SNS Reaal NV, the Dutch bank nationalized Feb. 1 at a cost of 3.7 billion euros ($5 billion), could not have been saved by anyone other than the government and any other option probably would have cost the taxpayers more, the finance minister said.
“There was no party that was willing to fill a gap of 2.4 billion euros,” Jeroen Dijsselbloem told lawmakers yesterday in the first debate in parliament after the nationalization. The 2.4 billion euros is the cost of SNS’s property finance writedown, he said. “I wish I could have struck a deal with a private party, but the risks would have been too high,” Dijsselbloem said.
The Finance Ministry took control of Utrecht-based SNS Reaal, the fourth-largest Dutch lender, after real-estate losses brought the company to the brink of collapse. The intervention raised questions over whether the Dutch central bank and the government had sufficient tools to prevent this from happening. The decision to nationalize the bank was made at 2 a.m. Feb. 1 after the central bank told the minister all options were off the table, he said.
Lawmakers urged Dijsselbloem to do everything legally possible to hold former SNS management liable. They also questioned the central bank’s failings in regulating SNS and urged an investigation into its role in the events leading up to the nationalization. Parliament also asked for a hearing that has yet to be set, while a proposed clawback law for variable bonuses is pending in the Dutch Senate. SNS Reaal amended its governance rules in 2010 to allow bonuses for members of the executive board to be recovered.
The government is providing 6.1 billion euros in loans and guarantees. The expropriation of subordinated creditors reduced the rescue costs for the state by about 1 billion euros, Dijsselbloem said on Feb. 1. Dijsselbloem’s actions rattled European investors by wiping out SNS Reaal equity and some subordinated debt holders, while forcing other banks to contribute 1 billion euros in a one-time levy.
“This was acceptable for the central bank given the impact a levy has on banks that make credit available,” Dijsselbloem said. “Had I the opportunity of a levy of 3 billion euros, believe me, I would have done it,” he said. Dijsselbloem reiterated he wants to introduce European-Union-wide rules requiring all bondholders, including senior debt investors, to share in losses when a bank fails. “We need a deeper bail-in,” Dijsselbloem said.
The Netherlands’ top administrative court said at least 25 SNS investors appealed the government’s decision to take control of the nation’s fourth-largest bank and expropriate the securities they owned.
As of Feb. 5, 25 investors had filed an appeal to the Council of State, Wendy van der Sluijs, a spokeswoman for the court in The Hague said yesterday. The deadline for appeals is Feb. 11, 10 days after the SNS nationalization decree. The court will subsequently organize a hearing and present its ruling before the end of the month, she said.
“The court will rule and I am looking at this with confidence,” Dijsselbloem said.