SNS Investors Say ‘Impossible’ Dutch Capital Demand Was Illegal

SNS Reaal NV investors wiped out by the Dutch lender’s nationalization said the Dutch central bank acted unlawfully when it demanded an immediate 1.8 billion-euro ($2.4 billion) capital increase in January.

“The central bank gave SNS Bank a task which was impossible to fulfill,” Dutch investors’ group VEB, representing more than 8,000 holders of SNS Reaal securities, said in notes prepared for a hearing at the central bank today. The order was unlawful, The Hague-based group said.

Dutch Finance Minister Jeroen Dijsselbloem took control of SNS Reaal after real-estate losses brought the fourth-largest Dutch lender to the brink of collapse. Shareholders and some bondholders were expropriated in the rescue without any compensation as he sought to limit taxpayers’ costs. The nationalization, which became irrevocable on Feb. 25, has triggered multiple court cases and appeals as investors fight their bail-in.

The Enterprise Chamber of the Amsterdam Court of Appeal last month heard arguments on whether the minister was right to refuse compensation. SNS Reaal itself also appealed the central bank’s Jan. 27 decree, VEB said in notes today. The lender has until July 8 to substantiate its objections, VEB said.

“I can confirm SNS Reaal filed a pro-forma appeal against the central bank’s decision before the nationalization on Feb. 1,” Jeroen de Graaf, a spokesman for the lender, said by phone today. “We are still considering the grounds for the appeal.”

Tobias Oudejans, a spokesman for the Amsterdam-based central bank, declined to comment on SNS Reaal’s appeal. Under Dutch law, complaints regarding the central bank must be made first to the bank itself. The central bank’s response can be appealed in administrative court.

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