Effective supervision by applying technological innovation DNB applies technological innovation to structured and unstructured data in order to identify and monitor risks.
▪ DNB has demonstrated that it is technically possible to have access to real-time data at supervised institutions. DNB translates this into a vision on the potential for both supervision and financial institutions for applying this technique.
▪ Two pilot projects directed at data-driven supervision, including experiments with application of machine learning launched. ▪ Concrete schedules and processes in place for upscaling of successful pilots. ▪ DNB has further developed its internal process to facilitate a case-oriented approach in order to further enhance the
reliability and efficiency of the primary supervision process. ▪ DNB stimulates exchange of knowledge in the field of artificial intelligence and other advanced data techniques with the
financial sector.
DNB is engaged in and acts on the impact of digitalisation on the financial sector, both in terms of opportunities and threats.
DNB has developed a vision on digitalisation and the concomitant risks. DNB translates this vision into supervisory actions where relevant. DNB seeks a dialogue with the financial sector on opportunities and threats, including possible obstacles to innovation in the current rules and regulations.
▪ DNB has identified the main vulnerabilities in changing value chains, and how it translates this into its supervision. ▪ DNB has translated its vision on the impact of digitalisation on the financial sector and the concomitant risks to supervisory
actions where necessary. ▪ DNB participates in pilots and projects together with the financial sector in order to build its knowledge of the impact and
opportunities of technological developments. Two pilots have been launched for the regulatory sandbox.** ▪ DNB has launched an iForum with representatives of DNB itself and the sector in order to boost the dialogue on technology. ▪ The DNB Academy has developed a technology training course in order to build and boost relevant knowledge among our staff. ▪ DNB has expanded its strategic secondments policy in order to ensure that knowledge on new technologies is acquired across
the board. At least one of these strategic secondments has knowledge acquisition of new techniques as its primary goal.
Enhancing the efficiency of supervision in DNB’s business management by implementing new technological developments where possible together with the financial sector.
DNB computerises and digitalises processes in order to maintain effective and efficient supervision and curb indirect costs where necessary.
▪ New technologies have been implemented in the ongoing development of the supervision methodology. DNB is making optimum use of univocal data definitions and re-use of data retrieved.
▪ Investments and improvements of business processes are aimed at achieving a demonstrable reduction of direct and/or indirect supervisory costs. Together with the sector, we have sharpened our insight into the supervision processes that lead to indirect costs. We have formulated business cases to assess where indirect expenses may be cut and which investment this would require.
▪ A pilot has been run with a supervised institution to test data access. This pilot also charted the cost gains for the institution and the general conclusion of the exercise was discussed with the sector.
▪ Our Digital Supervision Portal facilitates supervised institutions in reporting their outsourcing and cloud outsourcing activities to us.
* The ambitions and KIs relating to this priority area are provisional. As far as information technology is concerned, we are working
on formulating a digital ambition. We are making progress on this point, and will continue working on specifying the details in 2019.
** The AFM and DNB have launched a joint regulatory sandbox to ensure that market operators are enabled to market their
innovative financial products, services or business models without unnecessary obstacles. Our regulatory sandbox for innovations
is available to all financial enterprises wanting to launch an innovative financial concept.
36 Priority 2 – DNB emphasises future orientation and sustainability
Ambition KI Target values 2019
DNB emphasises future orientation and sustainability.
Monitoring and reinforcing the capacity for change of institutions, whereby institutions are prompted into action where necessary.
▪ We reviewed the capacity for change at a risk-based selection of small banks, insurers, pension funds and trust offices highlighting the sustainability of their business models. The results were discussed in supervision meetings with individual institutions and were fed back to the entire sector.
The Dutch financial sector is on top of the impact of climate and environmentally related risks on the short and long-term solidity of its institutions and takes the appropriate measures to manage these risks.
▪ DNB has developed an assessment framework for management of climate-related risks by financial institutions. Five institutions were evaluated based on this assessment framework.
▪ Under this assessment framework, institutions that have office premises as a relevant component of their business model have knowledge of the energy label of the office premises in their real estate portfolios, or have formulated plans to collect the necessary data.
▪ In addition, for on-site inspections at banks, we established how sustainability may be incorporated in the different types of on-site inspections, and piloted this approach in two on-site inspections.
DNB is a thought leader in addressing sustainability issues in relation to financial supervision.
▪ International cooperation with other central banks and supervisory authorities as part of the Network for Greening the Financial System has culminated into an approach to further evaluate sustainability issues. The objective is to perform at least three examinations together.
▪ Observations from ongoing supervisions show that cooperation with the financial sector and sector representatives**, the AFM, policymakers and universities, e.g. through the Sustainable Finance Platform, boosts attention for sustainability issues in the financial sector.
▪ Knowledge of sustainability issues will be verifiably conveyed in speeches and publications.
** The members of the Sustainable Finance Platform include the Dutch Banking Association, the Dutch Association of Insurers,
the Federation of the Dutch Pension Funds, and the Dutch Fund and Asset Management Association.
37
Supervision Outlook 2019
Priority 3 – Taking a hard stance against financial and economic crime
Ambition KI Target values 2019
Prevention of involvement of financial institutions in financial and economic crime by increasing ownership at top management.
▪ In conformity with the requirement under the Anti-Money Laundering and Anti-Terrorist Financing Act (Wet ter voorkoming van witwassen en financieren van terrorisme – Wwft),AML/CFT must be explicitly assigned with one day-to-day policymaker.
▪ At end 2019 all institutions are obliged to comply with this requirement. We evaluated this in our annual survey and by means of interactions with specific institutions.
▪ Trust offices must have an independent and effective internal compliance function in place in conformity with the new Act on the Supervision of Trust Offices (Wet toezicht trustkantoren – Wtt 18).
▪ At the end of 2019 all trust offices are obliged to comply with this requirement. We examined this as part of our annual survey and by means of interactions with specific trust offices.
Ensure close AML/CFT supervision on cryptos
▪ Implementation of AMLD5 in national legislation including setting up supervision of trading platforms and e-wallets (provided DNB is designated as the responsible supervisor).
▪ Identification of types of cryptos (in the context of combating financial and economic crime) and the appropriate integrity regulations.
▪ At end 2019, the shape of the adjusted Anti-Money Laundering and Anti-Terrorist Financing Act will be clear and DNB (provided it is designated as the responsible supervisor) will have ensured timely implementation of its supervision on trade platforms and e-wallets.
▪ DNB has uninterrupted insight into the relevant forms of cryptos at national level – with FEC partners through the InnovationHub – and international – through the FATF and EBA. For each form of crypto, the right identification is made to assess the appropriate integrity regulation.
Reinforcement of cooperation between institutions (and with public partners) in counteracting financial and economic crime.
▪ Initiative between public and private partners (pilot with the serious crime task force) and determining the feasibility and implementation method of interbank initiatives.
▪ Positive evaluation of the effectiveness of the serious crime task force at the end of 2019 (including DNB’s role) with tangible points for improvement for after 2019.
▪ Evaluation of interbank initiatives performed by DNB together with the banking sector in the course of 2019 and the subsequent decision-making of banks on the realisation of initiatives.
38 Generic/regular KIs
Ambition KI Target values 2019
Supervision is decisive, timely and of high quality and is consistent with the European supervisory frameworks to enable a resilient financial system.
DNB ensures effective risk identification
▪ For all systemically important banks (SIBs), the minimum supervision plan as formulated in the context of the SSM will have been implemented.
▪ DNB will have performed at least 30 on-site inspections at banks.
▪ For insurers and pension funds, a risk-based supervisory agenda has been compiled and implemented (i.e. sector-wide and based on risk scores of individual institutions).
▪ Tangible and relevant tail risks have been identified. ▪ DNB has documented the correlation between micro
and macro risks.
DNB’s risk mitigation is effective.
▪ SREP decisions have been made for all banks. ▪ Risk-based follow-up action has been taken with
respect to identified risks for all insurers and pension funds by means of urging institutions to take action on our findings and the underlying root causes, and where necessary by means of formal measures and/or capital demands.
▪ The regular reports and evaluations of long-term and/or complex supervision dossiers show that DNB intervenes in supervision dossiers on time, effectively and in the correct manner.
DNB performs its statutory tasks within the set deadline.
▪ All applications for fit and proper assessments are dealt with within the statutory period.
▪ All applications for declarations of no-objection (DNOs) are dealt with within the statutory period.
▪ All licence applications are dealt with within the statutory period.
DNB seeks to achieve European supervision frameworks that lead to effective and comparable supervisory requirements.
▪ DNB has determined priorities for further development of European supervisory frameworks.
▪ Contributions to European consultations are in line with these priorities.
▪ DNB complies with the SSM requirements relating to the minimum number of on-site inspections performed abroad, thereby contributing to harmonisation of on-site supervision.
DNB is transparent towards supervised institutions by continuing to seek the dialogue with the sector and to inform institutions on time.
▪ All insurers and pension funds have received their own supervision agenda including all examinations and surveys planned for 2019. This agenda will communicate the objective, approach and the envisaged effects of examinations and surveys.
▪ 90% of this agenda will have been realised at these institutions. Exceptions to the planned schedule will be communicated on time in advance.
▪ To the extent possible, the outcomes of examinations will have been fed back sector-wide by means of sector letters, newsletters, round table meetings or seminars or other ways.
De Nederlandsche Bank N.V.
Postbus 98, 1000 AB Amsterdam
020 524 91 11
dnb.nl