FGH hypotheekbank
General
On an institutional level, our contacts with De Nederlandsche Bank nv
are devoloping well. This central bank has shown sympathy for the
specific problems that the real estate and mortgage finance industry is
incurring. During 1981, agreements were made concerning financial
structure policy over the next three years, aimed at maintaining the
'status quo' in the banking and insurance industries. The mortgage
banks reserved the right to continuously issue mortgage bank bonds
but in return had to agree to allowing the commercial banks to issue
bank paper, although only up to a specified maximum amount peryear.
The competition for guilders from bank paper made itself felt in 1981,
despite the fact that total bank paper issues were limited to 500 million
guilders on an annual basis. Even under difficult market conditions,
1981 provided proof that our mortgage bank bond can hold its own.
However, we also turned to other financing possibilities and other
markets in order to meet our future requirements for 'raw material' at a
reasonable price.
In February 1982, after the 1981 fiscal year end, the Netherlands central
bank and the Finance Ministry announced a change in policy stating
now that they will no longer automatically oppose insurance
companies and credit institutions from taking additional equity
positions in mortgage banks.
Our relations with the Netherlands Federation of Mortgage Banks were
also extensive and productive this year.
Debt financing
The US dol lar and the Deutschmark again had a very decisive influence
on interest rates on the Netherlands capital and money markets in 1981
with the dollar having the most influence in the last months of the year.
Tight US monetary policy aimed at curbing inflation continued
throughout the year. This monetary policy together with the continued
nominal growth in the U.S. national income produced tightness in
liquidity and forced interest rates sharply higher. These high interest
rates in turn caused the dollar to be pushed substantially higher, and
both factors caused an outflow of international funds towards the U.S.
much to the detriment of the Deutschmark and the guilder.
Subsequent tightening in the Netherlands and West German money
markets caused a development in interest rates which noticeably ran
parallel with developments in the U.S. In the Netherlands, the upward
trend in interest rates was intensified by the disappointing financial
deficits shown by local and central government. The original
projections of a five per cent deficit, or around 15 billion guilders,
increased during 1981 to roughly eight percent, or 24 billion guilders.
This meant the capital market was influenced more than ever by central
and local government financing policy.
The following overview will demonstrate how state loan issues sharply
increased, thereby in turn putting pressure on mortgage bonds which
were competing for funds.
17
