On 12 June 2015, legislation implementing the 'European Union Single Supervisory Mechanism Regulation no. 1024/2013', also known as the SSM Regulation, entered into force in the Netherlands. The SSM Regulation became effective on 4 November 2014 and created a single supervisor for the prudential supervision of banks: the European Central Bank. The division of tasks and responsibilities between the European Central Bank and the Dutch supervisory authorities DNB and the AFM are now implemented in the Dutch Financial Supervision Act, even though the changes do not include material deviations from the SSM Regulation.

Background

The European banking union consists of three pillars: (i) the Single Supervisory Mechanism pursuant to the SSM Regulation, (ii) the single resolution mechanism, and (iii) a European deposit guarantee scheme. Under the SSM Regulation, the supervision of banks in the Euro area has become a shared responsibility of the European Central Bank (the "ECB") and the national supervisory authorities. The purpose of the recent changes is to document the division of tasks between the ECB, the Dutch Central Bank ("DNB") and also, to a lesser extent, the Netherlands Authority for the Financial Markets (the "AFM"), and to facilitate the cooperation between the ECB, DNB and the AFM.

Amendments

The two main amendments concern the banking licences and declarations of no-objection. The ECB has direct supervisory competence in respect of credit institutions, financial holding companies, mixed financial holding companies established in participating Member States (including granting or revoking banking licences), and branches in participating Member States of credit institutions established in non-participating Member States that are significant. With respect to the declaration of no-objection for an equity interest or a degree of control where 10% or more is held in Dutch banks, prior approval from the ECB is required. However, the applicant must submit the application to the DNB; which is responsible for preparing a draft decision.

Other amendments relate to reducing the regulatory burdens for branch offices and minor amendments to the consolidated supervision.

Practice

In practice, the ECB may request DNB's assistance in the preparation and exercise of its duties. The latest legislation therefore includes provisions for the DNB to appoint authorized persons to perform these tasks.