subscription to be made on 11th November and payment on
12th December 1977. This issue was a success.
With this increase in capital and the payment in full of the
whole of our share capital, which is to be realised in the course
of 1978, we think a firm foundation has been laid for a further
growth in our business activities. A proposal to amend the
Articles of Association, become necessary by the change in
capitalisation, will be submitted to the next general meeting of
shareholders for their approval. We shall seize this opportunity to
propose a few other desirable amendments of the Articles of
Association.
In previous annual reports we have kept you informed of develop
ments in the matter of the incorporation of the mortgage banks
into the financial ordering in the Netherlands by a special
regulation, based on the draft Bill concerning the supervision of
the credit system. Developments in this field were seriously
delayed by the cabinet crisis in the spring of 1977 and the pro
longed formation of a new Government following upon it.
However, the informative discussions by representatives of the
Netherlands Association of Mortgage Banks with the Ministry of
Finance and The Netherlands Bank were continued. During these
discussions our line of banking industry called special attention
to the historically grown position of the mortgage banks in the
Netherlands, because we are of the opinion that this position
should be the basis for a statutory regulation.
Already before World War II, primarily for the protection of the
interests of their creditors, the mortgage banks had within their
association developed a number of solvency and liquidity
standards, which are still the basis for the solid status of mortgage
banks in the Netherlands. Acceptance of these standards is
necessary for a mortgage bank to be admitted as a member of
the Netherlands Association of Mortgage Banks; an independent
supervisory body is charged with the supervision of the observ
ance of these standards.
Business-economic supervision by The Netherlands Bank on the
basis of the new legislation will, wherever possible, have to
coincide with that which has developed over the years, if mort
gage banking is not to be hampered in its further development.
This supervision cannot be realised directly on the basis of the
draft Bill concerning the supervision of the credit system but, by
virtue of this Act, should be laid down by Order in Council. The
cause of this is the fact that in the nature of the funds attracted
by them the mortgage banks differ essentially from the institutions
for which this legislation is primarily intended. The latter, in fact,
mainly cover their finance needs by funds with a shorter term
than two years. The term of the passive funds of the mortgage
banks is for the major part more than two years.
It is clear that these essential differences are also bound to lead to
a difference in setting the standards which The Netherlands Bank
will apply in its supervision from the points of view of solvency
and liquidity.
Considering the term of the funds attracted the mortgage banks
mainly have to look for their passive financing to the open and
the private capital market. The continuous demand for mortgage
credit makes a continuous appeal to these markets necessary.
For attracting funds on the open capital market the mortgage
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