April 3 (Bloomberg) -- The Netherlands pledged to seek European Union approval before setting up a separate bank for unwinding SNS Reaal NV’s property assets, regulators said in a letter.
SNS also pledged not to acquire stakes in any companies or to advertise its state-ownership in return for temporary EU authorization for the Dutch takeover of the country’s fourth-largest lender in February, the European Commission said in the document published on its website today.
“The Dutch state informed the commission that it is seriously considering a bridge bank to completely separate the problematic property finance portfolio from the remaining assets,” the Brussels-based EU authority said. The government “indicated that it would only put the bridge bank in place after having received approval of the commission.”
The EU must still grant final approval for a 300 million-euro ($385 million) recapitalization and a 1.1 billion-euro bridge loan for SNS Reaal as well as a 1.9 billion-euro recapitalization for its SNS Bank unit.
Dutch Finance Minister Jeroen Dijsselbloem on Feb. 1 said SNS’s real estate portfolio would be transferred to a separate real estate management organization that will subsequently wind down the loans. The vehicle would require shareholders’ equity of 500 million euros, according to Dutch central bank estimates.
“We are working on options to isolate property finance, in line with what the finance minister ordered on Feb. 1,” Roland Kroes, a spokesman for SNS Reaal, said by telephone today.
SNS Reaal said last week that the EU wouldn’t allow it to make the next interest payment, scheduled for April 15, on 400 million euros of subordinated bonds due 2041.