1. The statutory basis underlying measures for countering double­gearing at banks in the Netherlands is provided for by supervisory legislation, stipulating that a declaration of no objection is required for each participation of a bank amounting to more than 10% of the capital of the other institution (bank, insurance company or another financial or non­financial institution) and for each participation of more than 5% in a bank. The declarations of no objection, to be granted by the Minister of Finance on the recommendation of the Nederlandsche Bank (the Bank), may be subject to conditions concerning for instance the periodic provision of additional information and the degree of capitalisation of the institutions with which a participation relationship exists.

2. The conditions attached to declarations of no objection depend on the structure of the conglomerate and are determined case by case. Notably where participations in banks by non­regulated holding companies are concerned, these conditions are a major instrument with which to counter double­gearing, as they afford the possibility of imposing requirements as to the size of the holding company's own funds (capital and reserves). In some cases, for instance, the own funds of the holding company may be required to amount to at least the total own funds of the (banking) subsidiary or subsidiaries, the participations being valued at net worth by the holding company. In The Netherlands, this approach is known as the one­to­one rule. If an institutions does not meet the conditions set, the authorities can, as a last resort, revoke the declaration of no objection granted, which means that the participation relationship between the holding company and the bank must be terminated.

3. In the case of relationships between banks and insurance companies, the Insurance Board plays a role comparable to that of the Bank. The Bank and the Insurance Board have concluded a Protocol with a view to attuning the supervision exercised by the authorities on banks and insurance companies making up part of a single conglomerate through, for instance, a joint recommendation to the Minister of Finance as to the conditions to be attached to the declarations of no objection. Here allowance is made for the fact that in The Netherlands the degree of capitalisation of non­regulated holding companies and the measures countering double­gearing generally play a smaller role in the supervision of insurance companies than of banks.

4. The following conditions may be attached to declarations of no objection:­

A. In the case of participations of banks or financial holding companies (more than 80% of whose balance­sheet total concerns financial activities; insurance operations are considered non­financial activities) in banks, the requirements provided for by the EC Directive on Consolidated Supervision are applied. This means that parent banks are subject to consolidated supervision, while financial holding companies need to meet the standards of banking supervision where, for instance, solvency in concerned.

B. In the case of a participation of a bank in an insurance company, the required solvency margin at the insurance company (plus any deficits) must, prior to the calculation of the parent bank's solvency ratio, be deducted from the bank's regulatory capital base (risk­based deduction). The participation in the insurance company is valued, in the bank's balance sheet, at net worth.

C. The most usual structure for banking / insurance conglomerates in The Netherlands is that of the non­regulated holding company with banking and insurance subsidiaries. The capital requirements to be imposed on the holding company are conditional, according to the Protocol, on the share of banking and insurance activities in its total financial activities:­

(i) in the case of primarily j(>80%) banking conglomerates, the one­to­one rule may be applied;

(ii) in the case of mixed banking / insurance conglomerates, the holding company's capital, reserves and subordinated loans (including specific components acknowledged by the supervisory authorities) are checked to see whether they amount to at least the total of the required solvency (margin) of the subsidiaries;

(iii) in the case of primarily (>80%) insurance conglomerates, the degree of capitalisation of the holding company is usually not subject to requirements.