Dutch 4th Largest Bank SNS Nationalised After Real Estate Losses

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Source: Bloomberg – SNS Nationalized in Netherlands After Real Estate Losses

Notable excerpts:

The 3.7 billion-euro ($5 billion) nationalization of SNS Reaal NV (SR), the fourth-largest Dutch bank, was the only way to protect savers and the banking system, Prime Minister Mark Rutte said.

The collapse of SNS would have put both in danger,” Rutte told reporters in The Hague yesterday. “We needed to intervene.

SNS, which acquired ABN Amro Holding NV’s property-finance unit in 2006, has been hurt by losses on real estate loans that left it struggling to repay a government bailout before next year’s deadline and bolster capital.

The move comes less than five years after the Netherlands bought Fortis’s Dutch banking and insurance units and its stake in ABN Amro for 16.8 billion euros when the company ran out of short-term funding and customers withdrew deposits. The government also provided aid to ING Groep NV (INGA), the biggest Dutch financial-services company, and Aegon NV (AGN) at the time.

The state will inject 2.2 billion euros of capital into SNS Reaal, write down 800 million euros on its earlier aid package and use 700 million euros to put the real estate portfolio at arm’s length.

Customers withdrew about 1.4 billion of deposits since Jan. 16, according to a finance ministry document.

SNS Reaal is the smallest of four Dutch banks designated as “systemically important,” or too big to fail, by the Dutch central bank. It had 32.5 billion euros in savings at the end of the third quarter…

Following the financial crisis that led to nationalization of the Dutch parts of Fortis and ABN Amro and the bankruptcy of DSB Bank NV, the Netherlands adopted legislation allowing it to transfer banks’ assets, liabilities or stock.

It is concerning that about half of the Dutch insurance and banking industry is now state-owned,” said Benoit Petrarque, an Amsterdam-based analyst at Kepler Capital Markets. “That could be a reason for the Netherlands to accelerate some exits.

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