In May 2004, the Dutch Government announced 40 outlines of new pension regulations, which cover issues including funds’ provisions, financial recovery and investment policies. Jan Nijssen, global head pensions and chief executive officer central Europe, insurance at ING Group, says the growing complexity of pension products has prompted the Dutch Government to introduce steps to improve transparency and enable comparisons to be made between products.
“In its Framework Memorandum on the New Pensions Act, the government announced that the present regulations on information provision would be further specified in new pension legislation, under which employers will have a statutory obligation to inform new employees in writing about membership of the pension scheme, accrual of pension rights and any associated risks within three months of the start of the employment contract,” he says.
Nijssen adds: “Also, pension providers will be obliged to inform members about the projected level of supplementary pensions. The government also intends to improve the provision of information to retirees.”
Benjie Fraser, managing director at Bank of New York in London, says the EU Directive is one of the single biggest drivers of change in the Dutch market. “We are all in a state of flux in terms of planning services around Dutch pension funds, particularly the multinationals,” he says.
Fraser believes the top layer of funds will look to improve investment efficiency by creating pooled European funds. Bank of New York is in talks with customers to develop solutions for pooled funds.
Sikko Van Katwijk, managing director, Citigroup Gloal Transaction Services (GTS) Emea, agrees the Dutch market is in the midst of extensive regulatory change, which is driving funds to redefine their strategies. “Many funds are changing their requirements from a single view to multiple client views and that is a complex change. Regulators are stepping in more and more and that is having a dramatic impact on medium-sized funds with limited resources.”
Van Katwijk says medium-sized funds are likely to seek more services from their providers, or hand funds over to insurance companies or larger pension funds to run in order to be more efficient. “I think the trend will be for service providers to take in more key activities from these clients, who do not have the investment available to develop such services themselves.”
In October 2004, Citigroup acquired the direct custody, securities clearing and fund services businesses of Dutch bank ABN Amro in a number of European and Asian markets, including the domestic Dutch custody business.
At the time of the announcement, Frank Bisignano, chief executive of GTS said the transaction would “significantly strengthen Citigroup’s market position in the Netherlands”. Over time, Citigroup expects to combine the domestic custody operations it acquired with its GTS operations in each market, with ABN Amro operational and servicing staff and management becoming employees of Citigroup.
Rene Wiegel, head of relationship management, continental Europe at ABN Amro Mellon Global Securities Services says the deal will not impact on ABN Amro Mellon. “Domestic custody is not our prime focus, therefore we saw no strategic justification to take on ABN Amro’s local domestic custody network.”
Citigroup’s Van Katwijk says clients of ABN Amro in the Netherlands will not experience a big difference in the services they receive. “We have bought a quality base of people and knowledge of how to handle the asset servicing business in the Dutch market.” Clients will receive the same level of service they experienced with ABN Amro, he says. “There is a clear need for Citigroup as a custodian to be closer to customers and to be able to deliver on the changing needs of these customers.”
Being close to customers is a common refrain among custodians and is one of the main justifications cited for custody mergers. Bank of New York formed an alliance with ING Bank in October 2002, with ING Investment Management (IIM) as the first customer of the merged entity. Under the deal, ING Bank provides Dutch sub-custody for IIM, BNY and the alliance.
Fraser says the alliance has a “very active pipeline”, but he will not give details. By partnering with ING, BNY has found a “lot of doors open, particularly because we have a local office in Amsterdam and have a great deal of communication with institutions through ING”.
The other Dutch-US custody alliance, ABN Amro Mellon Global Securities Services, scored one of the larger mandates in the Dutch market in 2004, picking up Stichting Pensioenfonds UWV in April. The global custodian will provide investment custody services, including accounting, performance measurement and full administrative and regulatory reporting for the pension fund assets of UWV, which total €2.2bn.
UWV is the Workers Insurance Authority and its pension fund was created in July 2003 following the merger between UWV’s funds and those of GAK Nederland and Cadans. Nadine Chakar, chief executive of ABN Amro Mellon says: “Stichting Pensioenfonds UWV is a newly consolidated pension fund, which therefore required a specialist in the Dutch market to work within a tight timeframe to provide a flexible, high-standard service.”
Wiegel adds that ABN Amro Mellon’s experience as a provider for ABP, the Netherland’s largest pension fund, helped secure the UWV mandate. ABN picked up the €50bn mandate in May 2001 from ABP Investments, the asset management division of Stichting Pensioenfonds ABP.


CSD move to boost efficiency
The overall efficiency of the Dutch market received a boost in December 2004 when the Dutch Ministry of Finance extended admission criteria for domestic central securities depository (CSD) Euroclear Nederland to Dutch and other investment firms based in the EU. Previously, these firms were unable to become direct members of the CSD.
From 1 January, investment firms that become members of the CSD will be able to settle their transactions and hold their positions directly with Euroclear Nederland. This includes over the counter transactions and those executed on Euronext Amsterdam and the Dutch Trading Service operated by the LSE.
The move brings the Dutch depository in line with the other Euronext markets, Belgium and France. Dutch investment firms as well as those in other countries will be able to use Euroclear Nederland as their single point of entry for the settlement of trades in the Euronext-zone securities markets, once the single settlement platform is launched in 2007.
Peter Sneyers, general manager of Euroclear Nederland, says: “This admission criteria extension will increase efficiency and reduce costs for investment firms trading in Dutch securities. It will also widen the scope of counterparties with which our members can settle transactions in a single account. Moreover, the new criteria at Euroclear Nederland will enable Euroclear to make progress on its plans to harmonise, to a common denominator, the admission criteria of the three Euronext-market CSDs.”

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