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News | 01-02-2013 | 09:05
The Minister of Finance, in close consultation with the Dutch Central Bank (DNB), nationalized SNS Reaal. Customers’ savings deposits were protected and SNS REAAL’s services were guaranteed. The intervention averted a serious threat to financial stability and the economy.
The private sector should contribute to maintaining financial stability
Nationalisation under the Intervention Act (Interventiewet) has become necessary because SNS REAAL is in serious trouble due to its real estate problems. The DNB gave the institution a deadline of 18:00 on 31 January 2013 to come up with a solution. Without such a solution, SNS Bank would go bankrupt and the Dutch financial system would be in serious and immediate danger. The DNB concluded after the deadline had passed that no solution had been found and that nationalisation was the only option to preserve financial stability in the Netherlands. “I carefully examined all alternative solutions involving all parties in the market. But yesterday evening I found myself forced to conclude that no acceptable overall solution had been proposed. I was therefore forced to use the last resort, namely nationalisation. Nationalisation would preserve financial stability and prevent serious damage to the economy. I fully understand that many people will find it repugnant that a large amount of taxpayers’ money will be needed again. That is why I want the private sector to contribute as much as possible to the rescue of SNS Reaal,” said Finance Minister Jeroen Dijsselbloem.
The private sector must share the costs, as far as the DNB deems justified. This means that shareholders and junior creditors will be divested, saving the state €1 billion in expenses. In addition, a one-off special disposal tax of €1 billion will be imposed on banks in 2014.
Intervention and budgetary consequences
DNB found that additional financial measures were needed to stabilize SNS REAAL. The problematic real estate sector of SNS REAAL will be isolated. The entire operation will cost the state €3.7 billion. The money is divided into €2.2 billion in new capital injections, €800 million written off from previous aid programs, and €700 million to put the real estate portfolio on an independent footing.
In addition, the Dutch government will provide EUR 1.1 billion in loans and guarantees worth EUR 5 billion. As a result, the Netherlands’ eurozone balance will fall by 0.6% in 2013, while eurozone debt will increase by 1.6%.
Savings are safe
Depositors and other customers of SNS REAAL will not notice any other changes. SNS REAAL has 1.6 million savings accounts and 1 million checking accounts, and its customers will continue to be served as normal, and their savings will be protected.
Salary Review
SNS Reaal’s CEO and CFO, Mr. Latenstein and Mr. Lamp, have announced their resignation from the board of directors of SNS Reaal. The new board of directors will consist of Mr. Van Olphen and Mr. Oostendorp. The chairman of the supervisory board has also resigned. The current deputy chairman, Mr. Overmars, will take over his position. The directors have not received any bonuses and will not receive any. In addition to the ban on bonuses, the institution also foresees a modest reduction in the remuneration of its employees.
The future of SNS Real
The new management has been instructed to ensure that once SNS REAAL is stabilised and market conditions allow, the business unit is returned to private hands.
Avoid government intervention
This new intervention marks a setback in the efforts to restore the health of the Dutch financial sector. The minister intends to avoid such costly government measures in the future. Minister Dijsselbloem: “In the future, banks must be easier to separate. This means that only the publicly relevant parts need to be saved, rather than the entire institution. Legislation at the European level must ensure that in the future, private stakeholders pay the bills as much as possible.”
Technical aspects
The levy decision and its press release are available on the website.
In 2014, a one-off tax of €1 billion will be levied on banks and paid to the state treasury. This tax is not deductible from corporate income tax. The amount paid by each bank will be proportional to its share of the total amount of deposits guaranteed by the deposit guarantee scheme on February 1, 2013.
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