Prior approval from DNB is also required if an equity interest or control of 10% or more is acquired in a special purpose reinsurance vehicle or a Dutch-based settlement institution holding a DNB-issued authorisation (Section 3:95 of the Wft). Pursuant to Section 3:108a of the Wft, the same requirement applies to a proposed acquisition of an equity interest or control of 10% or more in a Dutch-based electronic money institution.
In specific cases, increases of such equity interests or control (referred to below as 'holding') are also notifiable to or subject to approval from DNB. In addition, Dutch-based banks and insurers require prior approval for specific acts pursuant to Sections 3:96 and 3:97 of the Wft, respectively.
Approval is granted by way of a declaration of no-objection, or DNO (verklaring van geen bezwaar). DNB will issue a DNO for an envisaged holding after verifying that a number of criteria have been satisfied.
What exactly is a holding?
A holding as used in the present context means a 'qualifying holding' (gekwalificeerde deelneming) as defined in Section 1:1 of the Wft. This is because the requirement to apply for a DNO applies only if the direct or indirect holding comprises 10% or more of the issued capital of the financial corporation concerned. The DNO requirement also applies to a controlling power or voting right at least equal or comparable to a 10% equity holding. This includes voting rights deemed to be conferred by way of an agreement.
Types of DNO
A DNO for a holding pursuant to Section 3:95 of the Wft will be issued with a bandwidth constraint. This means that the size of the holding may fluctuate within a specified percentage range without a new or modified DNO being required for every change. However, certain changes in the size of a holding will still be notifiable to DNB, pursuant to Section 3:103 of the Wft.
Another variant is the group DNO, which covers the prospective acquirer and other companies within the same group jointly, thereby removing the need for each individual group company to apply for a separate DNO. Group DNOs are only issued for holdings within the meaning of Section 3:95 of the Wft and insofar not relating to a holding in a bank Besides, a group DNO is issued only upon specific request and only to an economic entity whose legal entities and companies are organisationally connected under a single managing entity. The holders of a group DNO are required to notify changes in the group structure to DNB. Such changes may give DNB ground to perform a supplementary assessment.
Banks, moreover, may be granted an umbrella DNO covering all indirect holdings as referred to in Section 3:96 of the Wft that have been or are to be acquired through a subsidiary company.
Holdings by banks
The term 'holding' may refer not only to a holding in a financial undertaking (Section 3:95 of the Wft), but also to one held by a Dutch-based financial undertaking (Section 3:96 of the Wft). A bank that wishes to acquire or increase a holding in another enterprise may also be required to apply for a DNO (Section 3:96(1), under a and b, of the Wft). This applies if the size of the holding exceeds a specific threshold and therefore entails a material risk for the bank. Moreover, the value of qualifying holdings by banks in non-financial corporations is capped, in terms of both individual holdings and aggregate holdings in non-financial corporations. A bank intending to acquire a qualifying holding in a bank, investment firm, insurer or reinsurer established in a Member State may suffice by applying for a DNO under Section 3:95 of the Wft or an equivalent prohibition applying in the target undertaking's home Member State.
Other acts by banks and insurers subject to the DNO requirement
The obligation to obtain a DNO applies not only to material holdings, but also to certain other acts banks and insurers perform. A financial or corporate reorganisation at a bank also requires prior approval from DNB in the form of a DNO. The same applies if a bank plans to take over the assets and liabilities of another enterprise above a certain threshold or if it intends to enter into a legal merger with another enterprise. Furthermore, a DNO is required if a bank appoints a managing partner. These acts are described in Section 3:96(1) of the Wft.
With effect from 1 January 2014, insurers are required to apply for a DNO in the event of a reduction of own funds if, at the time of the reduction, they do not satisfy the solvency capital requirement or it is likely that they will be unable to satisfy this requirement in the next twelve months (Section 3:97 of the Wft). With effect from 1 August 2014, banks no longer require a DNO for a reduction of own funds. Although banks continue to require DNB’s prior permission for reducing own funds in the cases referred to in Article 77 of Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013, such permission need not take the form of a DNO. We advise banks in individual cases to contact their DNB examining officer at the earliest opportunity.
Section 3:95 of the Wft
With respect to holdings within the meaning of Section 3:95 of the Wft, the assessment criteria and the consideration procedure have been harmonised at the European level and must be applied uniformly in all Member States. The assessment criteria are:
- the integrity of the prospective acquirer or of the persons who, by virtue of the prospective qualifying holding, will or will be able to determine or co-determine the policy of the financial undertaking;
- the suitability of the persons who, by virtue of the prospective qualifying holding, will determine the day-to-day policy of the financial undertaking;
- the financial soundness of the prospective acquirer, relative to the financial undertaking’s business activities;
- whether the financial undertaking will be able, as a result of the qualifying holding, to continue satisfying the prudential rules set pursuant to the Wft. Relevant considerations include whether the qualifying holding is structured such that supervision, information exchange and distribution of responsibilities between supervisory authorities are effective; and
- whether there are good grounds to assume that money laundering or terrorist financing play a role in the prospective acquisition or increase the risk of such activities being involved.
These assessment criteria are set out in Section 3:100 of the Wft. The assessment primarily aims to ascertain whether the prospective acquisition will not affect the soundness of the undertakings concerned - the soundness test. This soundness test may also include an assessment of macroprudential aspects, looking at the possible effects the holding may have on the stability of the sector - the stability test.
Section 3:96 of the Wft
DNO applications made pursuant to Section 3:96(1) of the Wft will be assessed on the basis of the criteria set out in Section 3:101 of the Wft. When assessing such applications, DNB will determine whether:
- the act conflicts or might conflict with the solvency capital requirements that apply to the bank in question;
- the act otherwise conflicts or might conflict with a sound and prudent conduct of business; and
- the act leads or might lead to an undesirable development of the financial sector.
These criteria primarily serve to assess the prudential risks the act will entail for the bank.
Rules and restrictions
DNB may attach rules or restrictions to a DNO it issues. If, in respect of the act for which the DNO was issued, circumstances occur or facts become known that affect the criteria against which a qualifying holding was assessed, DNB may impose further rules or restrictions or even revoke the DNO.
Application and consideration procedure
The relevant application forms may be downloaded from Open Book on Supervision. The application form to be used depends on the type of DNO application.
As indicated above, the assessment criteria and the consideration procedure for DNO applications have been harmonised at the European level and, as in other Member States, they have been transposed into national law. This means DNB will assess an application made under Section 3:95 of the Wft in accordance with these criteria and procedural rules.The Dutch legislator has decided to use the European consideration procedure for DNO applications made under Section 3:96 of the Wft. The procedure set out in the General Administrative Law Act (Algemene wet bestuursrecht - Awb) continues to apply to applications made under Section 3:97 of the Wft and notifications made under Section 3:108a of the Wft.
The European harmonisation is designed to standardise and clarify the process and assessment criteria for holdings and takeovers in the European financial sector. By that, the objective of harmonisation is to foster cross-border holdings as well as cooperation among prudential supervisors in the Member States.
Uniform assessments must be based on uniform DNO application data as submitted, in the Netherlands, under Section 3:95 of the Wft. The content and scope of the data to be submitted depend on the prospective acquirer's influence on the target undertaking. Nevertheless, DNB may need to request additional information to complete its assessment. The application form for holdings in banks, insurers etc. lists the data to be submitted, based on the 'Guidelines for the prudential assessment of acquisitions and increases in holdings in the financial sector required by Directive 2007/44/EC', as published by EBA (formerly CEBS), EIOPA (formerly CEIOPS) and ESMA (formerly CESR) in December 2008. You may download the application form, the Guidelines and the accompanying press release using the links provided on this page. You may also download the corresponding integrity screening forms which the prospective acquirer, or its day-to-day policy-maker if the prospective acquirer is a legal entity, may be asked to submit in individual cases. A group within the meaning of Section 2:24b of the Dutch Civil Code applying for a group DNO may, in principle, suffice by naming the natural persons in charge of the day-to-day management of (a) the group company that will directly hold the holding and (b) the group company acting as ‘top holding company’ within the group.
Under the procedure for considering DNO applications filed pursuant to Sections 3:95 and 3:96 of the Wft, the assessment period (or consideration period) may not exceed 62 business days following receipt of an application containing all data required. This means the consideration period will not commence until an application has been submitted in full. Within a set period, this term may be extended by a maximum of thirty business days if additional information is needed for the consideration to be completed. Submission of incomplete or incorrect data is a ground for rejection.
The assessment uses the principle of lex silencio positivo, meaning that a DNO is deemed to have been granted by operation of law if the consideration period is exceeded. This principle does not relate to applications made under Section 3:97 of the Wft and notifications made under Section 3:108a of the Wft.
DNO applicants should take the consideration period and procedure outlined above into account. They are advised to contact DNB at the earliest possible opportunity to discuss submission of the required data, based on the data requirements listed in the application form. This will help prevent unneeded delays in the consideration procedure. For the same reason, it is recommended that DNO applications relating to an application for authorisation filed with the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten - AFM) be submitted directly to DNB, rather than to the AFM.
Effective 4 November 2014, the ECB will decide on applications relating to holdings in banks, within the context of the Single Supervisory Mechanism. To the extent they relate to Dutch banks, DNB will assess them and issue its opinion to the ECB, which is why such applications must be submitted to DNB as usual. In order to allow for timely decision-making by the ECB, the applicant is expected to submit its application, including the information requested, in English.
Handling a DNO application involves a fee. Fees are listed in Annex I to the Funding of Financial Supervision Act (Wet bekostiging financieel toezicht) or, in full, Act of 24 May 2012 providing rules on funding the supervision of the financial markets, Bulletin of Acts, Orders and Decrees (StaatsbladBulletin of Acts, Orders and Decrees (.
More information / contact
Financial undertakings may contact their examining officer on this subject. Other parties may submit requests for information in writing to:
De Nederlandsche Bank NV
Expert Centre Market Access
PO Box 98
1000 AB AMSTERDAM
Telephone: DNB Information Desk 0800 020 1068 (freephone in the Netherlands), on weekdays between 9:00 and 17:00 hours