Following the regular country risk assessment by S&P, the agency has taken negative action on Dutch banks reflecting the system-wide incremental increase in economic risk. However S&P still views the region as structurally sound and does not expect a sharp increase in housing related loss.
S&P has downgraded various Dutch banks:
- ABN AMRO Bank and Rabobank Nederland had ratings reduced by one notch with a stable outlook
- ING Bank/Groep had its rating affirmed and its outlook set to negative
- ING Bank/Groep subordinated debt has been lowered by one notch
The action follows S&P’s regular country risk assessment of the Netherlands where it concluded that:
- Economic risks for Dutch banks have increased incrementally, based on expectations of a more protracted downturn in the Netherlands and the wider Eurozone
- The prolonged housing market slump, elevated household leverage, and measures to reduce the budget deficit are constraining consumer confidence and private sector activity in general
- S&P anticipate that the impact of these constraints could lead to moderately higher impairment charges among Dutch banks over the next two years
- Despite an incremental worsening in the near-term outlook, S&P view the Dutch economy as structurally sound and competitive, and believe that the likelihood of a very sharp increase in housing related losses is low
- S&P also state that the measures announced by the government to restrict the tax deductibility of mortgage interest payments reduce uncertainties for prospective homebuyers