Oct. 23 (Bloomberg) -- The collapse of a regional Dutch bank best known for its links to the national soccer champion has ensnared Central Bank President Nout Wellink and ABN Amro Holding NV Chief Executive Officer Gerrit Zalm.

The Finance Ministry is investigating DSB Bank NV and regulators’ roles in the events that led to its bankruptcy this week. Wellink, whose term ends in 2011, is responsible for bank supervision. Zalm was DSB’s chief financial officer until he left to run ABN Amro after its nationalization last year.

“I think the Dutch Central Bank knew for a while that there were issues at DSB,” said Jaap Koelewijn, a professor of corporate governance and corporate finance at Nyenrode Business Universiteit in Breukelen, the Netherlands. “If I were Wellink, I wouldn’t try to get re-elected to a third term.” He’s 66 and “has been damaged enough,” Koelewijn said.

The DSB scandal has taken on outsized importance because of the interwoven nature of Dutch politics and finance. Former government ministers Zalm and Ed Nijpels were both DSB board members. The Netherlands is still recovering after the state bought the Dutch assets of ABN Amro last year and threw ING Groep NV a 10 billion-euro lifeline ($15 billion).

“This was the last thing we needed for the banks and the Netherlands as a financial center,” former ABN Amro CEO Jan Kalff said Oct. 16 on radio station BNR Nieuwsradio. “It couldn’t be any worse.”

Wellink and Zalm, 57, declined to comment when contacted by Bloomberg News.

‘He Needs to Go’

The Finance Ministry aims to conclude its probe as soon as possible, spokeswoman Saskia Kranendonk said. The central bank and the financial-market regulator, known as AFM, have announced a separate investigation into the role of DSB’s board members.

“The minister has indicated ABN Amro’s top executive needs to have an unblemished reputation,” said Ewout Irrgang, a Socialist Party member of parliament and former central bank employee, referring to Zalm. “If the independent investigation, which shouldn’t take longer than a couple of weeks, doesn’t clear him, he needs to go.”

Zalm, the longest-serving finance minister in Dutch history, became chief financial officer at DSB in December 2007 after serving as chief economist.

“I successfully sought to achieve improvements in policy,” Zalm said in an Oct. 12 statement. “I’m confident that this will be confirmed by the investigation.” He said he’ll fully cooperate with the probe.

‘Why Didn’t They Act?’

The central bank took control of DSB on Oct. 12, almost two weeks after consumer advocate Pieter Lakeman alleged that the bank overcharged people for mortgages and triggered 600 million euros of withdrawals. DSB was declared bankrupt Oct. 19.

DSB’s annual accounts for 2007 and 2008 seem “too optimistic” because the bank set aside 1 percent of the value of its loans to cover bad debts, while the industry standard is about 2 percent, Sweder van Wijnbergen, professor of economics at the University of Amsterdam, wrote Oct. 20 in the newspaper NRC Handelsblad.

“Why didn’t they act?” said Nyenrode’s Koelewijn. “Supervisors and directors do not get into trouble for acting, but for not acting.”

Three days after Lakeman called for people to withdraw money, the Dutch central bank asked Scheringa to step down and sell his shares in DSB as the regulator sought to restore trust in the bank, Charles Huijskens, a spokesman for DSB’s administrators said.

Wellink has been central bank president since 1997. He probably won’t be ousted until his term expires because there is no obvious successor and forcing him to step down would further damage the Netherlands’ credibility, Koelewijn said.

Call Centers

Dirk Scheringa, a 59-year-old former policeman, started out selling loans and insurance on commission through call centers, direct mail and the Internet. He continued using the strategy after receiving a banking license in 2005, with DSB accounting for 0.7 percent of Dutch ad spending and 35 percent of TV commercials by lenders, according to Nielsen estimates. Scheringa bought AZ, the Dutch soccer champion, as his fortunes grew.

AFM, led by former Finance Minister Hans Hoogervorst, in May fined the bank 120,000 euros for awarding mortgages to clients who might not be able to repay them. The bank said in July it planned to appeal.

DSB’s collapse is “a bitter pill for the regulators, the Dutch central bank and AFM,” said Elly Blanksma-van den Heuvel, a lawmaker for the ruling Christian Democratic Alliance. “The impact is enormous. Questions about failed supervision are on everyone’s lips.”

Court of Public Opinion

Nijpels, 59, was on DSB’s supervisory board for five years. He has been chairman of Stichting Pensioenfonds ABP, which oversees about 180 billion euros of pensions, since Aug. 1.

“I expect the investigation will prove that Ed Nijpels knew everything,” said Kees de Lange, chairman of the Dutch Association for Pension Interests NBP. “That per definition disqualifies him as ABP’s chairman.”

The ABP board supports Nijpels and awaits the results of the probe, the fund said in an e-mailed statement.

“If the investigation reveals facts hindering my functioning as chairman of ABP, I will accept the consequences and step down,” Nijpels wrote in a letter on ABP’s Web site.

The executives also need to battle public opinion, said Pieter Riemer, an Amsterdam-based partner in the corporate practice at Linklaters LLP. While the facts disclosed so far don’t merit enough evidence for a resignation at this point, the public may have a different take, he said.

“It is a matter of perception and trust,” according to Riemer. “Public opinion is a powerful force.”

To contact the reporter on this story: Jurjen van de Pol in Amsterdam jvandepol@bloomberg.net; Maud van Gaal in Amsterdam at mvangaal@bloomberg.net;

Last Updated: October 23, 2009 03:50 EDT