NETHERLANDS: An Introduction to Capital Markets: Securitisation
The Dutch Securitisation Sector: Outlook for 2025
In recent years, the Dutch securitisation sector has undergone notable changes, influenced by financial, economic and regulatory factors, amidst evolving European regulations and global turmoil.
Financial and Economic Developments
In 2023, the Dutch residential mortgage securitisation market experienced substantial growth. The Dutch market saw a significant rise in green securitisations, with EUR1.4 billion being allocated for mortgages on energy-efficient homes, a substantial increase from EUR0.5 billion in 2022. Since 2016, the Netherlands has issued EUR4.5 billion in green securitisations, accounting for over half of Europe’s EUR8 billion total for residential mortgages. Green securitisations represented nearly 40% of all issuances in 2023, compared to 19% in 2022.
This surge highlights the Netherlands’ status as a significant player in the European market. Under the relevant EU regulations, such “green” transactions are self-labelled as green by the relevant issuers based on guidelines aligned with international standards, although so far a specific definition of what constitutes “green” remains up for debate. This shift reflects a broader trend towards sustainability in the sector, despite ongoing discussions about the true criteria for green classification.
Despite the increase in green securitisations, there has been a general decline in external securitisations since 2018. This trend is partly due to banks opting for alternative funding sources, such as the ECB’s additional lending facilities and covered bonds, which have offered easier and cheaper financing options.
In addition, in 2023 the issuance of retained residential mortgage securitisations increased to EUR10 billion, from EUR1.5 billion in 2022; however, the total outstanding amount of residential mortgage securitisations (placed and retained) decreased from EUR97 billion in 2022 to EUR85 billion in 2023. The issuance of placed securitisations of other assets (such as consumer credit and car leases) has increased from EUR0.7 billion.
European Legal and Regulatory Developments
In the Netherlands, the legal and regulatory landscape of the securitisation sector is largely dictated by European legislation and regulation. Therefore, the outcome of the currently ongoing review of the EU Securitisation Regulation is likely to also materially affect the Dutch securitisation sector. The focus of this review is to:
- (further) harmonise and simplify disclosure requirements;
- clarify roles and responsibilities of the parties involved; and
- potentially establish a new framework for synthetic securitisations.
Another significant development that will likely affect the Dutch securitisation sector is the introduction of the EU green bond standards and sustainability requirements. These initiatives reflect the EU’s commitment to sustainable finance and its goal of aligning the financial sector with wider climate and sustainability objectives.
Legal and Regulatory Developments in the Netherlands
On a national level, there also are several developments that, while perhaps not primarily and directly aimed at the securitisation sector, will likely have a significant impact on it.
Transfer of receivables
The Netherlands is awaiting the implementation of the EU’s Directive on credit servicers and credit purchasers (EU 2021/2167; the “NPL Directive”). This Directive is aimed at further developing secondary markets for non-performing bank loans, and is likely to have significant implications for the securitisation of such loans. Although the NPL Directive includes measures to remove undue barriers to credit servicing and the transfer of bank loans to non-bank entities (which was its original purpose), the EU legislative negotiations have also led to several formalities being added to the sale and transfer of non-performing bank loans (including certain borrower notification requirements).
The NPL Directive also amends the Mortgage Credit Directive (2014/17/EU) with introduction of the requirement for performing consumer mortgage loans – similar to the existing requirement under the Consumer Credit Directive (2008/48/EU) – to inform the consumer about the transfer of the consumer mortgage loan receivables. Such a notification requirement is at odds with the undisclosed assignment (stille cessie) often used to transfer consumer loan receivables without notification (except in certain default events). However, the notification requirement does not apply if the original lender continues to manage the loan on behalf of the SPV.
Debt collection services
Another relevant legal development is the Act on the Quality of Debt Collection Services (Wet kwaliteit incassodienstverlening). This Act – which came into force on 1 April 2024 with a transitional arrangement for existing debt collection agencies until 1 April 2025 – aims to regulate the debt collection sector, providing better protection to debtors and improving the quality of debt collection services. However, due to very wide definitions, the effective scope of this new Act is much broader than just debt collection agencies, and will generally also include each primary servicer of (securitised) debt portfolios with natural persons as debtors. In short, this new Act requires professional debt collectors to register with the supervisory authority, and to implement an extensive set of (quality) standards and minimum requirements aimed at the (further) protection of debtors. Accordingly, this Act will indirectly influence the securitisation sector, particularly in relation to securitisations involving consumer loans.
Consumer protection and ex officio reviews
In recent years, Dutch courts have increasingly conducted ex officio reviews in consumer cases, particularly concerning consumer credit and mortgage loans. These reviews entail independent court assessments of compliance with European rules on unfair commercial practices, regardless of whether compliance was challenged by the parties. Dutch courts have examined lenders’ fulfilment of precontractual information requirements and the fairness of variable interest clauses. Interestingly, Dutch court decisions on these issues do not always align with the rulings of the Dutch Financial Services Complaint Institute (Kifid), causing market uncertainty. However, as Kifid’s stance on variable interest clauses has been informally endorsed by the Dutch Authority for the Financial Markets (AFM), many lenders have initiated compensation schemes. This heightened focus on fairness and transparency in consumer loans is expected to persist, influencing the securitisation sector’s practices and policies.
The Dutch Securitisation Association
The Dutch Securitisation Association (DSA) advocates for the interests of both issuers and investors in Dutch securitisation transactions. In September 2024, new versions of the DSA RMBS, Consumer ABS and BTL RMBS standards became effective. These updates align the standards with developments under the Securitisation Regulation and other regulatory changes, such as the EU green bond standard. These new standards, and an updated legal and tax framework, are available on the DSA’s website (dutchsecuritisation.nl).
Tokenisation in securitisation
A final interesting development is the increase in popularity of blockchain-based securities. This phenomenon is described as tokenisation and could also impact on the securitisation market. Tokenisation enhances efficiency, transparency and accessibility, presenting a new frontier for the securitisation sector. Depending on the characteristics of the tokens, these could be regulated by the Markets in Crypto-Assets Regulation ((EU) 2023/1114; MiCAR). A practical example of tokenisation is the recent trend of tokenising real estate assets, whereby property can be divided into multiple tokens, each representing a fraction of the property’s value, and with companies issuing tokens representing a fraction of a debt security, such as a corporate bond. As tokenisation continues to gain traction, it could revolutionise the securitisation sector and beyond.
Conclusion
The securitisation sector in the Netherlands continues to evolve in response to various financial, economic, legal and regulatory developments. The implementation of new regulations, the impact of EU initiatives and the introduction of tokenisation are shaping the future of the sector.