Econintersect: The fourth largest systemically important bank in the Netherlands, SNS Reaal, has been seized by the government. The action to achieve resolution of the bank failure will have a cost to the government of €3.7 billion ($5 billion).
The total rescue package is €10 billion, including government loans (€1.1 billion), loan guarantees (€5 billion) and €1 billion in contributions from the rest of the Dutch banking system.
SNS Reaal went under because of bad real estate loans. The biggest area of loss came for loans against Dutch and Spanish properties. The bank had been known to be is serious trouble in recent weeks as it desperately searched for private capital to shore up its failing assets. The value of its real estate based assets were €14 billion at the end of 2009. According to Reuters, the assets had fallen in value to €8.55 billion by the middle of last year.
The latest action puts a second of the four systemically important banks in the Netherlands under government ownership. ABN Amro was taken over in 2009 and remains in receivership.
Shareholders in SNS Reaal and all subordinated bond holders will be wiped out in the action, Subordinated creditors will have their claims written down by €1 billion.
The Dutch government will inject €2.2 billion in capital, will write down €700 million in real estate assets and forgive €800 million debt still owed to the government from a previous bailout of €750 million in November 2008.
The Netherlands will see their deficit, already outside the EU limit of 3%, balloon to almost 4% as a result of this added burden.
At the end of 2011 SNS Reaal reported assets of €132 billion ($181 billion).
The following is a press release by SNS Reaal announcing the departure of three top executives coincident to the government takeover:
Friday, February 1, 2013
SNS REAAL NV announces that its Executive Board members Messrs Ronald Latenstein, CEO, and Ference Lamp, CFRO, and Chairman of the Supervisory Board, Mr Rob Zwartendijk, resign from their respective positions. Reason for this decision is that they do not want to and cannot take responsibility for the nationalisation scenario.
In the past few years, Messrs Latenstein and Lamp, together with the organisation and supported by the Supervisory Board, have worked very hard to resolve the issue of the Group’s property finance division. In this process, they consciously worked towards a private solution, because they believe that, from the organisation’s social position, this is the appropriate route. They have done everything in their power to achieve this. They have thus shown their responsibility to safeguard the future of the concern and the interests of the stakeholders. However, the Ministry of Finance has made another choice. The persons in question do not advocate the chosen solution, but respect the choice of the Ministry of Finance. They decided to resign from their positions of their own accord without receiving severance pay and remain available for an orderly transfer.
SNS REAAL regrets the departure of the persons in question, but respects their choice. SNS REAAL is greatly indebted to them for their tireless efforts and expertise with which they served the organisation in recent years. Under their management, a strategic repositioning and social renewal of the organisation was effected. Moreover, they leave behind healthy core activities. Mr Latenstein was CEO and Chairman of the Executive Board of SNS REAAL since 2009. From 2003 to 2009, he was CFO of the organisation. Mr Lamp was CFRO and member of the Executive Board since 2009. Mr Zwartendijk was Chairman of the Supervisory Board of SNS REAAL NV since 2009.
The following in another press release from SNS Reaal:
Friday, February 1, 2013
Following the announcement of the departure of the CEO, CFRO and Chairman of the Supervisory Board at SNS REAAL NV, the other members of the Executive Board and Supervisory Board decided to remain in their current positions to ensure continuity of the Company. The members in question will enter into a consultation with the new shareholder. The current Vice President of the Supervisory Board will for the time being fulfil the role of Chairman of the Supervisory Board.
- Decree by the Minister of Finance regarding the expropriation of securities and capital components of SNS REAAL NV and SNS Bank NV (Minister of Finance, The Netherlands, 01 February 2013)
- Nationalisation of SNS REAAL (J.V.R.A. Dijsselbloem, Minister of Finance, The Netherlands, 01 February 2013)
- Netherlands nationalises SNS Reaal (Matt Steinglass, Financial Times, 01 February 2013)
- Dutch nationalise SNS Reaal bank group in $14 billion rescue (Thomas Escritt and Anthony Deutsch, Reuters, 01 February 2013)
- Resignation announcement Ronald Latenstein, Ference Lamp and Rob Zwartendijk at SNS Reaal (Press release, SNS Reall, 01 February 2013)
- Composition Executive Board and Supervisory Board as per 1 February (Press release, SNS Reall, 01 February 2013)