‘Challenges and opportunities in the coming years’

(Spoken word is valid)

• 2018 promises to be a good year. In the Netherlands, the economy is predicted to grow with more than three percent. In the Euro-area a 2.3 percent growth of the GDP is predicted by the Dutch Central Bank.
• At the end of last year,  the beginning of December, we were in tense anticipation of the final decision of the Basel committee on banking supervision regarding the new capital requirements for banks, so-called Basel 4.
• It is the provisional end of a long debate, which started with the consultation in March 2015 by the Basel Committee with a document called: “Capital Floors: the design of a framework based on Standardised Approaches”
• This debate took me all across Europe, from the stairs of Berlaymont building, the Head Quarters of the European Commission in Brussels, to the old templar hospital in Malta, to a ‘paternoster’ of the ministry of Finance in Berlin.
• A paternoster is, as you know, a passenger elevator which consists of a chain of open compartments (each usually designed for two persons) that move slowly in a loop up and down inside a building without stopping. 
• On our way, together with colleagues, to a meeting with Wolfgang Schäuble, now former German minister of Finance, we had to take a paternoster. For me this unusual continuously moving elevator stood  symbol for the past years of seemingly endless talks about the capital floors. For a long time, it seemed that the Basel Committee wouldn’t come to an agreement at all.
• But finally, on December the 7th, they did. It was a clear compromise between mainly Europe and the United States, with a capital floor of 72.5 percent. As it is with a compromise: it could have been worse, but it should have been a lot better!
• Fortunately, Dutch banks are in good shape, have robust capital buffers and a healthy risk profile. They will therefore be able to absorb the capital impact resulting from the conclusion of the Basel Committee.
• However, Dutch banks still have concerns about an international level playing field for banks. When implementing the proposals, the European Union should take differences between countries and sectors into account.
• Like I said, it’s a provisional end of the discussion. The ball is now in the court of the European Commission. Supervisors are not yet in agreement what the impact of Basel 4 would be. This shows the importance of a robust impact assessment on a European level.
• In the coming years we will work towards this. A proposal in the European context is expected to be published in 2020, but the phase leading up to this will be as important as the process itself.   
• We can also apply the image of the paternoster going slowly up and down  to the first phase of the Brexit talks. Whereas in view of the time constraints, a high speed train now is needed to pass all stations on time. Brexit remains a great concern due to its political unpredictability. We continue to stress to regulators and politicians the importance of a gradual Brexit process avoiding a cliff edge scenario.
• We welcome the fact that now both sides are discussing a broad transition agreement, which could mean, as proposed by the European Commission, that current EU rules would be extended until December 2020. This would create some more time to reach a deal on the future EU-UK relationship.
• We still have a lot of work to do regarding the future EU-UK relationship. We have always said that we would want this to be as close as possible. Therefore we would like to see a financial services paragraph included in a future trade agreement. We understand that this is without precedent, but that is a poor reason not to go for it.
• The warning last week by the Dutch ministry of Economic Affairs (and Climate!) for a hard Brexit reminds us of the fact that in politics things can go in all directions. Like I have said before, I prefer a ‘smart Brexit’.
• Brexit has awakened many people to the importance of the European project – public support is going up across the European Union.
• We are committed to the completion of the Banking Union and while we do understand the challenges politicians face in terms of the explaining the European cooperation, this is the time to look to the future.
• Steps still need to be taken to make the Eurozone more robust, especially with the possibility of rising interest rates looming at the horizon.
• Non performing loans, a legacy of the crisis of the past, are declining rapidly. This trend has to be continued, supported by the policy and supervision by the ECB. This is a condition for the completion of the European banking union.
• Important steps have been taken with the implementation of a resolution framework, but more can be done.
• Sofar we had a few examples of resolving banks under new rules, particularly in Spain. The resolution authorities have to gain further experience with resolution in practice.
• And, as currently discussed within the EU, it is important that the backstop for the resolution fund is further developed. Even though banks are currently contributing a lot to the Fund with a target of EUR 55 bln. Currently Dutch banks have contributed EUR 1.5 bln.
• So in Europe we have the three B’s: Basel, Brexit and the Banking Union.
• On a larger scale I think the main challenges ánd opportunities in the coming years for banks lie in financing the transition to a green and sustainable economy and digitalization
• To start with the last one: With the coming into force of the European Payment Service Directive PSD2 banks have to share their data with third parties if the customer gives his or her consent.
• Undoubtedly this will lead to more competition, improved products and services.
• But it also raises important questions regarding the privacy of our clients
• How can we ensure that customers can participate in the digital economy without worrying about their personal data?
• I think we have to answer those questions and create public support before we can take steps in using the data of our customers
• Another question that we need to answer in the coming years, and I think the most important question, is  how we are going to help financing the transition to a green and sustainable economy  Last month I was in Paris for the One Planet Summit
• President Macron had invited many world leaders and a lot of stakeholders to ensure that the commitments made for the Paris agreement were kept
• And those of you who were at our new-year reception know that an important message there came from a former bodybuilder, actor from Austria: Arnold Schwarzenegger
• Throughout his life he was told that he couldn’t do things. He couldn’t make money as a bodybuilder, he couldn’t become a Hollywood actor with his 'ridiculous German accent' and as an actor he could never become governor of the state of California.
• But he did become a bodybuilder, he was the highest paid Hollywood star and he was elected governor of the state of California. Because he never took no for an answer and when confronted with opposition to fight climate change, Schwarzenegger said, that’s exactly what we must do.
• Even when critics are saying manmade climate change can’t be proven, even when Donald Trump says he wants to back out of the Paris deal, and even when it looks almost impossible to reach the Paris goals, he says: Don’t take no for an answer!
• After the summit we had a dinner, hosted by the Dutch embassy on climate finance, attended by 20 representatives of Dutch and French banks
• So if we are asking ourselves if  banks can help financing the transition to a sustainable world and economy we cannot take no for an answer.
• And based on the discussion and enthusiasm there, I think I can safely say that in finding solutions to help financing the transition to a sustainable economy banks do not take no for an answer.
• I wish you all a happy new year!