Dutch Finance Minister Jan Kees de Jager is preparing a draft bill allowing the country’s central bank to sell assets of troubled lenders and insurers without shareholders’ approval.
“The recent financial crisis has revealed significant weaknesses in the framework,” De Jager wrote in a letter to parliament in The Hague today. “The improvement of the framework for crisis management has a high priority for me.”
The Dutch central bank, led by Nout Wellink, is in favor of the proposed changes, which would allow it to take control of a troubled financial company and transfer shares, assets or liabilities to another firm or the government without approval from a general meeting of shareholders.
The central bank used an emergency procedure last year to take control of DSB Bank NV, based in Wognum, northern Netherlands, following a run on its deposits. DSB was declared bankrupt in October last year after its owner, former Dutch policeman Dirk Scheringa, failed to find a buyer.
The proposed change “creates an alternative to the financial reorganization option in the emergency procedure, which has proven ineffective,” Wellink wrote in a letter to De Jager dated Oct. 5.
New legislation should prevent companies from canceling contracts with financial institutions that are taken over by the government, as this may frustrate a restructuring, the central bank said.
The Finance Ministry will publish the proposal and seek public feedback next month.