The Dutch financial sector remains subject to scrutiny by the Dutch government. In March 2015, a public hearing was organised by the Standing Committee on Finance of the Dutch Parliament (the “Committee”) with respect to the practices of credit restructuring departments of banks.
On this occasion, the Committee invited experts and other people directly involved with this issue to provide an explanation, and to answer questions from Members of Parliament. No official records of these round‑table conversation are available. We attended the hearing and prepared a summary which is available upon request.
The reason for the round-table was the publication of a report by the Netherlands Authority for the Financial Markets ("AFM") on the credit restructuring departments of Dutch banks. The AFM examined the files of small and medium sized companies which were transferred to the credit restructuring departments of banks. The AFM did not identify any unacceptable practices by such departments. However, according to the AFM, there is room for improvement when it comes to transparency and communication with the companies involved. Companies for example do not always know what to expect and what the objective of the restructuring process is. However, the AFM did not see a pattern of unreasonable actions performed by the banks.
According to Mr. Korte (board member of the AFM), banks should identify risks timely and, more importantly, explain these risks to the companies. Mr. Biesheuvel (founder of a lobby organisation for companies) emphasized that trust in the banking sector should be restored. Banks should for example explain under what conditions the special credit management regime can be exited again. Lobby groups agree that more regulation is not the answer. What the government could do, is establishing a centre where companies can ask for a second opinion. It was furthermore discussed whether or not there is an unequal balance of power between banks and their clients. Mr. Fennema (journalist of a web log) believes that there is an unequal balance and argued that banks are able to unilaterally change the terms and conditions applicable to companies in distress. Prof. Adriaanse (Leiden University) discussed the circumstances that can contribute to a positive outcome; an outcome in which the company returns to normal banking conditions. Important is a sense of urgency at the management and shareholder levels of the company. The directors and shareholders of the company should feel the need to change the organisation.
A summary of the hearing is available upon request.