IFLR 1000
The Guide to the World's Leading Financial Law Firms

The Dutch banking market has been fairly uncertain in the run up to the summer of 2011, but local partners were very positive."The atmosphere is rather more positive, especially in the last six months....

The Dutch banking market has been fairly uncertain in the run up to the summer of 2011, but local partners were very positive.

"The atmosphere is rather more positive, especially in the last six months. We are not sure what effect Greece will have," says a partner, who adds that "Greece has been creating uncertainty for banks which have been getting a more positive mind-set and want to do things at a fast pace while in the meantime money is still quite cheap".

A number of corporate financings were completed in just four weeks, namely for TNT, Philips and KLM, and overall there have been quite a few high profile corporate financings: "We are seeing the need to support M&A activity and we are back in the world of bids and auctions," says a partner.

Dutch banks are back up and running since the bankruptcy in 2009 of DSB Bank. One of the biggest banks Rabobank continues to enjoy a AAA rating and "is solvent and active in the mid-market," says a partner, while BNP Paribas and Deutsche Bank "are taking some aggressive steps" and ABN AMRO "is back, but a shadow if its former self". ABN AMRO, Rabobank, ING Bank and NIBC have been active in acquisition financing. "ING Bank got help from government so they are under pressure to lend" says a partner, while another adds: "ING is under explicit pressure to lend an additional €20 billion." Firms note that RBS has pulled out of leveraged financing and is focussing on the UK market with "issues of its own".

In general, partners note that the lee time on deals is slightly longer and banks are chasing the same good deals. The overriding perception is that some Dutch banks "are struggling and can't provide leverage, so we are seeing a lot of club loans – not the red tape of syndicated loans - and borrowers are reluctant to accept stringent terms". "Good borrowers have power, and bad borrowers have no chance," says a partner.

Firms report that "the leverage loan pipeline is starting to fill while pure leveraged financing is currently patchy at the moment", and that private equity is poised for activity. "They are sitting on war chests, they haven't been able to invest so are waiting to strike and looking to do it quickly". "We are anticipating a very busy summer with a wall of debt maturing in 2012 and 2013 and there will be a need to refinance and probably restructure a lot of private equity deals," says a partner, "we expect to get back to 2007 levels".

According to another partner, "leverage finance, recapitalisations and covenant lights are back, and at the same time there are fewer banks. The international banks have gone back to deal with their domestic markets, and Dutch banks doing the Dutch market".

Real estate has been slow, although firms are predicting a lot of refinancing, and new rules regarding hospital financing have obliged hospitals to turn to the market, opening up a new sector.

The Dutch capital markets are in quite a shaky position even though some partners contend that the "economy in the Netherlands has picked up quickly, following the trend in Germany rather than the UK or elsewhere".Market volatility has taken a heavy toll on the equity markets....

The Dutch capital markets are in quite a shaky position even though some partners contend that the "economy in the Netherlands has picked up quickly, following the trend in Germany rather than the UK or elsewhere".

Market volatility has taken a heavy toll on the equity markets. "In a normal year we expect about six domestic IPOs," says a local partner, but over the past 12 months there have been no large IPOs, with the NYSE Euronext Amsterdam seeing more delistings than listings. According to one partner it is a "market collapse, many deals have been pulled or postponed".

"We were working on a number of IPOs but they were all aborted or postponed due to pricing and volatility... in one week we saw five Dutch listings being pulled in London," says a partner. Another adds that "2010 and 2011 both started well, but in 2011 two IPOs have been already pulled, everybody is awaiting events, deals are waiting to be done when market improves; the volatility is too high and IPOs have a long deal time".

Equity activity has been largely transaction-driven although there were a number of Dutch listings on foreign exchanges, for example Nielsen (which first had to delist in Amsterdam), NHV, Delta Lloyd, InterXion, Aperam, Nord Gold (postponed) and NXP Semiconductors. "It is not a given that Dutch firms will list in Amsterdam," says a partner, who adds: "there is now a project underway with the goal of promoting Amsterdam as a platform for listings on the Euronext with a number of the leading firms and banks involved, but it is not going very well."

Things have been a bit better in the debt markets. "Volatility is affecting this as well, but the debt capital markets deals are quicker and easier than equity deals so there are windows," says one partner.

Firms have handled a number of Rule 144A/Reg S compliant bonds, which are "popular with investors" say lawyers, high-yield bonds and a good number of securitisation programmes. The market has also seen new state guaranteed issuances.

Though there have been some convertible bonds, one partner says they "lost appeal due to volatility, and what this says is that people are still nervous and a bit conservative about the market". Corporates and FIGs have instead been opting for the more conservative corporate bonds or alternative high-yield bonds. In order to avoid taking on risk, one partner says banks have been "loaning through securitisation techniques", so that "corporates go to the debt markets and investors have the exposure rather than banks".

The Netherlands is the second biggest securitisation market in Europe and this sector (90% mortgage related) has been "surprisingly strong" with "Dutch and UK securitisations leading the rebound" says a partner. SNS Bank, Rabobank, Westland Utrecht and Delta Lloyd have all been active in the area. The reason is that they are seen favourably in light of the Basel III capital requirements: "You don't get a good investor base, but they are good because of regulations and deleveraging in Basel III," says a partner.

The Netherlands has had a bit of a rollercoaster ride in M&A. "2010 started well, a bit of a slowdown in the summer then it ended quite well, and the first quarter of 2011 was extremely busy," says a partner....

The Netherlands has had a bit of a rollercoaster ride in M&A. "2010 started well, a bit of a slowdown in the summer then it ended quite well, and the first quarter of 2011 was extremely busy," says a partner. But the slowdown in the summer of 2010 was, says another, "the quietest time ever; I have not ever seen this in 25 years of M&A practice".

Since October 2010 the market made a sharp recovery and according to one partner "if you could have slept through 2009 and 2010 you wouldn't have thought there was a crisis". "There has been a tremendous recovery of the market across the board, not only in private equity but also as strategic moves are back on the scene... the lending market is easier, companies are recovering and, being cash rich, are beginning to venture out".

"Clients used the downturn to restructure so they now have war chests and cash to invest... one year ago the pipeline was drying up but things have improved," says another. The buzz has been lined with lots of caution however: "In due diligence people really want to see not just the annual figures but also the figures for the first quarter too... but it doesn't mean they are not doing deals," says a partner. 'Optimistic but cautious' very much remains the catchphrase in the market.

On top of that, banks have been cautious with lending, deals are taking longer to prepare and the price remains unpredictable. But the underlying need of private equity companies to refinance and sell has been a cause for optimism and firms are seeing some of the large multipliers of 2007 come back. Aside from this, firms note that pension funds have been making moves to invest and real estate "is a building market; depressed still but if you really look specifically there were a few that were early in reorganising and they are doing quite well", says one partner.

"There is a little bit more attention for healthcare, maybe not a trend yet... but there is a global tendency of market orientation in the healthcare industry - seeing more and more specialised healthcare business being set up," says a partner. According to another, "in ten years the life sciences sector has grown from a value of €80 million to €2.1 billion".

On the legislative side, there are currently discussions (and have been for a while) for an overhaul of corporate laws on BV (limited company). The legislation will make company structures more flexible and change the rule on shareholder voting rights. The aim is to make "the Dutch BV more attractive to foreign investors", says a partner.

Though the project finance market in the Netherlands is relatively small compared to the UK or US markets, there is a lot of activity being planned.Firms report a huge pipeline of projects under public-private partnership (PPP) agreements and DBFM (design-build-finance-maintain) contracts....

Though the project finance market in the Netherlands is relatively small compared to the UK or US markets, there is a lot of activity being planned.

Firms report a huge pipeline of projects under public-private partnership (PPP) agreements and DBFM (design-build-finance-maintain) contracts. €4.5 billion has been put aside by the government to develop a number of motorways connecting the national airport Schiphol to and from Amsterdam, Rotterdam and other major conurbations. The projects will include bridges, gas pipes, telegraph poles and other bits of infrastructure along motorway routes. There are five projects in total each with a budget of about €1 billion.

"The A1-A6 has already been launched and is at pre-qualification stage and there are three more coming, the A6-A9, with a budget of about €3.5 billion," says a peer: "they will keep the market busy, not just the tenders but also secondary work." "All the projects are moving very slowly, they are still at the structural phase and the lenders aren't yet on board, it will be even slower when the banks are on board, they will need to really do a lot of financing," says a partner. None of the projects will reach closure soon.

"The market has improved due to the attitude of the government, and investors are more eager to be involved, very positive attitude of government towards DBFM now that the benefits are more widely known, and with the budget deficit it is a good way to finance projects without increasing the deficit," says a partner, adding that "the old DBFM projects are all completed and have been a success story so far".

One of the key players in formulating and establishing PPPs in the country has been the European Investment Bank (EIB). Local partners hold the bank in high esteem and to a certain extent pin the success of projects on its involvement. "The EIB has played a great role in the Netherlands," says a partner, and "there will be uncertainty of funding if they are not involved".

On the private side, 99% of project finance is renewable energy related, especially with on and off-shore wind farms and solar energy, but also in biofuels. Lack of financing has been slowing the market however, with one partner noting it is "quieter; you do see effects of the credit crunch, less money being made available for financing, there is also a lot down to subsidies on renewable energy which have been cut so you see the number of projects dropping".

A new area is hospital financing, following changes in the legislation that mean hospitals must stand on their own two feet. "The hospital construction market is booming, it is a new market that wasn't there before," says a partner. "Hospital financing is quite new in the Netherlands," says another, "it isn't really project finance and not PPP, but the funding they need is impressive."

Partners are also expecting a lot of real estate work: "It is quiet but it is a huge asset class that you can't ignore, there is a huge wall of debt, something will happen, it has to break open," says one.

"The worst effect is still to be felt," says one partner, "90% of what could be insolvencies have in fact been solved in the banks through in restructuring, and this has been successful, but the crisis is not over yet". There is a lot of pressure and stress in the Dutch market say some partners, "pressure to make profits, to keep balance books healthy and pressures on banks to avoid further write offs, there is also pressure in the real estate sector, in transport and in retail thanks to weak consumer confidence"....

"The worst effect is still to be felt," says one partner, "90% of what could be insolvencies have in fact been solved in the banks through in restructuring, and this has been successful, but the crisis is not over yet".

There is a lot of pressure and stress in the Dutch market say some partners, "pressure to make profits, to keep balance books healthy and pressures on banks to avoid further write offs, there is also pressure in the real estate sector, in transport and in retail thanks to weak consumer confidence".

"Real estate is very much 'watch this space'; 12 months ago they were trying to keep everything under wraps and now it is very much distressed," says a partner. "Lending to corporates has been rolled out and extended, everybody hoping that the problem will just go away - we have seen ships, real estate, drilling platforms... now everyone is waiting for real estate to collapse," says another.

On the bankruptcy side, the collapse of DSB Bank in 2009 and Lehman Brothers in 2008 has continued to keep firms busy primarily dealing with creditors and claimants. The Dutch subsidiary of Lehman Brothers, Lehman Brothers Securities, acted as a finance vehicle for the US parent company and was its biggest creditor and claims against it are estimtaed at €35 billion. "That is the size of the claim against the Dutch issuer and the US guarantor," says a partner, "it is a 'double dip' claim, so there is lots of innovative work to be done, everybody wants to avoid litigation and it will take a minimum of one to two more years".

Nevertheless, the number bankruptcies has gone down. According to one partner: "Everyone expected it to be worse than it was, there were fewer than expected a year to a year and half ago, which leads us to the conclusion that the banks are still able to role forward debt." Another partner adds that the problem is "banks are not in the driving seat" and under pressure not to write off debts with insolvencies.

Firms have been very busy at the pre-insolvency restructuring phase, with equity restructurings and debt to equity swaps and the restructuring market has been getting increasingly sophisticated, with Dutch versions of UK and Chapter 11 mechanisms being used. The market saw some very big restructurings in 2010, most notably for Almatis.

On the legislative side, the Netherlands currently has the oldest insolvency act in Europe and although a new act was developed, the current government has abandoned it. Partners tend to say the old act is inadequate but will suffice.

In terms of the legal market, law firms handle a number of different disciplines within restructuring and insolvency. There is restructuring work, insolvency work and finally court appointed bankruptcy administrators. All three are included in the rankings however the three disciplines are often quite separate.