Competition in the SME loan market

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Side view of meeting

On 30 June, the Netherlands Authority for Consumers & Markets (Autoriteit Consument en Markt, ACM) published a report entitled Concurrentie op de markt voor MKB-financiering (‘competition in the SME loan market’). In its report, the ACM presents a series of findings about the competitive environment in that market.

Taking Finance Further

ABN AMRO welcomes competition, and offers clients the possibility to compare and choose: not only between separate providers of bank loans, but also between the various forms of financing. Eighteen months ago ABN AMRO launched the Taking Finance Further (Verder met Financieren) website for this precise purpose. The information presented there is particularly useful for small SMEs seeking to improve their borrowing options.

SME market

The market for SME loans in the Netherlands is a complicated one. Profits were under considerable pressure for several years, and several major players abandoned this market as a result. ABN AMRO is very much committed to the SME market, however, and this tradition, going back many years, has given the bank an extensive understanding and expertise in the area of financing SMEs. The bank’s balance sheet is also sufficiently healthy to meet the demand for loans. The available capacity is not restricted in any way.

The demand for loans experienced a substantial downturn during the recession years. In recent quarters, however, it has been recovering very gradually. The proportion of applications leading to loan agreements has changed very little since ABN AMRO was given shape in its new form in 2010.

Little risk of tacit coordination

According to the ACM report, the risk exists that the three largest banks have been tacitly coordinating their market behaviour. ABN AMRO emphatically denies that the bank is involved in any tacit coordination. The bank also considers the risk of this happening to be very minor. The available information about market shares does not offer sufficient grounds for drawing conclusions about how individual offered rates relate to each other.

Transparency about interest rates

ABN AMRO shares the ACM’s view that transparency is important. The bank’s website shows the rates that are the same for all clients: the basic interest rate, for example. In addition to these rates, every interest rate composition includes an individual risk mark-up that is linked to the client’s risk profile. Being customised to the specific client, these mark-ups vary by definition.

Profit margin and interest rate margin

Lastly, the ACM’s finding about ‘projected profit margins’ needs to be seen in the correct perspective. While it is true that interest margins have improved in recent years, improved interest margins do not automatically translate into better profit margins. The interest margin is simply the difference between the prices of borrowings and lendings, before deduction of other costs such as allowances and additional costs resulting from legislative and regulatory requirements.

For more information, facts and figures about loans to SMEs, visit


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