Nout Wellink

• 1. Introduction

  ›

  Nout Wellink was named, in 2010, the single person believed to have wielded the greatest influence on worldwide financial oversight. Financial News made that assessment, pointing specifically to what it called game-changing proposals on capital requirements and liquidity for the world's banks. Behind that judgment was a Dutch economist from a small town called Bredevoort who spent decades moving through the layers of international finance, from a ministry hallway in The Hague to the chairman's seat of the most powerful banking standards body on earth. How did a man trained in law at Leiden University become the architect of post-crisis banking rules that touched every major lender on the planet? And how does that same career sit alongside a string of bank failures that drew sharp criticism from the Dutch parliament?

• 2. From Bredevoort to the Bureaucracy

  ›

  Wellink studied law at Leiden University from 1961 to 1968, a seven-year stretch that gave him the analytical foundation for everything that followed. He then earned a doctorate in economics from Erasmus University Rotterdam in 1975. Those two degrees, one in law and one in economics, pointed him toward public finance rather than the private sector. He joined the Dutch Ministry of Finance in 1970 and spent twelve years climbing its ranks, eventually reaching the positions of director general of financial and economic policy and treasurer general. That dual grounding in legal reasoning and macroeconomics would shape how he approached banking regulation for the rest of his career.

• 3. Running De Nederlandsche Bank

  ›

  In 1982, Wellink moved from the ministry to De Nederlandsche Bank, becoming its executive director. Fifteen years later, in 1997, he was named president of the institution. His second term ended on the 1st of July 2011. Over those years he accumulated a cluster of international roles: director of the Bank for International Settlements from 1997 to 2012, chairman of the BIS board from 2002 through 2006, member of the Governing Council of the European Central Bank from 1999 to 2012, governor of the International Monetary Fund, and member of the Financial Stability Board. In 2000 he also joined the Trilateral Commission. That web of overlapping mandates placed him at the intersection of nearly every major forum where global financial rules were written or debated.

• 4. Three Failures, One Regulator

  ›

  Landsbanki, the Icelandic bank, received a Dutch banking permit in 2008, operating under the name Icesave. That same year Landsbanki went bankrupt and was nationalized by the Icelandic government, leaving Dutch depositors exposed. DSB received its permit from DNB in 2005, but analysis conducted after its 2009 bankruptcy showed that DSB's risk management had serious flaws at the time the permit was granted and that its business model was considered risky. DNB had issued the permit on the basis of an improvement plan and the appointment of a supervisory board; neither delivered. The supervisory board had little real influence over the bank's chief executive, Dirk Scheringa, the planned risk-management improvements ran far behind schedule, and the required change to the business model was never carried out. A third episode involved Fortis, Banco Santander, and RBS, which in 2007 successfully purchased ABN Amro with the intention of splitting it apart. DNB approved that takeover even though ABN Amro was a major system bank described as pivotal to the Dutch economy. When the credit crisis hit in 2008, Fortis suffered severe damage, and both Fortis and ABN Amro were ultimately nationalized, Fortis by the Belgian government and ABN Amro by the Dutch. The Dutch parliament investigated and directed sharp criticism at DNB's conduct across all three cases.

• 5. The Basel Years

  ›

  From 2006 through 2011, Wellink chaired the Basel Committee on Banking Supervision, the body that examines and proposes reforms to global banking regulations. He brought a particular philosophy to the role. In his own words, a resilient banking system is central to sound financial markets and growth, and while supervisors cannot predict the next crisis, they can carry forward lessons from recent events to promote a more resilient system that can weather shocks, whatever the source. That framing, cautious about prediction but insistent on preparedness, ran through the committee's work during the years immediately following the 2008 financial crisis. His 2009 paper, Beyond the Crisis: the Basel Committee's Strategic Response, set out the committee's direction in the aftermath of those events. The work done during his chairmanship fed into the Basel III framework, which overhauled capital and liquidity requirements for banks worldwide.

• 6. Later Life and Legacy

  ›

  Since October 2012, Wellink has served as a member of the board of the Bank of China. He received recognition from the Dutch state in the form of appointment as Commander of the Order of Orange-Nassau and as a Knight of the Order of the Netherlands Lion. The University of Tilburg awarded him an honorary doctorate. His published output spans a range of periods and subjects: a 1978 book on public finances co-written with Lenze Koopmans, a 2002 paper on the role of national central banks within the European System of Central Banks co-authored with Bryan Chapple and Philipp Maier, and a 2001 Dutch-language book whose title translates roughly as new wine in old bottles, addressing the emerging new economy. The Basel Committee paper from 2009 remains the work most directly tied to the regulatory rebuild that followed the global financial crisis, a crisis that, by then, had already exposed the limits of the very oversight systems Wellink had spent his career shaping.