Supervisor Authority for Consumer Market comes to the conclusion that Dutch banks are not enough to compete with each other and argues that small businesses pay the price for that.
Entrepreneurs pay small businesses for their funding too much on their banks. Or vice versa: banks earn too much on loans to their customers from the SME sector. Tuesday published Supervisory Authority for Consumers and Markets (ACM) a report on competition in the markets for SME finance. That is unsatisfactory necessary over, apparently. Competition in the market for financing to SMEs by banks is not optimal and in recent years has decreased enables ACM. “This market is only a limited number of banks operating, the market has high entry barriers and little competitive pressure from shoppende SMBs or alternative financing arrangements.”
Dysfunctional market
That it SMEs in the corner from where the blows fall and banks that distribute widely, is a topic that Follow The Money several years brought to the attention. So we published numerous articles on the issue of interest rate derivatives in SMEs and entrepreneurs treatment befall special management in the departments. In the voluminous article The banks shift their risks on small clients , we unraveled also the lack of transparency in banks’ business to the detriment of smaller operators.
That the Dutch banking market is not good operates, 2014 was also the conclusion of a study by the (troubled) KPMG.
A few weeks ago, also pleaded De Nederlandsche Bank (DNB) for more competition the Dutch banking country
A few weeks ago, also pleaded De Nederlandsche Bank (DNB) for more competition in the Dutch banking country. FTM then noted that the political little to do nothing to change this situation.
“Always fun to see that politics and the state government have examined something and then confirm what every boerenlul so already knew ‘ FTM showed a reader know that.
What not every boerenlul necessarily know is that the financing of the Dutch SMEs for more than 85 percent by ABN Amro, Rabobank and ING is provided. There lies the core problem. The fact that the barriers to entry are too high ensures that state little or nothing changes. An important consequence is that banks their benefit and are able to charge customers higher prices in order to northward push their own profit margins.
Profit margins
Increasing profit margins of banks therefore a very important indicator of the situation on the Dutch market for SME financing. ACM investigated the expectations that banks had on their profit margins on their business financing and noted that the anticipated profit margins have risen in the period January 2007 to September 2014.
Source: ACM report
An important point, because banks deny that. Most prominent is ING board member Wilfred Nagel that in one of his responses under this Article Follow The Money. “The margins are mostly lower than most other countries, ‘says Nagel,” while losses at least as high, and compared to many countries, are higher. “
The lobbying group for banks, the Dutch Association Banks (NVB), it is not entirely agree with the conclusion of the regulator: “The finding that the” expected profit “from banks has increased over the last two years does not prove that there is real profit made and thus the competition is reduced.
‘Tacit coordination
It is also striking that the ACM claims that there is a risk of “tacit coordination” between the banks to greater bank profits can lead. Undesirable behavior of this kind is difficult to document and address via legal channels. As long as journalists ACM nor the bankers were able to catch, the supervisor shall, therefore, but the proposal that banks make their pricing more transparent. “That’s clearly an increase in the base rate for SMEs and the outside world is a pass-through of cost or an increase in the margin,” says ACM.
See the very ACM accessible infographic on its own report by clicking on the image below
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