On 5 July 2016, the Independent Derivatives Committee (Onafhankelijke Derivatencommissie, ‘Committee’) published a Uniform Recovery Framework for reassessing interest rate derivatives for SMEs. In the months since, the Committee, the Netherlands Authority for the Financial Markets (AFM), the banks and the external file reviewers have worked together to monitor how the Recovery Framework works in practice. The Committee has now added the findings to the Recovery Framework, which it finalised on 19 December 2016.
9,000 interest rate derivatives
ABN AMRO can now set up its own client reassessment process and the related checks and balances. Once this is in place, starting in the first quarter of 2017 we can begin our reassessments of around 6,800 clients with some 9,000 interest rate derivatives. ABN AMRO hopes to propose a solution under the Recovery Framework for each of these clients next year. At various points in the process the reassessments will be checked by an independent external file reviewer – in ABN AMRO’s case, audit firm PwC.
Last year, under the AFM’s supervision, ABN AMRO performed a reassessment of its SME interest rate derivative files. On 4 December 2015, as the reassessment was nearing completion, the AFM announced that it considered the reassessment processes at the various banks to be insufficient. Early in 2016 the Dutch Minister of Finance set up a committee of independent experts and tasked them with defining a Uniform Recovery Framework. The Committee presented its proposed Recovery Framework on 5 July 2016. ABN AMRO has expressed its commitment to this Recovery Framework.