The Dutch banks have such a large share of the market held together, it is not necessary for them to compete sharply on mortgage rates. This allows them to maintain high profit margins on mortgages, says regulator De Nederlandsche Bank (DNB)
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The Dutch banking sector, according to DNB strongly dominated by the three major banks. While in the sixties of the last century a multitude of smaller, more specialized banks were active in the Netherlands, which in the eighties and nineties clumped into three major banks now: ING, Rabobank and ABN Amro
Risks
The fact that the banking industry in the Netherlands is so highly concentrated, and so large relative to the size of the economy, provides for great risks for the stability of the financial system, and reduces the competition between the major banks. Also limits the entry of new players and it can lead to less efficient services to customers, says DNB.
Cheap money
According to DNB, the relatively large size of the sector in the Netherlands partly due to market-distorting factors such as the mortgage interest deduction and the high maximum loan to values which allow banks here. Additionally enjoyed the systemic banks implicit state guarantees which they could attract to cheap money in the capital market.
Less competition
The market share of the big banks lead as the DNB to lower competition and less efficiency in service delivery . “I’m not saying there is no competition, but little. In fact, it is an oligopoly. There is no competition to provide competitive rates. That happens only temporarily as of one of the parties the market suddenly under pressure. Then you see lower interest rates. Until that happens, they do not help their margins. This, you see that the margins on mortgages in the Netherlands internationally very high, “says Jan Sijbrand, director supervision at DNB
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