Bloomberg News

Dutch Banks Replace Interbank Financing With Debt Securities

October 28, 2011

(Updates with interbank loans in second paragraph.)

Oct. 28 (Bloomberg) -- Dutch banks cut their reliance on interbank loans for funding in the last four years and replaced them by issuing debt securities, according to the country’s central bank.

Debt securities comprised 21 percent of banks’ balance sheets in September, up from 17 percent in the same month of 2007, with “brisk” growth in so-called covered bonds, the Dutch central bank said in a statement today. Interbank financing fell to 7 percent from 11 percent, showing “decreasing mutual confidence between banks,” the bank said.

The total balance sheet of Dutch banks, including Rabobank Groep and ING Groep NV, expanded by 18 percent to almost 2.5 trillion euros ($3.5 trillion) between 2007 and 2011. That compares with a gross domestic product of 591 billion euros in 2010, according to the country’s statistical bureau.

Deposits accounted for 35 percent of balance sheets, unchanged from 2007, the statement said. The central bank based its findings on data from banks registered in the Netherlands and excluded their foreign offices.

ING’s banking unit had a balance sheet of 885 billion euros at the end of June, an 11 percent reduction from 2007, according to a presentation on the Amsterdam-based company’s website. Rabobank had 665 billion euros in assets at the end of June. The Utrecht, Netherlands-based firm is the world’s largest agricultural lender.

--With assistance from Martijn van der Starre in Amsterdam. Editors: Jon Menon, Stephen Taylor

To contact the reporter on this story: Maud van Gaal in Amsterdam at mvangaal@bloomberg.net

To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.net


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