SNS Reaal NV won temporary approval from European Union regulators for recapitalizations and a bridge loan from the Dutch government, which took control of the country’s fourth-largest lender earlier this month.
A restructuring plan for SNS Reaal must be sent to the European Commission within six months before the Brussels-based authority gives final approval for the aid, the EU said in an e-mailed statement today. The EU will examine a 300 million-euro ($395 million) recapitalization and a 1.1 billion-euro bridge loan for SNS Reaal and a 1.9 billion-euro recapitalization for its SNS Bank unit.
“The intervention by the Dutch state leads to far-reaching and appropriate burden sharing by shareholders and hybrid capital holders,” the EU said in the statement. “Through the nationalization all capital holders of SNS Reaal and SNS Bank -- including hybrid capital holders -- are fully participating in the losses of SNS Reaal.”
The EU must examine large government payments to banks to ensure they don’t receive an unfair advantage over rivals. It has required banks to sell assets or set limits on executive bonuses, acquisitions and dividends to compensate for harm to competition in return for final approval for state help.
Today’s decision allows the Dutch government to proceed with the capital injections and the bridge loan, Ben Feiertag, a spokesman for the Dutch finance ministry said in an e-mail.
Roland Kroes, a spokesman for SNS Reaal, said the bank had “taken note of the announcement and will get started on the restructuring plan.”
Dutch Finance Minister Jeroen Dijsselbloem took control of SNS Reaal on Feb. 1, after real estate losses brought the bank to the brink of collapse. The nationalization included shares and subordinated bonds in SNS Reaal and SNS Bank. The bailout of SNS Reaal will cost taxpayers 3.7 billion euros in write-offs and capital injections, and the government is also providing 6.1 billion euros in loans and guarantees.
Dijsselbloem, sworn in on Nov. 5, became the first finance minister to use powers granted under legislation introduced last year allowing the Dutch central bank to transfer assets and liabilities in a troubled bank. A decision that is allowable when there is a grave and immediate threat to the stability of the financial system.
Investors are appealing in Dutch courts the government’s expropriation, claiming it is disproportionate and relies too heavily on one assessment of the company’s real estate loans.
The nationalization comes less than five years after the Netherlands bought Fortis’s Dutch banking and insurance units and its stake in ABN Amro Holding NV for 16.8 billion euros when the company ran out of short-term funding, customers withdrew deposits and investors lost confidence. The government also provided aid to ING Groep NV, the biggest Dutch financial-services company, and Aegon NV at the time.