Klaas Knot, the designated new president of De Nederlandsche Bank, is no-nonsense name for a no-nonsense era. The surprise appointment of the 44-year-old economist, career public servant and banking supervisor came after months of haggling between the Dutch central bank and the finance ministry over the succession of Nout Wellink, the veteran central banker who leaves office on 30 June.
The heir apparent and Wellink’s personal favourite to succeed him, Lex Hoogduin, was brushed aside. Disillusioned, he has resigned from the DNB’s board. Together with Knot (pronounced K-not), a new director of banking regulation and supervision has been appointed. Jan Sijbrand, who holds a PhD in mathematics and works as the head of risk management at NIBC, a Dutch bank, is an expert on understanding complicated financial products. He becomes probably the first ‘quant’ to join the board of a major central bank.
With Wellink, Hoogduin and Henk Brouwer (director of banking supervision, who is also retiring) all leaving, the Nederlandsche Bank will lack experienced insiders in European monetary affairs at a crucial time for economic and monetary union. The Netherlands, like Germany, is highly reluctant to continue financial support for Greece and other debtor nations. The board of the Bundesbank is also being shaken up. So the central banks of the two main creditor countries face major change at a sensitive juncture. Jens Weidmann, the new president of the Bundesbank, is aged 43. The main Dutch political parties hailed Knot’s appointment as a new start for the central bank, while economists were predictably critical about the lack of his monetary experience.
Knot was born in Onderdendam, an agrarian village in the northernmost part of the Netherlands. His mother worked as a local school teacher, his father sold fertilisers to farmers. After graduating he wrote his PhD on ‘Fiscal policy and interest rates in the European Community’. In 1995, he started his career at the Dutch central bank and, with a year and a half’s break at the IMF, he stayed there until 2009, working in different supervising positions. In 2005 he became a part-time professor at his alma mater, Groningen University, as Hoogduin’s successor.
The generational shift is part of ‘cultural change’ at the central bank engineered by the Dutch government. The DNB was widely blamed for the ‘loss’ of ABN Amro, the venerated Dutch bank that was bought by a consortium of three foreign banks in 2007 and partly nationalised by the Dutch government in 2008 after the banking crisis. Wellink also got the flak for the collapse of the Icelandic internet bank Icesave in 2008 and of DSB Bank, a Dutch consumer credit bank in 2009.
Last year, after several critical reports, politicians requested Wellink’s resignation. Leading economists claimed Wellink – a member of the DNB board for almost 30 years, half of it as president – had been in charge too long. The minority government that came to power with the support of the populist party of anti-immigrant politician Geert Wilders was determined to put an end to the ‘ancien régime’.
Finance minister Jan Kees de Jager made clear Wellink could not seek a third term. He decided, too, that the future director of regulation and supervision would have an equal position to the president. When DNB discreetly suggested Hoogduin should take over, the government ignored the recommendation. The stalemate lasted for months. To his own surprise, Knot is now being presented as the perfect outsider – a representative of a new generation of pragmatic public servants.
In the current Dutch political climate international considerations carry little weight. The public mood demands more activist regulation and closer scrutiny of supervision by the government. Knot’s appointment marks the final settlement with the Wellink era – and the opening of a new one.
Experts
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