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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

5


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


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


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


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


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


▪ 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).

17


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


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.

21


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


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.

25


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


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.

29


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


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.

33


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


Priority 1 – Responding to technological innovation in the financial sector*


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


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


Priority 3 – Taking a hard stance against financial and economic crime


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


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

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