Recently, DNB published its ‘Supervision in Focus 2024-2025,’ providing a retrospective on the past supervisory year and a look ahead to the new year. The publication offers valuable insight into the systematic approach of risk-based supervision and the priorities DNB has set for 2025.
In this article, we summarise the key insights from this publication.
DNB’s supervision is risk-based. The higher the impact on confidence in the financial system, the more intensive the supervision. DNB has conducted an impact analysis for both prudential and integrity risks. Prudential risks at banks are not included in the publication due to ECB oversight.
Pension funds have been assigned the highest impact for prudential risks, while investment firms have been assigned the lowest impact. According to DNB, the impact of integrity risks is highest for banks and trust offices, and lowest for pension funds.
In addition to insight into impact, DNB provides insight into risk scores per sector. On average, institutions are in a strong prudential position. The supervisor sees an increase in operational and market risks. The integrity risk scores have improved, partly due to a change in the methodology. However, managing integrity still requires significant supervisory effort, particularly for institutions with a large impact.
When DNB finds a risk score too high, a supervisory instrument is applied. The chosen instrument is aligned with the risk level. For higher impact or higher risks, a heavier instrument is used. These mainly consist of in-depth investigations or extensive mitigation processes, which involve a risk recovery plan and long-term monitoring. Integrity supervision particularly emphasizes these mitigation processes, especially for trust offices.
Enforcement measures are applied when necessary. A total of 39 enforcement measures were implemented in 2024 over the first ten months, with 20 informal and 19 formal (such as fines, instructions, or penalties). It is noteworthy that formal enforcement is mainly related to integrity supervision (16 out of 19 formal measures).
The focus of supervision on banking was on interest rate risk, liquidity, and credit portfolio risks. Due to changes in market interest rates, managing interest rate risk became more important. The risk management of banks concerning interest-only mortgages remained a significant area of focus.
Thematic and in-depth on-site investigations were conducted in areas such as liquidity, interest rate risk, governance effectiveness, digital transformation, and cyber resilience.
In 2025, particular attention will be paid to effectively addressing previous findings, such as correcting deficiencies in internal models. The focus of supervision will shift towards geopolitical risks and managing credit risks. Developments in the Dutch housing market remain a priority, but sustainability, data quality, IT, and cyber risks will continue to receive attention.
Mortgages, Artificial Intelligence (AI), cyber resilience, and sustainability have received special attention in the supervision of insurers in 2024. Mortgage portfolios were examined to better understand the risks insurers face. DNB also looked at the extent to which AI is used by insurers and the cyber resilience in the supply chain.
In 2025, supervision will focus on the proper implementation of DORA. The calculation of the capital requirement using the Standard Formula and the effectiveness of the ‘system of governance’ will be examined. DNB will also continue to supervise the implications of the Pension Supervision Act for insurers.
Supervision of pension funds in 2024 primarily focused on the transition to a new pension system. DNB has already received and completed several full entry requests and partial assessment requests. Much attention is given to guidance, dialogue, coaching, learning, and monitoring and adjusting risks.
In 2025, pension supervision will largely focus on ensuring a smooth transition. DNB expects to assess many more entry decisions, as most pension funds will transition as of January 1, 2026.
In addition to supervision of the pension transition, attention will be given to cyber risks and sustainability in 2025. Research will begin on potential vulnerabilities related to integrity risks. Other risks will temporarily receive less supervisory attention.
In 2024, DNB published the ‘Good Practices Guide for Prudential Reporting’ for investment firms and managers of investment institutions. It concluded that the data quality is still not at the desired level. In the coming year, the focus will remain on the data quality of the reports provided by institutions. In 2025, DNB will also investigate the calculation of the ‘fixed cost requirement’ by these institutions.
In 2024, investigations were conducted to ensure third-party funds are protected, cyber risks, and transaction monitoring for integrity risks.
In 2025, the focus will be on integrity risks, information security, cyber resilience, climate and environmental risks, and the implementation of MiCAR, DORA, and PSD3.
In 2024, DNB paid attention to risk management, client research, and governance of trust offices.
Client research and the business operations of trust offices will continue to be an important area of focus in 2025. Adequate Systematic Integrity Risk Analysis and having a proper transaction and integrity risk profile are other key areas of focus. Supervisory attention will also remain on unlicensed trust services (including fragmented trust services).
In 2025, the supervision of cryptocurrency service providers will largely be transferred to the AFM. DNB will remain responsible under MiCAR for prudential supervision of cryptocurrency service providers and the assessment of holders of qualified stakes in these providers. Supervision of compliance with the Wwft (Anti-Money Laundering Act) and the Sanctions Act 1977 will be transferred to the AFM, except for banks and electronic money institutions that offer cryptocurrency services. Furthermore, DNB will be responsible for granting licenses to stablecoin issuers.
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