Additional investigation into Volksbank, new fine is coming

This article was last updated on August 9, 2024

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Additional investigation into Volksbank, new fine is coming

De Volksbank will almost certainly receive a second fine for poor risk management at the bank. At the request of the European Central Bank (ECB), supervisory authority De Nederlandsche Bank (DNB) has started an additional investigation into the parent company of SNS, ASN and RegioBank.

The ECB has asked DNB to look at the way in which de Volksbank identifies the risks of customers with, for example, loans, de Volksbank now reports when publishing the half-year figures. This is because de Volksbank allegedly underestimated the risks of customer loans for years. The bank has been told by DNB that this could also lead to a fine.

Last year, de Volksbank announced that DNB had concluded that the company, still owned by the State, did too little to prevent money laundering and terrorist financing. Customer backgrounds were also not properly checked.

In this case, DNB has been in the process of imposing a fine on de Volksbank for some time. In the past, other banks such as ING and ABN Amro received hefty fines for this. They settled with the Public Prosecution Service for many hundreds of millions of euros. De Volksbank cannot yet say how high the fines will be.

‘Really complicated’

Roland Boekhout, who started as CEO at de Volksbank in May, said in a response that there is “undeniably” still a lot of work to be done at the state-owned bank. He states that some of the problems have now been solved, but some have not. “Many of these problems are really complicated and will take years to solve,” he explains.

According to Boekhout, this is partly because new requirements are increasingly being imposed on banks for money laundering controls and risk management. “For this you have to build completely new databases and systems. These are problems that will not be solved tomorrow. We have to show the regulator that we are moving towards that solution. But a lot still needs to be done for that.”

Sale

The problems also cast a shadow over the sale of de Volksbank. NLFI, the institution that manages the shares of banks and insurers that were nationalized during the credit crisis for the State, recently advised de Volksbank to to start selling. This put an end to wishes from the House of Representatives to keep the bank in state hands.

Meanwhile, profit at de Volksbank also fell over the past six months, mainly because less interest is earned. Boekhout speaks of “a big challenge”.

In addition to solving the money laundering and risk problems, he must also quickly make the bank more profitable. This must be done by increasing efficiency, but also by simply earning more. “We continue to work on more business loans and try to sell more pension products and insurance. But our main model is to attract savings and offer mortgages. We really need to further optimize that process.”