Resolution of failing banks: not all resolution plans fully completed
Minister does not exercise full supervision
The Netherlands Court of Audit has audited the preparations made by the Dutch central bank (De Nederlandsche Bank, DNB) for the resolution of medium-sized and small banks in serious financial trouble. Since 1 January 2016, the European Single Resolution Board (SRB) has been ultimately responsible for ensuring that failing banks within the euro area are resolved, either by winding them up under normal insolvency proceedings or by taking them into resolution. Responsibility for the resolution of medium-sized and small banks in the euro-area countries lies with the national resolution authorities of these countries. DNB is the national resolution authority in the Netherlands.
Our audit shows that, since March 2019, DNB has prepared and endorsed resolution plans for the vast majority of Dutch medium-sized and small banks . While complying with the statutory requirements, these plans are concise.
Although progress has been made with resolution planning for medium-sized and small banks, we found that not all plans had been fully completed yet, despite the relatively uncomplicated nature of the Dutch banking industry.
We also examined how the Minister of Finance, who is responsible for supervising DNB’s resolution activities, discharges his responsibility. We found that the Minister does not exercise full supervision of DNB. This means that he does not have up-to-date information on the general state of resolution planning for medium-sized and small banks in the Netherlands. Precisely because DNB is still in the process of fleshing out its role as the national resolution authority, we had expected the Minister to play a more active role in supervising DNB’s resolution activities, also in the light of his responsibility for the stability of the financial system and his role as the national treasurer.
We encountered impediments to our audit abilities as we were not given access to all documents we requested from the Single Resolution Board (SRB). The SRB barred us from referring to the documents that we were supplied with and from basing any conclusions on these documents.