The population of wealthy individuals in the Netherlands experienced a slump in 2015. However, the tide is set to turn with a healthy forecast for performance over the coming five years. John Schaffer digs deeper into a recently published WealthInsight report on the Dutch wealth sector
The Netherlands stands as one of Europe’s most significant economies. According to the International Monetary Fund (IMF), the Dutch economy is the 17th-largest globally by nominal GDP.
However, the population of high net worth individuals (HNWIs) in the country diminished during the past year. According to WealthInsight, the Dutch HNWI population decreased by 1.2% in 2015, following a 2.4% increase in 2014. WealthInsight notes that there were 184,887 HNWIs present in the country in 2015, collectively holding $755.6bn in wealth.
The dip in HNWI performance is likely to be a momentary blip as WealthInsight forecasts that the Dutch HNWI population will grow by 13%, to reach 209,040 in 2020, while HNWI wealth is projected to grow by 23.1%, to reach $946.4bn.
Amsterdam accounts for the lion’s share of the Dutch wealthy population at 29,739, accounting for 16.1% of all HNWIs. The population of HNWIs in Rotterdam stood at 8,479 in 2015, while The Hague – home to the UN’s international court of justice – holds 6,400 HNWIs.
Financial services and investments were the primary source of wealth for 22.4% of local HNWIs in 2015. Retail, fashion and luxury goods were the third-largest, with 9.1% in the same year, followed by tech and telecommunication with 8.4%, and media with 7.3%.
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Equities were the largest asset class for Dutch HNWIs in 2015, with 27.9% of total HNWI assets, followed by business interests with 24.4%, real estate with 23.1%, fixed income with 10.7%, alternatives with 8%, and cash and deposits with 5.9%.
Allocations towards alternative investments decreased in from 8.3% to 8% between 2011 and 2015, while allocations to commodities decreased from 3.1% to 1.8%.
Dutch HNWIs held 31.2% ($235.7bn) of their wealth outside of their home country in 2015. WealthInsight forecasts that foreign asset holdings will increase to $290.1bn by 2020, accounting for 30.7% of the country’s total HNWI assets.
The Dutch wealthy are favouring European countries for their foreign holdings – accounting for 39.6% of Dutch HNWIs’ foreign assets in 2015.
This was closely followed by Asia-Pacific with 33.3%, North America with 16.7%, Latin America with 6.3%, the Middle East with 2.4%, and Africa with 1.7%.
Growing ultra wealthy population
There were 2,788 UHNWIs in the Netherlands in 2015, with an average per capita wealth of $82.8m, making them the prime target group for wealth sector professionals.
UHNWIs accounted for 1.5% of the Netherlands’s total HNWI population in 2015, above the global average of 0.7%. The number of Dutch UHNWIs rose by 7.4% during the review period, from 2,597 in 2011 to 2,788 in 2015.
Domestic banks dominate
The Dutch banking sector is highly concentrated and dominated by a small number of national banks. By the end of 2015 there were 102 banks in the Netherlands; of these, ING, Rabo and ABN Amro make up 67.76% of the country’s total banking assets.
Private banking is dominated by domestic banks; their large branch network allows them to cater to the wider HNWI population.
Foreign banks play a limited role due to the perception that the Dutch market is difficult to enter. Citibank has been present in the Netherlands since 1964, and is the only US-headquartered bank with such a long service history in the country.
BNP Paribas has had a presence since 1863. HSBC has been present in Amsterdam since 1999, but only began to provide a full range of services in 2011.