Update on review of SME derivatives records

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ABN AMRO last year reviewed 6,000 records of 4,500 clients who had contracted interest rate derivatives in order to establish whether any of the records contained irregularities. We have contacted all of the clients in question and, where necessary, will approach clients pro-actively to offer solutions.

Interest rate derivatives and surcharges

The records show that some of the SME clients with interest rate derivatives were charged a surcharge on their corresponding variable loan during the tenor of the loan. Although the terms of the variable loans clearly specify that this surcharge may be imposed, providing adequate information is important – particularly given the combination of a variable loan and an interest rate derivative.

In cases where clients were inadequately informed about the surcharge in relation to the interest rate derivative, the surcharge will be cancelled on a case-by-case basis. From the outset, this has been one of the points included in the review of the SME interest rate derivatives.

The bank formed a provision in 2015 for these and other solutions to issues concerning SME interest rate derivatives.

Talks with the Netherlands Authority for the Financial Markets (AFM)

The AFM on 4 December announced that some points of the reviews banks are currently conducting would need to be altered. ABN AMRO is currently consulting with the AFM to determine what impact these alterations will have on ABN AMRO’s review process.