Ing Groep (EU:INGA)
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A Dutch parliamentary committee Wednesday recommended banks separate their high-risk activities from client-related activities as part of a proposed overhaul to make the financial sector in the Netherlands more robust and prevent future taxpayer bailouts.
The committee said that activities such as proprietary trading, should be separated and have their own capital base. It also called for studies to examine whether banks need higher capital requirements and if they should ringfence their operations abroad to protect their domestic activities.
The recommendations were part of a report that the committee presented following a 17-month inquiry on the financial crisis in 2008 and 2009. They will soon be discussed by the Dutch parliament and may result in additional regulation for Dutch banks.
The Dutch financial sector was hit hard during the global credit crunch and many big banks and insurers required state aid to stay afloat. The government spent EUR13.7 billion in capital injections for ING Groep NV (INGA.AE), Aegon NV (AGN.AE) and SNS Reaal NV (SR.AE). It also spent around EUR30 billion in the nationalization of ABN Amro Bank NV, the Dutch banking arm that was part of collapsed giant Fortis.
The rescue packages have weighed heavily on state finances and the government has often been criticized for the way it handled the crisis.
In its report, the committee said the government spent too much money in the nationalization of ABN Amro and that it did not always provide lawmakers with correct and complete information. The committee also concluded that parliament sometimes failed to use the instruments available to hold the government accountable and that lawmakers weren't always as alert as they should have been.
In response to the crisis, the government has prepared a broad package of new regulations, including a bank levy and a new deposit-guarantee scheme. The biggest banks in the Netherlands--ING, Rabobank, ABN Amro and SNS Reaal--will need to hold more capital and prepare emergency scenarios in case they run into trouble. The rules will come on top of the international banking rules prepared under the Basel III capital regime.
Some banks have warned that regulatory pressure will put a brake on credit supply and hurt the economy.
-By Maarten van Tartwijk, Dow Jones Newswires, +31 20 571 5201;