Private credit vs. bank lending in the Netherlands: the structural shift continues.

The Dutch corporate lending market is in the midst of a structural realignment that has been building for over a decade and shows no signs of reversing. Private credit — direct, non-syndicated lending by non-bank funds — has moved from a niche alternative to a mainstream financing channel, particularly in the mid-market. For foreign law firms and international lenders active in the Netherlands, understanding the mechanics and trajectory of this shift is increasingly essential to advising clients effectively.

How the Dutch Market is Segmented

The Dutch debt finance market is traditionally divided into three segments based on deal size:

• small transactions up to approximately EUR 30 million, typically lent by Dutch commercial banks on a bilateral basis (and increasingly by direct lenders);

• the medium bracket from EUR 30 million to EUR 250 million, where direct lenders or club arrangements now dominate; and

• large transactions above EUR 250 million, historically the preserve of bank syndicates but increasingly contested by private credit.

The mid-market segment is where the transition has been most pronounced. Leveraged buyouts in the Dutch mid-market are now predominantly funded by private credit, with continued focus from private debt providers on core sectors such as business services, TMT, and healthcare. This is not simply a pricing story. The appeal of private credit to borrowers is grounded in speed, documentation flexibility, and the ability to obtain committed terms without the execution risk inherent in broadly syndicated structures.

What Is Driving the Shift

The regulatory backstory is well understood but still unfolding. Academic literature suggests that the expansion of private credit has been driven in significant part by regulatory constraints on banks and structural shifts in the financial system — regulations limiting banks' ability to lend to unprofitable or riskier firms tend to push those borrowers toward non-bank lenders, and direct lenders step in when issuance of bank loans and securitised debt weakens.

Unlike the United States, Europe remains a predominantly bank-led market — bank lending still accounts for roughly 50% of corporate credit in Europe, compared with around 25% in the US — but borrowers are increasingly acknowledging the benefits of private credit: certainty, flexibility and speed. That structural gap between a bank-dominated baseline and borrower demand for alternative structures is where private credit in the Netherlands is currently operating.

The European regulatory agenda is reinforcing this trajectory. Basel IV is pushing banks to hold more capital against corporate loans, reducing their appetite for mid-market lending, while more and more mid-market borrowers are looking for long-term financing partners to support their transformations in digitalisation, the energy transition, and supply chain reshoring.

The CRD VI Dimension

One development that deserves particular attention from international practitioners is the implementation of CRD VI, which introduces a new framework for third-country banks lending into EU jurisdictions. Prior to CRD VI, it was relatively straightforward for non-EU banks to lend into the Netherlands, since a banking licence was only required if a party attracted repayable funds from the public or provided credit to consumers. Corporate lending into the Netherlands was therefore largely outside the Dutch banking licensing perimeter, making the Netherlands a popular destination for private debt structures, direct lending, securitisation, and fund finance.

The new regime is expected to alter lender sentiment quite significantly, presenting both opportunities and challenges for the local market. For UK and US banks wishing to provide core banking services to EU clients — such as direct lending or back-to-back lending — these changes may bring compliance challenges should they wish to continue providing their services.

Critically for private credit funds, CRD VI introduces rules on lending by non-EU credit institutions to European borrowers, but private credit funds should not be affected in the Netherlands, since they do not meet the definition of a credit institution. The Netherlands has now enacted its implementing legislation — the Implementatiewet kapitaalvereisten 2026 was adopted by the Dutch Senate on 16 June 2025 — ahead of the EU transposition deadline of 11 January 2027. This creates an important regulatory asymmetry: third-country banks face new compliance obligations under the Dutch implementation, while private credit funds continue to operate largely outside the licensing perimeter — a dynamic that may further accelerate the shift from bank to non-bank lending.

Regulatory Oversight of Private Credit

The Dutch regulatory approach to private credit itself remains light-touch at the national level. The Dutch Central Bank (DNB) and the Dutch Financial Markets Authority (AFM) are not specifically focused on regulating private credit lenders and have been awaiting the implementation of AIFMD II and CRD VI, without developing parallel national initiatives. AIFMD II, which was implemented in the Netherlands as of 16 April 2026 through an amendment to the Dutch Act on Financial Supervision (Wft), introduces a harmonised EU framework for loan-originating funds — covering leverage limits, risk retention, and investor concentration rules. The Dutch legislator implemented AIFMD II in a largely policy-neutral manner, without gold-plating, with the stated aim of maintaining a level playing field with Luxembourg and Ireland.

DNB has, however, flagged the systemic dimension of non-bank lending growth. While the availability of credit from parties other than banks is beneficial for businesses, investors in private credit — including Dutch insurers — are exposed to associated credit, liquidity, and contagion risks. This shift toward non-bank lending highlights the need for better information on this market and risk management appropriate to the institutions involved.

Structural Concerns: PIK, Covenants, and Opacity

The growth narrative for private credit is compelling, but the market is not without fault lines. While the headline default rate in private credit has remained below 2% for several years, once selective defaults and liability management exercises are taken into account, the effective default rate approaches 5%.

Payment-in-kind (PIK) usage has risen notably across private credit markets, including in Europe. Once largely confined to structurally subordinated or mezzanine paper, PIK toggles now feature routinely in senior unitranche documentation in the Netherlands — typically as a borrower option to capitalise a portion of the margin for a limited period, rather than as a standalone PIK facility. The increasing prevalence of PIK toggles in senior secured deals has attracted scrutiny at the European level: the ECB's November 2025 Financial Stability Review flagged loosening lending standards and opaque valuations in private credit as a growing concern, and the FSB's May 2026 report on private credit vulnerabilities specifically identified PIK toggle usage as a stress indicator correlated with borrower distress.

The ECB has raised concerns about credit quality in the eurozone private credit market specifically. The ability of private credit-backed firms in the euro area to service interest payments from operating cash flows has deteriorated in recent years — a trend absent among firms relying on bank loans, raising questions about underwriting discipline as the asset class has scaled.

For practitioners advising on Dutch law private credit transactions, these structural tensions have direct documentation implications. The absence of standardised intercreditor arrangements, the still-developing super senior / senior dynamic in Dutch structures, and the growing use of PIK toggles all require careful bespoke drafting — areas where there is no equivalent to the LMA's settled market practice in the syndicated space.

Dutch Documentation Specifics

The most common private credit structures in the Netherlands — disregarding holdco financing or equity co-investments — are either a combination of senior term debt and a super senior revolving facility, or a combination of senior term debt with super senior term and revolving facilities. Revolving facilities are typically only provided by private credit providers for a bridge period, and delayed draw facilities feature on the majority of deals.

Two Dutch law developments are materially expanding the collateral pool available to lenders in Dutch-law transactions, and both warrant attention from foreign practitioners.

The first is already in force. The Wet opheffing verpandingsverboden entered into force on 1 July 2025, rendering contractual clauses that restrict the transfer or pledging of business receivables null and void. As of 1 October 2025, this nullity also applies to clauses in contracts concluded before that date. Under the new Section 3:83(3) of the Dutch Civil Code, any clause between creditor and debtor that purports to exclude or hinder the transferability or pledgeability of a business receivable — whether with proprietary (goederenrechtelijk) or contractual effect — is null and void. The practical significance for private credit lenders is considerable: receivables portfolios that were previously encumbered by contractual pledge restrictions can now be taken as security, and written notification to the debtor is required where the underlying contract contained such a restriction.

One notable carve-out applies: the nullity does not extend to receivables arising from current accounts or savings accounts, syndicated loans, or claims on clearing institutions and central banks. The exclusion of bank account receivables is a notable limitation — credit balances on Dutch bank accounts remain outside the reach of the new regime, and lenders seeking to perfect security over such balances must continue to rely on existing mechanisms.

The second development is still in the legislative pipeline but equally significant. On 15 December 2025, the Dutch government launched an internet consultation for the draft Wet modernisering pandrecht en cessie, which addresses two structural bottlenecks in Dutch security interest law: the outdated paper-based registration process at the Dutch Tax Authority (Belastingdienst) and the restriction that companies can only pledge receivables that already exist or arise directly from an already existing legal relationship — the so-called grondslagvereiste.

The first modernisation replaces the requirement of a registered private deed with a private deed bearing a fixed timestamp (vaste dagtekening), to be obtained via a qualified electronic timestamp. This makes 24/7 digital registration possible and eliminates the current dependency on physical filing in Rotterdam by courier before 5pm. The second modernisation abolishes the grondslagvereiste, enabling all future receivables to be pledged in advance by executing a single pledge deed — in the same way as is already possible for moveable assets — rendering the current practice of daily omnibus pledge deeds (verzamelpandakten) redundant. For non-bank private credit lenders in particular, this levels the playing field: the verzamelpandakte structure has historically favoured banks and factoring companies that had the operational infrastructure to run daily pledge cycles.

Taken together, both legislative measures point in the same direction: a Dutch collateral framework that is more accessible, more efficient, and better suited to the needs of a lending market in which non-bank lenders play an increasingly prominent role.

Outlook

European private credit had a breakout year in 2025, with fundraising hitting a record $65 billion through the first nine months of the year — 14% higher than 2024's full-year total — and European funds accounting for 35% of all private debt fundraising, up from roughly 24% in each of 2023 and 2024.

The structural drivers of this growth — bank capital constraints, the CRD VI asymmetry, ELTIF 2.0 broadening the investor base, and the unmet financing needs of mid-market sponsors — are not temporary. For international law firms instructing Dutch counsel on cross-border leveraged transactions, the practical implication is that a growing proportion of Dutch mid-market deals will be documented under private credit conventions rather than LMA syndicated loan standards, with all the documentation and enforcement complexity that entails.

This update is for informational purposes only and does not constitute legal advice. No attorney-client relationship is created thereby.