Before De Nederlandsche Bank (DNB) may grant dispensation from liquidity testing and reporting for branches with registered office in another EEA Member State and operating in the Netherlands several conditions must be met. One of these conditions is written confirmation from the senior management at the head office of the bank (hereafter the firm) that the branch is part of.
The firm is an entity authorised in a EEA Member State and is subject to consolidated supervision by the home supervisor. The minimum requirements for the confirmation letter are:
- the firm will unconditionally support the liquidity needs of the branch in the Netherlands;
- the firm will inform DNB at the same time it informs the home supervisor if the firm fails to meet the home supervisor’s liquidity rules, or if such an event is imminent;
- the firm will promptly inform DNB in case any legal, regulatory or other constraints on the provision of liquidity from the firm to the branch in the Netherlands are imposed;
- the Dutch branch’s liquidity position and processes will remain fully integrated in the firm’s liquidity risk management and processes;
- information relevant for the evaluation of the liquidity position of the firm will be made available to DNB on request;
- the firm reports the liquidity position of the firm as a whole on a combined all currency basis in such a way that DNB can readily assess its liquidity position. Specific agreements between DNB and the head office of the firm on the form and frequency of such reports are required and will be confirmed in writing.
In addition to the above mentioned minimum required content of the confirmation letter to DNB by the head office, DNB may require additional bank specific confirmations as part of the confirmation letter.
DNB will take the application for the dispensation of liquidity testing and reporting into consideration only after both the confirmation letter from the firm as well as the confirmation letter from the home supervisor have been received. Providing DNB with the confirmation letters does not imply that the conditions for granting dispensation are met. DNB will judge the application taking into account firm specific circumstances.