191 Since the peak of the financial crisis, unrealized losses in the financial sector have declined materially as progress has been made  toward reducing operational and systemic risk. Following on global Central Bank actions to provide liquidity and valuation support,  regulators have now implemented a wide array of reforms designed to strengthen capital levels, reduce balance sheet risk and improve  liquidity across the sector. Given significant progress, central banks have now begun preparing the market for less central bank support  going forward. Capital and liquidity buffers will continue to be strengthened as required by Basel III and decisive steps in the Euro area  toward a Banking Union, supervised by the ECB, should further increase confidence in the sector’s ability to weather economic  headwinds and reduce future risk to taxpayers.  The banking sub-sector in Aegon’s portfolio is relatively large, diverse, and of high quality. Aegon holds EUR 8,288 million  (2012: EUR 8,599 million) of AFS bonds issued by banks. In aggregate, the gross unrealized loss on these bonds amounts  to EUR 221 million (2012: EUR 335 million) and the net unrealized gain on these bonds amounts to EUR 226 million  (2012: EUR 343 million). The gross unrealized losses in the banking sub-sector primarily reflect the size of Aegon’s holdings, low  floating rate coupons on some securities, and credit spread widening since the time of acquisition due to the Sovereign debt crisis  in Europe, residual impact from the U.S. financial crisis, and global economic uncertainty. Following the implementation of new,  more stringent global legislation on bank capital and liquidity requirements, credit spreads in the sector have outperformed the broader  corporate market in 2013. Decisive steps by EU leaders and world central banks continue to stabilize the euro and improve funding  conditions for most banks. Globally, there remain pockets of concentrated risk on bank balance sheets, and ratings for some countries  and banks remain under pressure, but the banking sub-sector has largely been strengthened and oversight increased. Within the banking sub-sector, Aegon holds EUR 1,433 million (2012: EUR 1,606 million) of deeply subordinated securities with  deferrable coupons that have an associated unrealized loss of EUR 130 million (2012 EUR 250 million).  There is one individual issuer rated below investment grade in the banking sub-sector which has unrealized losses greater than  EUR 25 million.  Aegon’s available-for-sale debt securities for Belfius Bank SA have a fair value of EUR 99 million as of December 31, 2013. These  below investment grade securities are Upper Tier 2 and had gross unrealized losses of EUR 26 million as of December 31, 2013. Belfius  Bank SA was created subsequent to the restructuring of Dexia SA. Dexia’s reliance on short-term wholesale funding caused a near- collapse as funding markets froze in 2008 and 2009. Capital injections from Belgium, France and Luxembourg along with guarantees  on Dexia’s funding provided sufficient access to funding markets until the Sovereign debt crisis in 2011 put too much strain on Dexia’s  large funding needs. In November 2011, a new restructuring plan was put in place for Dexia SA and 100% of Dexia Bank Belgium was  sold to the Belgian state. Aegon’s bonds now form part of the capital structure of that entity which was rebranded as Belfius Bank SA  during the first half of 2012. Payments continue to be made on Aegon’s holdings in accordance with the original bond agreements.  Aegon evaluated the near-term prospects of the issuer and it is believed that the contractual terms of these investments will be met  and these investments are not impaired as of December 31, 2013. The Industrial sector is further subdivided into various sub-sectors with a majority of its gross unrealized loss in Basic Industry and  Consumer Non-Cyclical sub-sectors. The Basic Industries sector encompasses various sub-sectors including metals and mining,  chemicals and paper and forest products with the majority of the loss relating to metals and mining. Fundamentals for the metals  and mining industry have been negatively impacted by falling prices for base metals, non-ferrous metals, precious metals, coal and  steel. Slowing economic data out of China has been the main driver of the pricing pressure for the base metals and bulk steel-making  commodities as the country comprises from 40%-60% of the demand for most of these commodities. Rising interest rates have put  pressure on precious metals as investors become less worried about inflation and look to put money to work in income generating  assets. Chemicals have been positively impacted by continued low natural gas prices within the US, but given the global scale of most  players in the industry, they have also been harmed by a slowdown in global growth as well as volatility in raw material costs and  increasing competition from global peers. Paper and forest products have shown some improvement as the housing recovery takes  hold in the United States, but more traditional paper products such as newsprint remains challenged. Aegon evaluated the near-term  Corporate - Industrial sector Corporate – Financial Sector – Banking Sub-Sector Category Fair value Unrealized  Loss Rating Aging of  unrealized  Loss Belfius Bank & Insurance Banking 99 (26) BB > 24 months