Netherlands: Putting its housing market in order Raymond Van der Putten The Netherlands is undergoing a period of very weak economic conditions. In Q3 2012, the economy fell into recession for the second time in three years. In T1 2013, GDP was almost 4% below its peak of Q3 2008. As a result, labour-market conditions have deteriorated rapidly. In May, the unemployment rate (ILO definition) reached 6.6%. Although this compares well with the European average (12.1%), it is relatively high by Dutch standards. As of the end of 2008, for example, only 2.8% of the Dutch workforce was unemployed. The languishing economy can be partly attributed to the knock-on effects of the decline in house prices on the real economy, notably the negative wealth effects and the fall in confidence. Since Q4 2011, consumer confidence has been at historically low levels. In May 2013, house prices fell 7.1% from a year earlier. The average house price was 19% below its peak of August 2008. In real terms, the decline was 26%. According to government think-tank CPB, a decline of 10% in nominal house prices is likely to result in a 1.6% fall in consumption over four years and a 2.6% fall over eight years. Between 2008 and 2012, consumption declined by about 4%, almost half of it stemming from the slide in house prices. In this report, we explore the origins of the property crisis, its effect on households and the financial sector, and government policy to redress the imbalances in the short and medium term. The origins of the slump The current Dutch housing-market slump follows a long period of very rapid growth in property prices. Between 1985 and 2007, house prices rose by a cumulative 228%, while consumer prices increased only 56% (Chart 1). This boom can be partly attributed to the poor functioning of the supply side. During this period,
July-August 2013
housing demand grew rapidly due to demographic developments, such as population growth and a reduction in the size of households. The average size of the Dutch household fell from 2.39 people in 1995 to 2.24 people in 2010. However, during the same period, the housing stock grew by only 0.9%, not only due to lack of suitable building plots, but also a lack of qualified construction workers. Dutch house prices were booming up to 2008
120
2005=100
100 80 60
Real house prices
40 20
House prices 0 1980 1984 1988 1992 1996 2000 2004 2008 2012
Chart 1
Sources: OECD, Statistics Netherlands
Dutch demand for houses was also boosted by government policy. Traditionally, the Dutch government has pursued a policy of promoting home ownership, among other things, via the favourable tax treatment of main residences (Box). During the boom, the authorities took some modest measures to limit the fiscal advantages of mortgage borrowing. The interest payments on second mortgages, for example, were only tax deductible if the loan was used for home improvements. Moreover, if a homeowner sold his/her property to purchase another home, he/she was supposed to reinvest the capital gains from the sale in his/her new home. However, fearing severe electoral losses, no government or mainstream political party ever dared to suggest phasing out the system.
Conjoncture
9
Mortgages by type (%) Box: Tax treatment of mortgage interest payments
In the Netherlands, the tax treatment of one’s main residence is exceptionally generous. Homeowners can deduct the full amount of their mortgage interest on their main residence from their taxable income over 30 years, with some minor exceptions. However, they have to add to their taxable income the imputed income from their home (eigenwoningforfait). The imputed rental value of a property worth, say, EUR 400,000 is EUR 2,400 per year. In general, homeowners take out mortgages on which they repay the principal, or part of it, after 30 years. This explains why Dutch household debt is among the highest in the OECD (Chart 4). In 2011, the tax deduction amounted to EUR 33 bn, resulting in a tax revenue loss to the public coffers of EUR 14 bn (or 2.3% of GDP). Any capital gains on the primary residency are tax free. Source: BNP Paribas Dutch price-to-income ratio still fairly high (%)
200
Long-term average = 100 Spain
160 Netherlands 120 80 UK
US
40 0 1995 1997 1999 2001 2003 2005 2007 2009 2011 Chart 2
Source: OECD
Demand was further stimulated by the sophistication of the mortgage market. According to the IMF, the Dutch mortgage market is the most comprehensive market in Europe, offering a wide range of financial instruments, many geared towards fiscal optimisation. 1 Traditional mortgages, such as annuities and flat-rate repayments, have lost ground to mortgages that do not require any repayment of principal for at least 30 years (endowment, savings-based and investment mortgages, Table). Increasingly, certain mortgages do not even require to subscribe to a savings scheme that will repay the principal at the end of the mortgage term (interest-only mortgages). Access to these products was facilitated by the decline in mortgage interest rates from 7.12% in 1995 to 4.82% in 2007.
July-August 2013
Type of mortgage Flat-rate repayment Annuity Interest-only Endowment Savings-based Investment Other
1990-1995
2006
2009
4 10 26 11 39 8 2
3 8 44 11 23 9 2
1 6 51 8 24 8 1
100 100 100 Source: Government of the Netherlands
Table
Moreover, the highly regulated rental sector has not been functioning well. Strict rent protection frightened off institutional investors. Only 25% of Dutch rental accommodation is private. The rest is social housing, mostly owned by housing associations. Access to social housing is difficult. As means tests are only carried out at the start of a lease, it is estimated that about 15% of Dutch social housing is occupied by high earners. This limited access to social housing and continued rise in house prices encouraged low-income earners to get a foot on the property ladder. Banks were quite willing to lend to this group, even at very high loan-tovalue (LTV) ratios; with the market booming, they assumed that the collateral would soon exceed the value of the loan. The average LTV ratio was 114 in 2007. Another important factor was the good performance of the Dutch economy. Between 1995 and 2007, GDP grew 2.8% per annum, while the unemployment rate declined from 7% to 3.6%. This exceptional economic performance was driven in part by the housing boom, as potential capital gains on houses prompted homeowners to step up consumption. These developments were not restricted to the Netherlands, though. The decline in interest rates and easier lending conditions also boosted mortgage lending and home prices in other OECD countries, such as the US, UK and Spain (Chart 2). At the peak of the market in 2008, the price-to-income ratio in the Netherlands was almost 50% higher than its long-term average. The turning point Market sentiment changed over the course of 2007, triggered by the subprime mortgage problems in the US. Dutch banks also started to question lending standards. Before 2007, banks had substantial leeway in their lending to households. In 2007, mortgage lending
Conjoncture
10
became more restrictive, as the banks signed up to a voluntary code of conduct. Depending on the level of interest rates, the loan-to-income ratio varied from three times annual gross income for low earners to five and a half times annual income for those earning more than EUR 100,000. However, income checks on households were weak. Banks, for example, were allowed to include in their assessment future income gains in a so-called “explanatory clause”. In 2007, the Dutch Authority for the Financial Markets (AFM) examined 408 mortgage loan dossiers. About a quarter of the contracts examined were deemed non-compliant with the lending code of conduct by way of the “explanatory clause”. In the case of first-time buyers, it was a third. In further research, the AFM concluded that the “explanatory clause” was misused in almost 65% of cases. The code was, therefore, tightened in 2011. The income criteria were made binding. Consumer housing costs were limited to around 30% of income and the mortgage could not be higher than 104% of the value of the property plus stamp duty (the latter was cut to 2% in July 2011). Interest-only mortgages were only allowed on 50% of the market value of the property. These measures were intended to reduce risk taking by both banks and households. At the same time, they also raised housing costs for first-time buyers and limited their access to the housing market. Slump in transactions weighing on prices 120
220
110
190
100
160
House prices (2005 = 100)
130
90 Transactions (annual rate, '000)
80
100
2005 2006 2007 2008 2009 2010 2011 2012 2013 Chart 3
Source: Statistics Netherlands
In addition, potential buyers may have been deterred by uncertainty, as reports of a possible downward correction of house prices started to appear. In April 2008, the IMF warned that 30% of the price increase between 1997 and 2007 could not be explained by fundamental factors, making the Netherlands one of the countries with the highest risk of price declines. July-August 2013
Home sales dropped sharply in mid-2008 and prices soon followed suit (Chart 3). By mid-2009, house prices had stabilised in nominal terms, thanks to looser monetary conditions and lower interest rates. From the middle of 2010, house prices started to drift down again, though, partly due to the deteriorating economic climate and the rising government deficit. In particular, existing and potential homeowners feared the government would do away with the favourable fiscal treatment of owneroccupied property. The decline was accelerated by the adoption of the stricter code of conduct by mortgage lenders in 2011. A weakening of the household balance sheet High net wealth % disp posable income,, 2011 or earlier U US GER JPN P U UK FR RA NLD L -500
Financial assets
Liabilities
-250
0
Chart 4
250
500
Non-financial assets
750
1000
1250
1500
Sources: OECD, Statistics Netherlands
The housing boom and its subsequent unwinding have been accompanied by a substantial increase in household debt. Between 1995 and 2013, Dutch mortgage debt has doubled to 108% of GDP. At 266% of gross disposable income, Dutch household indebtedness is among the highest in the OECD (Chart 4). It is generally seen as the Achilles' heel of the Dutch economy. However, the situation is less dramatic than the gross debt data might suggest. First, Dutch households tend to have substantial financial and nonfinancial assets. The non-financial assets are mainly housing stock and land, some used as collateral for mortgage loans. Even though the value of these assets has declined in recent years, they are still worth about twice as much as the Netherlands’ household debt. The other major components of Dutch household assets are pension and insurance reserves and longterm savings. In addition to a general public pay-as-yougo pension system, the Netherlands has a funded occupational system, which covers almost all employees. Despite benefit cuts in recent years, the Conjoncture
11
system is still pretty generous. The gross replacement rate of the mandatory public and private schemes is close to 100%, one of the highest in the OECD.2 This means that home ownership is not considered a retirement investment. In addition, many Dutch households have substantial long-term savings. These include endowment or savings plans to pay off the mortgage loans after 30 years. In total, household net assets amounted to 825% of gross disposable income in 2011, one of the highest ratios in the OECD. This does not mean that there are no problems, but they are restricted to certain groups. In particular, homeowners that acquired their mortgage at the top of the market are in severe difficulty. These are mainly young households. However, these earners have a long period of earning ahead of them and should not have a problem as long as they keep up their payments. Delinquencies have remained remarkably low
Delinquencies have been remarkably low (2011) Payment arrears for mortgages or rent pulation 12 % of total pop 10 8 6 4 2 0 GER
NLD
SP
UK
IT
FR
IRE
Source: Eurostat
Chart 5
Non-performing loans remain low
4
% of gross loans
3 2
The decline in house prices has increased the risk on mortgage loans for the Netherlands’ banks. It is estimated that 25% of mortgages are ‘under water’, meaning that in the case of foreclosure, a bank may not get fully repaid. Even though loan delinquencies are rising as a result of the adverse economic conditions, however, they have been relatively low compared with other countries (Charts 5 and 6). According to the Bureau for Credit Registration (BKR), mortgages in arrears for more than 120 days increased to 82,000 in April 2013 from 30,000 in 2007, to 1.6% of all homeowners. The low level of delinquencies is down to several factors. First, many homeowners whose mortgages are under water have sufficient savings to repay at least part of the debt. Second, unlike the US, the mortgage lender has full recourse to the borrower. If the property is sold for less than the total outstanding mortgage loan, the mortgage holder is responsible for the repayment of the residual debt. As Dutch personal insolvency law is quite onerous, it is in the interest of mortgage holders to avoid getting themselves into such a situation. Statistics Netherlands reports that the number of personal insolvencies declined in 2012. This does not mean payment difficulties have eased. The statistics office attributes the decline to efforts by local authorities and banks to help mortgage holders find a way out of the debt spiral. Third, even though unemployment is rising, many households have multiple earners. And
July-August 2013
1 0 2008
2009
Chart 6
2010
2011
2012
2013
Source: DNB
fourth, there is no easy alternative for homeowners, as there is a shortage of rental accommodation, particularly for people earning more than the maximum income allowable for social housing (EUR 34,000 annually in 2013). The Fitch ratings agency reports that the performance of Dutch banks’ mortgage books, although deteriorating, remains quite solid.3 Rabobank, the Dutch market leader, said only 0.6% of its mortgages were in arrears of more than 90 days in 2012. For the other major banks, ABN Amro and ING, this percentage was higher, at 1% and 0.7%, respectively. According to Fitch, the Dutch mortgage market is still among the best performing markets in terms of mortgage delinquencies.4 The risk for the banks is limited by the Netherlands’ national mortgage guarantee (NHG). In 2011 and 2012, about 80% of first-time buyers had an NHG-guaranteed mortgage. The share of guaranteed mortgages has increased considerably since eligibility for the guarantee was increased to EUR 350,000 in September 2009. To obtain the guarantee, the borrower pays a one-off fee; in 2013, this was set at 0.85% of the loan. In exchange,
Conjoncture
12
he/she will obtain a discount on the interest rate on the mortgage of 30-60bp. Claims on the NHG have increased in recent years. In 2012, the number of claims accepted was 3,166, up from 1,802 in 2011. Almost 50% of forced sales are related to divorce. Unemployment accounts for 20% of cases, which is relatively low considering the deterioration of the labour market. However, as mentioned, mortgage providers tend to try to avoid invoking the guarantee by changing the conditions of the mortgage to facilitate payment. This has been made easier by the decline in interest rates. The average amount per claim is fairly limited, at only EUR 34,735 in 2012. A further increase in the number of claims is expected in 2013, but the guarantee fund should remain at about the same level (EUR 786mn as of end 2012) thanks to an increase in the one-off fee paid by mortgage holders. As the NHG is backed by the Dutch state, the home ownership guarantee fund (WEW) that guarantees the loans is AAA rated. Interest rates have remained relatively high Over the past two years, interest rates have fallen considerably in the OECD. Between April 2010 and April 2013, the interest rate on the benchmark 10-year Dutch State Loan declined by 170bp to just 1.6%. This was not fully reflected in Dutch mortgage rates, though, which only fell by 30bp over the same period. In addition, ECB data show that Dutch mortgage rates have remained relatively high compared with those in other core countries (Germany and France) (Chart 7). From early 2011 to April 2013, the gap to those countries had widened to about 60bp. This effect of this gap on house prices is not negligible. The IMF estimates that an increase in Dutch interest rates of 100bp results in a fall in house prices of 5%.5 The disparity has attracted the attention of the authorities and has resulted in an investigation by the Dutch competition authority (ACM). Three interconnected explanations for the differential have been proposed: the high loan-to-deposit ratio (LTD), the lack of competition in the Dutch mortgage market and capacity restrictions. The Dutch central bank (DNB) has voiced its concern about the relatively high loan-to-deposit (LTD) ratio in the Netherlands. At the end of 2012, it had reached 1.83, the highest in the eurozone after Ireland. The main reason for the lofty LTD ratio is the high level of mortgage lending. Bank mortgage lending corresponds to around 90% of Dutch GDP, which is July-August 2013
Dutch mortgage rates remain relatively high
7
% Spain
6 Netherlands s
5 4
Germany France
3 2 2003
2005
Chart 7
2007
2009
2011
2013 Source: ECB
about twice the European average. The level of Dutch savings deposits, in contrast, is similar to that of neighbouring countries, at around 60% of GDP. 6 As a result, Dutch banks finance a much greater share of their loans on the international financial markets, either through bonds or securitisation. However, due to maturity mismatches, banks are exposed to a refinancing risk. Interest rates could rise rapidly if the market perceived the banks to be running into trouble. This is a risk for the Dutch state as ultimate guarantor of the financial system. In the past, the government has nationalised ABN Amro, DSB and, most recently, SNS Reaal, and provided support to other financial institutions, such as ING. Research by government think-tank CPB into the financing costs of Dutch banks does not show them to be exceptionally high. 7 It concludes that the financing costs through bonds and securitisation are no higher than in surrounding countries. By contrast, the remuneration on deposits is higher than in some neighbouring countries, although comparable with those in Denmark, France and the UK. Another possibility is the lack of competition on the Dutch mortgage market. The market share of the three largest banks (Rabobank, ING Bank and ABN Amro) is around 70%. However, there are few indications that banks have abused their market position, or that competition has been lacking. Before the economic crisis, competition was fierce, due to the presence of several predatory lenders. It is not clear that their presence was beneficial to the market, though. Due to a lack of supervision, the default rates on mortgages of those predatory lenders are now exceptionally high. Moreover, with hindsight, one might conclude that the interest rates those lenders were offering were not sufficient to compensate banks for the liquidity risk involved. Conjoncture
13
In the aftermath of the financial crisis in 2008, the European Commission limited competition on the Dutch market by decreeing that banks that had received government aid could not offer their products below the price of other banks. This so-called price-leadership prohibition affected ABN Amro, AEGON, ING and SNS Reaal. The ban was lifted in June 2011 for AEGON and in November 2012 for ING. Market concentration may be not the best indicator of the degree of competition. A better one, we believe, is the ease at which other parties can enter the Dutch housing market. Barriers to entry are relatively low. As almost 50% of mortgage contracts are concluded by mortgage brokers, new entrants do not need to invest in an expensive network of branches. Moreover, thanks to the NHG, these new lenders are able to limit their risk. Between 1996 and 2006, at least seven new mortgage providers entered the Dutch market. In recent years, conditions in the financial markets have changed. Due to new financial regulations (Basel III and Solvency II), foreign banks have limited their operations in the Netherlands and domestic banks have started to strengthen their balance sheets by selling assets and restricting lending. Between 2008 and 2012, the Dutch banks reduced their balance by 17%. 8 Mortgage lending has been halved from EUR 2.77bn per month before the crisis to EUR 1.26bn, although this also stems in part from a sharp fall in demand. Banks have also reduced their mortgage lending in a bid to cut their LTD ratios and have become less dependent on the international financial markets. These capacity restrictions may also have prompted banks to improve margins and limit demand for new mortgages. The DNB’s latest Stability Report confirms the improvement of financial buffers. In 2012, the Dutch banks’ core Tier 1 ratio improved to 10.2% from 9.5%, while the unweighted capital ratio improved to 4%.9 The Dutch competition authority (ACM) attributes the increase in margins primarily to capacity restrictions by mortgage lenders and the difficulties for new mortgage lenders to enter the Dutch market, because of higher financing costs due to new international financial regulations. The lack of competition is a major concern for the authorities. In 2013, the ACM will investigate how the functioning of the financial market can be improved.
mortgage lending following the credit crisis. To support mortgage lending, the authorities decided in September 2009 to raise the maximum mortgage guarantee temporarily from EUR 265,000 to EUR to 350,000. It was subsequently lowered to EUR 320,000 in July 2012, and from July 2013, will be lowered again to EUR 290,000. In addition, transactions costs were cut by the lowering of stamp duty from 6% to 2% in June 2011, initially for a year. The measure was made permanent in 2012. These measures had only a limited effect, as uncertainty about the future of mortgage tax relief dented confidence. Because of the deterioration of public finances, many homeowners feared a change in the rules. Moreover, the authorities had become more concerned about the high level of household indebtedness. The broad coalition of conservative liberals and Labour, the so-called Purple coalition, which came to power after the September 2013 election, decided on only one minor change for existing mortgage holders. The maximum rate of mortgage tax relief would be lowered from 52% to 38% over a period of 28 years. Initially, this will only affect homeowners with an annual taxable income of more than EUR 55,991. In the end, the measures to reduce the indebtedness of the household sector were restricted to first-time buyers. Since August 2011, only 50% of a mortgage can be an interest-only mortgage. Since 1st January 2013, to be eligible for mortgage interest relief, the mortgage must be amortised over 30 years. A first-time buyer may take out an interest-only mortgage on 50% of the value of the property, but the interest on this loan is not tax deductible. Moreover, the maximum LTV will be reduced gradually from 105% (including 2% stamp duty) in 2013 to 100% by 2018. The announcement of the measures boosted the number of housing transactions in Q4 2012, as many first-time buyers wanted to profit from the more advantageous fiscal treatment of the old system.
The government’s response The government has blamed the decline in house prices in part on the reluctance of banks to increase July-August 2013
Conjoncture
14
The road ahead The Dutch housing market is in the doldrums. House prices are about 19% lower than their peak reached in 2008, and 25% of mortgages are under water. This has made household reluctant to spend and some have started to bring the mortgage debt more in line with the value of their property. Nevertheless, non-mandatory household savings – i.e. savings excluding mandatory pension contributions – have actually declined and are even in negative territory. It is a typical example of the Keynesian savings paradox that says that total savings may fall in a recession when individuals try to save more because of its negative effect on demand and economic growth. The developments in the housing market might also have adverse effects on the functioning of the labour market. Homeowners with negative equity are reluctant to move as the bank will ask them to repay the debt remaining after the sale of the house within a limited period (maximum ten years). This makes it difficult for homeowners to accept a job in another part of the country. Government policy has been carefully navigating several sometimes conflicting objectives. First, the authorities would like to stabilise the market, which a necessary condition for sustainable recovery. Recently, some incipient signs that prices are close to the bottom have appeared. Over the past four years, housing affordability has improved considerably. The Dutch association of real-estate agents (NVM) calculates that despite the recent measures new homeowners now pay between EUR 100 and EUR 275 less per month than in 2009. Moreover, after 30 years, their mortgage is completely paid off. The main reasons for this improvement are the fall in interest rates (0.7pp), the decline in house prices (6-12% depending on the type of home) and the reduction of stamp duty (from 6% to 2%). Moreover, renting is becoming less attractive for higherincome earners in social housing as the government is intending to raise rents for this group. In addition, for the first time in 13 years, the number of houses for sale has declined significantly. This is partly due to the substantial jump in transactions in Q4 2012, as many first-time buyers wanted to profit from the old mortgage regulations. But most important, homeowners have become more confident that mortgage interest deduction will remain. Against this backdrop, we think house prices could stabilise in nominal terms in the second half of 2013. July-August 2013
The second objective is to reduce household leverage. The measures taken in this area such as lowering the LTV ratio and the restricting mortgage interest deduction only to mortgages amortised over 30 year mainly affect first time buyers. The authorities fear that bolder steps would destabilise the housing market even more. Finally, in order to strengthen the financial sector, the government is investigating how it could further reduce the exposure of Dutch banks to the wholesale capital markets. A study group set up by the housing ministry is exploring how institutional investors could be more involved in mortgage lending. It has suggested that pension funds be encouraged to invest more in mortgage-backed securities, or NHOs (national mortgage obligations), and that the government should guarantee these securities. In its latest article IV report, the IMF argues against such measures, saying it would create further distortions in the housing market. It argues that pension funds should be managed independently and do not need additional incentives to invest in the housing sector. 10 Moreover, the government should not take on additional contingent liabilities, it believes. For the IMF, the price adjustment in the housing market should proceed unimpeded. In the same report, the IMF recommends that the Dutch government should consider phasing in further reform measures in this area once the housing market has stabilised such as lowering the maximum LTV and capping the size of mortgage interest deduction in nominal terms and targeting it at lower-income earners. In the coming years, domestic demand is likely to remain lacklustre due to the ongoing deleveraging of the household sector and the government’s fiscal consolidation policy. The government aims at reducing the budget deficit to 3% by 2014 and to reach fiscal balance in the medium term. Even though it has fallen behind on its deficit reduction schedule, the government will be reluctant to propose an additional savings package. Such package could founder because of opposition in the Senate, where the government parties do not have the majority. Moreover, even if house prices were to stabilise in the coming months, households with negative equity are likely to continue to hold back on spending in order to reduce their mortgage debt. Against this backdrop, economic recovery is largely dependent on the external environment. We project the economy to contract in 2013 by 0.9% followed by a modest recovery in 2014 (around 0.5%). This will be insufficient for labour market recovery and Conjoncture
15
unemployment could reach almost 8% of the labour force by end 2014 compared with 6.6% at the moment. We estimate that the risks to our scenario are tilted to the downside. In recent weeks, interest rates have been rising as the Fed has indicated to start tapering off its asset purchases. This could tricker a rise in mortgage interest rates. Moreover, as a result a rising unemployment, payment arrears and personal insolvencies could increase further in the coming years, which might result in further downward pressure on house prices thereby reinforcing the current vicious
cycle of spending cuts and declining economic activity. However, the impact on the financial sector is likely to be limited. According to DNB calculations, the expected loan losses from an additional 20% decline in house price would only have a small impact on the capital ratios of the banking system.11
1stt July 2013
[email protected]
1
Paul Hilbers, Alexander W. Hoffmaister, Angana Banerji and Haiyan Shi, 2008, “House Price Developments in Europe: A Comparison”, IMF Working Paper WP/08/211. 2 OECD, 2011, “Pensions at a Glance”. 3 Fitch, 2013, “Major Dutch Banks’ Exposure to Real-Estate Lending”, 11 April. 4 Fitch, op cit. 5 IMF, World Economic Outlook, April 2008. 6 Most household savings are in the form of contributions to mandatory occupational pension schemes. 7 CPB, 2013, “De Nederlandse woningmarkt – hypotheekrente, huizenprijzen en consumptive”, CPB Notitie, 14 February. 8 This was partly the result of the separation of ABN Amro bank by Fortis, RBS and Santander and the sale of ING Direct in the US, as demanded by the European Commission (Autoriteit Consument & Markt, 2013, “Concurrentie op de hypotheekmarkt”, April). 9 The difference is due to the fact that Dutch banks have a substantial amount of mortgages on their balance sheets, which have a relatively low-risk weighting. 100 IMF, 2013, “Article IV Consultation, The Kingdom of the Netherlands”, Country Report No. 13/115. 11 IMF, op cit.
July-August 2013
Conjoncture
16
ECONOMIC RESEARCH DEPARTMENT Philippe d’ARVISENET Chief Economist
+33.(0)1.43.16.95.58
[email protected]
OECD COUNTRIES Jean-Luc PROUTAT Head
+33.(0)1.58.16.73.32
[email protected]
Alexandra ESTIOT Deputy Head – Globalisation, United States, Canada
+33.(0)1.58.16.81.69
[email protected]
Hélène BAUDCHON France, Belgium, Luxembourg
+33.(0)1.58.16.03.63
[email protected]
Frédérique CERISIER Public finance – European institutions
+33.(0)1.43.16.95.52
[email protected]
Clemente De LUCIA Euro zone, Italy - Monetary issues - Economic modeling
+33.(0)1.42.98.27.62
[email protected]
Thibault MERCIER Spain, Portugal, Greece, Ireland
+33.(0)1.57.43.02.91
[email protected]
Caroline NEWHOUSE Germany, Austria -Supervision of publications
+33.(0)1.43.16.95.50
[email protected]
Catherine STEPHAN United Kingdom, Switzerland, Nordic Countries – Labour market
+33.(0)1.55.77.71.89
[email protected]
Raymond VAN DER PUTTEN Japan, Australia, Netherlands - Environment - Pensions
+33.(0)1.42.98.53.99
[email protected]
Tarik RHARRAB Statistics
+33.(0)1.43.16.95.56
[email protected]
BANKING ECONOMICS Laurent QUIGNON Head
+33.(0)1.42.98.56.54
[email protected]
Julie ENJALBERT
+33.(0)1.43.16.95.41
[email protected]
Ekaterina MOLODOVA
+33.(0)1.43.16.95.54
[email protected]
Laurent NAHMIAS
+33.(0)1.42.98.44.24
[email protected]
François FAURE Head
+33.(0)1 42 98 79 82
[email protected]
Christine PELTIER Deputy Head - Methodology, China, Vietnam
+33.(0)1.42.98.56.27
[email protected]
Stéphane ALBY Africa, French-speaking countries
+33.(0)1.42.98.02.04
[email protected]
Sylvain BELLEFONTAINE Latin America - Methodology, Turkey
+33.(0)1.42.98.26.77
[email protected]
EMERGING ECONOMIES AND COUNTRY RISK
Sara CONFALONIERI Latin America
+33.(0)1.42.98.74.26
[email protected]
Pascal DEVAUX Middle East – Scoring
+33.(0)1.43.16.95.51
[email protected]
Anna DORBEC Russia and other CIS countries
+33.(0)1.42.98.48.45
[email protected]
Hélène DROUOT Asia
+33.(0)1.42.98.33.00
[email protected]
Jean-Loïc GUIEZE Africa, English and Portuguese speaking countries
+33.(0)1.42.98.43.86
[email protected]
Johanna MELKA Asia – Capital Flows
+33.(0)1.58.16.05.84
[email protected]
Alexandre VINCENT Central and Eastern Europe
+33.(0)1.43.16.95.44
[email protected]
Alexandra WENTZINGER Africa
+33 (0)1 55 77 80 60
[email protected]
Michel BERNARDINI Public Relations Officer
+33.(0)1.42.98.05.71
[email protected]
economic-research.bnpparibas.com
OUR PUBLICATIONS
Structural or in the news flow, two issues analysed in depth
EMERGING Analyses and forecasts for a selection of emerging economies
PERSPECTIVES Analyses and forecasts for the main countries, emerging or developed
ECOWEEK Weekly economic news and much more…
The information and opinions contained in this report have been obtained from, or are based on, public sources believed to be reliable, but no representation or warranty, express or implied, is made that such information is accurate, complete or up to date and it should not be relied upon as such. This report does not constitute an offer or solicitation to buy or sell any securities or other investment. Information and opinions contained in the report are published for the assistance of recipients, but are not to be relied upon as authoritative or taken in substitution for the exercise of judgement by any recipient, are subject to change without notice and not intended to provide the sole basis of any evaluation of the instruments discussed herein. Any reference to past performance should not be taken as an indication of future performance. To the fullest extent permitted by law, no BNP Paribas group company accepts any liability whatsoever (including in negligence) for any direct or consequential loss arising from any use of or reliance on material contained in this report. All estimates and opinions included in this report are made as of the date of this report. Unless otherwise indicated in this report there is no intention to update this report. BNP Paribas SA and its affiliates (collectively “BNP Paribas”) may make a market in, or may, as principal or agent, buy or sell securities of any issuer or person mentioned in this report or derivatives thereon. BNP Paribas may have a financial interest in any issuer or person mentioned in this report, including a long or short position in their securities and/or options, futures or other derivative instruments based thereon. Prices, yields and other similar information included in this report are included for information purposes. Numerous factors will affect market pricing and there is no certainty that transactions could be executed at these prices. BNP Paribas, including its officers and employees may serve or have served as an officer, director or in an advisory capacity for any person mentioned in this report. BNP Paribas may, from time to time, solicit, perform or have performed investment banking, underwriting or other services (including acting as adviser, manager, underwriter or lender) within the last 12 months for any person referred to in this report. BNP Paribas may be a party to an agreement with any person relating to the production of this report. BNP Paribas, may to the extent permitted by law, have acted upon or used the information contained herein, or the research or analysis on which it was based, before its publication. BNP Paribas may receive or intend to seek compensation for investment banking services in the next three months from or in relation to any person mentioned in this report. Any person mentioned in this report may have been provided with sections of this report prior to its publication in order to verify its factual accuracy. BNP Paribas is incorporated in France with limited liability. Registered Office 16 Boulevard des Italiens, 75009 Paris. This report was produced by a BNP Paribas group company. This report is for the use of intended recipients and may not be reproduced (in whole or in part) or delivered or transmitted to any other person without the prior written consent of BNP Paribas. By accepting this document you agree to be bound by the foregoing limitations. Certain countries within the European Economic Area:
ECOFLASH Data releases, major economic events. Our detailed views…
ECOTV In this monthly webTV, our economists make sense of economic news
ECOTV WEEK What is the main event this week? The answer is in your two minutes of economy
To receive our publications, please subscribe on our website. You can read and watch our analyses on EcoNews, our iPad and Android application.
This report is solely prepared for professional clients. It is not intended for retail clients and should not be passed on to any such persons. This report has been approved for publication in the United Kingdom by BNP Paribas London Branch. BNP Paribas London Branch is authorised and supervised by the Autorité de Contrôle Prudentiel and authorised and subject to limited regulation by the Financial Services Authority. Details of the extent of our authorisation and regulation by the Financial Services Authority are available from us on request. This report has been approved for publication in France by BNP Paribas SA, incorporated in France with Limited Liability and is authorised by the Autorité de Contrôle Prudentiel (ACP) and regulated by the Autorité des Marchés Financiers (AMF) whose head office is 16, boulevard des Italiens 75009 Paris, France. This report is being distributed in Germany either by BNP Paribas London Branch or by BNP Paribas Niederlassung Frankfurt am Main, a branch of BNP Paribas S.A. whose head office is in Paris, France. BNP Paribas S.A. – Niederlassung Frankfurt am Main, Europa Allee 12, 60327 Frankfurt is authorised and supervised by the Autorité de Contrôle Prudentiel and it is authorised and subject to limited regulation by the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). United States: This report is being distributed to US persons by BNP Paribas Securities Corp., or by a subsidiary or affiliate of BNP Paribas that is not registered as a US broker-dealer to US major institutional investors only.BNP Paribas Securities Corp., a subsidiary of BNP Paribas, is a broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the Financial Industry Regulatory Authority and other principal exchanges. BNP Paribas Securities Corp. accepts responsibility for the content of a report prepared by another non-U.S. affiliate only when distributed to U.S. persons by BNP Paribas Securities Corp. Japan: This report is being distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited or by a subsidiary or affiliate of BNP Paribas not registered as a financial instruments firm in Japan, to certain financial institutions defined by article 17-3, item 1 of the Financial Instruments and Exchange Law Enforcement Order. BNP Paribas Securities (Japan) Limited is a financial instruments firm registered according to the Financial Instruments and Exchange Law of Japan and a member of the Japan Securities Dealers Association and the Financial Futures Association of Japan. BNP Paribas Securities (Japan) Limited accepts responsibility for the content of a report prepared by another non-Japan affiliate only when distributed to Japanese based firms by BNP Paribas Securities (Japan) Limited. Some of the foreign securities stated on this report are not disclosed according to the Financial Instruments and Exchange Law of Japan. Hong Kong: This report is being distributed in Hong Kong by BNP Paribas Hong Kong Branch, a branch of BNP Paribas whose head office is in Paris, France. BNP Paribas Hong Kong Branch is registered as a Licensed Bank under the Banking Ordinance and regulated by the Hong Kong Monetary Authority. BNP Paribas Hong Kong Branch is also a Registered Institution regulated by the Securities and Futures Commission for the conduct of Regulated Activity Types 1, 4 and 6 under the Securities and Futures Ordinance. Some or all the information reported in this document may already have been published on https://globalmarkets.bnpparibas.com © BNP Paribas (2013). All rights reserved. Prepared by Economic Research – BNP PARIBAS
http://economic-research.bnpparibas.com
Registered Office: 16 boulevard des Italiens – 75009 PARIS Tél : +33 (0) 1.42.98.12.34 – Internet : www.bnpparibas.com Publisher: Baudouin Prot Printed in France by: Ateliers J. Hiver SA – July-August 2013 ISSN 0224-3288 – Copyright BNP Paribas
economic-research.bnpparibas.com
