Osborne Clarke is contributing editor in the Chambers Banking Regulation 2025 Global Practice Guide

The year 2025 promises to be both exciting and challenging for the global banking industry. While the effects of the COVID-19 pandemic may have subsided, the industry still has to deal with a mix of economic, regulatory, and technological challenges. Political tensions, the return of Trump to the political stage and trade issues between major economies further influence global financial markets and make things even more uncertain. Most banks must navigate the full implementation of Basel III standards by next year, which will increase capital requirements and leverage ratio standards. Additionally, the rise of open banking and advancements in artificial intelligence and blockchain technology will further disrupt traditional banking models.

The Dutch Central Bank (De Nederlandsche Bank, DNB), in its Financial Stability Report 2024, highlights lingering uncertainties in the market, that could lead to financial corrections and heightened risks for financial institutions. Factors such as geopolitical tensions, rising inflation, cyber threats, climate change, and biodiversity loss pose structural risks to financial stability. According to analysis of the DNB, the fragmentation of the global economy and the formation of regional blocs have intensified, with the Netherlands particularly sensitive to these factors.

Despite these risks, the DNB notes that Dutch-licensed banks are well-capitalised and have strong liquidity ratios partly due to higher interest rates. Loan asset quality has also remained stable, despite firms facing higher interest charges. Looking ahead, credit losses may increase. The higher interest rates are still impacting the economy, reducing the repayment capacity and creditworthiness of firms and households. Credit quality is particularly deteriorating for loans secured by commercial real estate, a market under pressure. Banks must revalue collateral and set aside provisions to mitigate these risks. Despite the potential for reduced asset quality and a deteriorating macroeconomic outlook, banks are resilient due to their strong positions.

Opportunities and challenges for Dutch-licensed banks

As we look ahead to the evolving regulatory landscape, Dutch-licensed banks will encounter new challenges and legislative changes. The Digital Operational Resilience Act (DORA) aims to bolster the digital operational resilience of the financial sector and requires banks to implement effective digital risk management practices. Starting this year, the DNB will monitor Dutch-licensed banks’ compliance with DORA’s provisions, focusing on their capacity to manage ICT-related disruptions.

Additionally, the Markets in Crypto-Assets Regulation (MiCAR), another key piece of legislation, impacts the sector. However, unlike banks in some other jurisdictions, Dutch-licensed banks have shown limited interest in offering crypto-asset services. The full impact of MiCAR on Dutch-licensed banks is yet to be seen and will be evident this year with the applicability of MiCAR.

The banking sector also anticipates major regulatory updates with the implementation of the Capital Requirements Regulation 3 (CRR3) and the Capital Requirements Directive 6 (CRD VI), which entered into force on 9 July 2024 and will be applicable in 2025. These updates will introduce significant changes to the regulatory framework, impacting various aspects of banking operations and risk management.

Supervisory focus

The European Central Bank (ECB) has been firm in its commitment to integrate climate and environmental risks into its bank supervision activities since the release of its guide on climate-related and environmental risks in November 2020. This topic is now at the forefront of the Dutch supervisory agenda. While not all Dutch-licensed banks are directly supervised by the ECB, the DNB has committed to applying similar requirements as the ECB. This means that, regardless of whether a Dutch-licensed bank is significant or not, the expectations and enforcement measures related to meeting climate risk management are alike.

The 2025 supervisory regulatory focus will also remain on the anti-money laundering and combating the financing of terrorism (AML-CFT) and sanction regulations, with the DNB enforcing heightened compliance. In 2024 a fair number of Dutch-licensed banks have either completed or have been summoned by the DNB to update their Systematic Integrity Risk Analysis (SIRA) following a binding instruction from the DNB. There are no signs of the DNB slowing down the heightened AML and sanction regulation compliance enforcement in 2025.

The Chambers Banking Regulation 2025 Global Practice Guide provides an overview of the current trends and developments to prepare for in 2025. The Law and Practice sections offer further information on navigating the local legal system, on local laws and practice at key transactional stages and on crucial aspects of doing business in the respective jurisdictions.

We hope you enjoy reading the 2025 Banking Regulations Guide!

Download the Chambers Global Practice Guide: Banking Regulation 2025 here: https://gpg-pdf.chambers.com/view/342585033/i/