Why the Dutch Hate Bankers
Why the Dutch Hate Bankers
(Bloomberg Businessweek) -- The Netherlands is the cradle of capitalism—the home of the world’s first stock market and the dominant global financial center in the 17th and 18th centuries. Its banking sector was the first to introduce innovations such as international trade finance and underwriting of bonds issued by foreign governments. And its banks today are among the European Union’s safest, most profitable, and most digitally savvy. So why do the Dutch hate bankers so much?
A 2018 survey by researcher NIM found that Dutch people have Europe’s highest level of trust in lawyers, doctors, and other professionals, but they’re tied for second-lowest in their feelings toward bankers. The Netherlands is a hotbed of measured moderation—it lacks France’s fierce unions, Britain’s sensationalist tabloids, and Italy’s string of failed governments—but Dutch bankers face Europe’s toughest restrictions on pay, profits, and practices. When ING Groep NV, the country’s largest lender, approached Germany’s Commerzbank AG about a possible takeover this spring, it offered to move its headquarters to Frankfurt as part of the deal, according to local media reports. “The Netherlands is an egalitarian country with relatively small income inequalities,” says Jeroen Dijsselbloem, a former finance minister. “The culture in the financial sector, which overvalues its own achievements, doesn’t really fit into that.”
As global financial institutions plot their escape from post-Brexit London, few are shifting significant operations to the Netherlands. Japanese bank Norinchukin will place its European office in Amsterdam, and New York-based trading firm Jane Street Group LLC will support its regional operations from there, but most top jobs that have moved have ended up in Dublin or Frankfurt. The country could have been an attractive destination for banks leaving London if not for its tough rules on pay in the financial sector, says Hans de Boer, chairman of the Dutch employers’ federation VNO-NCW. “Brexit offered an immense opportunity that the Netherlands hasn’t seized,” De Boer says.
The animus is relatively recent, and with its historical role in finance, the Netherlands was long a comfortable place for bankers. In 2007, after aggressive lending at home and abroad, banks’ assets represented more than five times gross domestic product, one of the highest ratios in Europe. But the expansion backfired, and during the financial crisis, three of the four biggest lenders, weighed down by plump real estate portfolios and risky foreign adventures, had to be rescued by the state. “Bankers’ prestige was higher in the Netherlands before the crisis, but the fall was farther than anywhere else, too,” says Arnoud Boot, finance professor at the University of Amsterdam and chairman of an advisory committee at the Dutch central bank.
Public rage boiled over as Dutch purchasing power plummeted. From 2014 to 2018, a theater group called The Seducers sold out venues with a play drawn from “true stories of the banking sector” featuring megalomaniacal executives chortling as they plot ways to pump up their loan books. ING Chief Executive Officer Ralph Hamers is a frequent target of politicians, newspaper columnists, and financial activists (one of whom is seeking to have Hamers jailed for his alleged role in the bank’s money laundering issues, an accusation ING roundly rejects). Sjoerd van Keulen, once the country’s “CEO of the Year” as boss of SNS Reaal—a bank that was bailed out—saw his contact details published online in 2013. A talk show host urged people to call or write demanding that Van Keulen give back a €1 million ($1.1 million) bonus granted before the crisis. No “scary threats,” the host added, but to little avail. Van Keulen fled the country after the Telegraaf newspaper published an aerial photo of his sprawling mansion on its front page.
The crisis sparked a host of regulations such as capital requirements 25% higher than the European average. Dutch banks face a special tax to cover the costs of their bailouts, whereas France and Germany scrapped similar levies after Brussels set up an EU-wide fund for the same purpose. They can’t deduct the full amount of interest costs from taxes, as banks in most other countries can. New rules allow companies to claw back bonuses if performance suffers. And bankers must sign an oath that they’ll always put customers’ interests first, won’t abuse confidential information, and will acknowledge their “responsibility to society.”
The biggest battleground is pay. Bonuses in the Netherlands can’t exceed 20% of fixed compensation, whereas elsewhere in the EU they can equal a worker’s base salary. In the face of public pressure, ING and ABN Amro Group NV have in recent years withdrawn proposed pay increases for their executives. After ING last year announced a pay rise, Prime Minister Mark Rutte criticized the move, calling banks “sort of semipublic institutions” that must show greater accountability than other companies. ING soon backed off the idea.
The banks have responded by dispatching top managers to schools to explain the importance of finance, and they’ve stopped hiring aggressive outsiders to collect on bad loans. They’ve scaled back investment banking units and limited their foreign expansion. And their international loan portfolios have tended to focus on less risky businesses such as cargo trade and agriculture, sectors they’ve historically specialized in. That’s as it should be, says Joost Sneller, a member of parliament from D66, a social-liberal party in the governing coalition. For the Dutch, a good banker is “boring and decent,” Sneller says, “not someone who’s adventurous and pushing limits.”
To contact the editor responsible for this story: David Rocks at drocks1@bloomberg.net
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