Termination banking relationship

January 15, 2024
Legal opzegging bankrelatie

The Court of Rotterdam recently issued a judgement (Court of Rotterdam 1 November 2023, ECLI:NL:RBROT:2023:10109) regarding the termination of a banking relationship by the bank (i.e. ABN AMRO Bank N.V. (ABN)) with its client (i.e. Rowood), where it was ruled that the termination has been conducted without taking into account proper care and is unacceptable according to the standards of reasonableness and fairness.


Rowood, an importer of wood and wood-based panel materials from Ridderkerk, the Netherlands, has several bank accounts with ABN and has also entered into a credit agreement with ABN. The General Banking Conditions (Algemene Bankvoorwaarden, ABV) apply pursuant to which ABN has a contractual right to terminate the banking relationship.

The Financieele Dagblad (Dutch financial newspaper) published multiple stories on Rowood in 2023, because the company would have been involved in suspicious transactions. According to these stories, Rowood would have, among other things, transferred amounts to the bank account of a sanctioned oligarch, initiated questionable payments to bank accounts in the name of persons other than that of the actual supplier, and bought wood in respect of which the country of origin is unclear. ABN became aware of these publications and initiated and performed a customer due diligence.

On 7 April 2023 Rowood answered the final questions that were raised as part of the customer due diligence. On 10 April 2023 ABN confirmed to Rowood through letters that it would terminate the banking relationship as of 11 September 2023. In this termination letter, ABN provided (in summary) the following substantiation for terminating the banking relationship:

  • Rowood transferred amounts to a bank account of a company of a sanctioned oligarch and therefore violated sanctions against Russia;
  • Rowood transferred amounts through third parties, which resulted in the inability to assess to which bank account the amounts were finally transferred;
  • Rowood conducted business activities with companies of which the identity and the purpose is unclear; and
  • Rowood purchased wood in respect of which it is unclear whether the wood complies with the applicable certification requirements.

On 24 July 2023 Rowood stated in a letter that it finds the termination unacceptable. On 17 August 2023 ABN stated by that it upholds its decision on termination but grants Rowood an additional two months to transfer its products and/or services to another bank. Shortly after receiving this letter, Rowood initiated preliminary relief proceedings  against ABN. It claimed that ABN should continue the banking relationship on the same conditions. ABN stated that, among other things, it has terminated the banking relationship on a legally valid basis referring to its contractual right to terminate the banking relationship as included in the ABV. Additionally, ABN stated that the derogatory effect of the standards of the reasonableness and fairness should be applied cautiously.

Assessment of the court

The Court of Rotterdam determines that this case has an urgent interest because ABN envisages to terminate the banking relationship and Rowood has not been successful transferring its banking activities to another bank . The Court of Rotterdam further determines that ABN has a contractual right to terminate the banking relationship but considers that the right to invoke this termination right and the right of contractual freedom is not unlimited. The circumstances of this specific case may imply that, pursuant to the standards of reasonableness and fairness, it is unacceptable for a bank to invoke its contractual right of termination. Whether that is the case, must be assessed considering all relevant circumstances at the time of termination.

The Court of Rotterdam takes as its starting point the termination letter of 10 July 2023 and the contractual rights to terminate the banking relationship included therein. The Court of Rotterdam rules that it may be expected from ABN to provide and substantiate the grounds on which the termination is based and to make this sufficiently concrete. Moreover, the Court of Rotterdam ruled that none of the accusations made by ABN are (entirely) justified or well-founded. The payment to the sanctioned oligarch cannot be considered a lawful ground for termination, because Rowood proved that it was not able to know that the company of the sanctioned oligarch was sanctioned. In addition, the Court of Rotterdam ruled that ABN drew conclusions based on circumstances that it had not – or not sufficiently – substantiated. Moreover, ABN did not ask additional follow-up questions after Rowood answered the initial questions and (where possible) substantiated its answers with relevant documentation. By means of a preliminary judgment, he Court of Rotterdam rules that the grounds for termination are not convincingly proven and insufficiently substantiated. The Court of Rotterdam expressed this as follows: “The letter of termination appears to have been written sloppy [ML] and is vague, incomplete and on certain points even incorrect” after which the Court of Rotterdam continues with “it is as if, on a number of points, matters are repeated without going into, and to render account for, all the answers given by [claimant (i.e. Rowood)] and the documents it has provided”. The Court of Rotterdam ruled that in these circumstances the termination was not made with proper care and is unacceptable pursuant to the standards of reasonableness and fairness. ABN must therefore continue the banking relationship with Rowood on the same conditions. The Court of Rotterdam does not see a reason to make this obligation conditional on Rowood initiating main legal proceedings, even though the Court of Rotterdam was requested to do so by ABN.


The judgment of the Court of Rotterdam shows that despite a legally valid contractual termination right under the ABV, banks cannot simply terminate a banking relationship.

it seems that banks may not easily terminate a banking relationship even when there is a, based on the ABV, contractual power of termination. Depending on the specific circumstances of a particular case, the standards of reasonableness and fairness may result in a termination being unacceptable. Whether this is the case is highly case-specific. See, for example, our previous newsletter for another example where it was ruled that the banking relationship should not have been terminated ‘Continuation banking relationship pending main procedure’. In each specific case, as also appears from the current judgment, the relevant circumstances are considered and assessed and the interests of the parties involved are considered. Consistent with prior judgments, this judgment makes it clear that, among other things, it is important for clients of a bank to properly and sufficiently answer the questions raised by a bank as part of customer due diligence and to ensure that those answers are sufficiently substantiated.

If you are confronted with a bank that contemplates changing or terminating the banking relationship and require any legal assistance or advice, please feel free to contact any of the experts of Meijburg Legal.


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