Tag Archives: SNS rescue

‘Nationalization of SNS – Costs 3,7 billion’

The bullet is through the church, or so it is (literally) said in the Netherlands: the nationalization of SNS Reaal, which was expected, is now a fact. The first interesting development is that the Dutch budget deficit increases to 3,3% or in other words: over the limit set by the EU. But Finance minister Jeroen Dijsselbloem says this nationalization was inevitable, because the bank would have gone bankrupt otherwise, and very soon too.

Regarding the junior/subordinate bonds:

Het ministerie van Financiën onteigent de investeerders die achtergestelde leningen hebben gegeven aan SNS Reaal. Dat scheelt de schatkist volgens Dijsselbloem een miljard euro. De Nederlandse banken moeten ook bijdragen aan de overname.

In other words – the Finance ministry disowns the investors that had subordinate loans to SNS Reaal, which apparently makes a difference of 1 billion (shareholders are also not protected). Also the other Dutch banks are supposed to contribute to the nationalization – they have to pay banking fee of 1 billion. But in exchange, they can take more time to fill a fund that is meant to protect the accounts of normal account holders.

 

I am not sure if this write-down of subordinate bonds is the issue referred to by Fitch, but the whole episode is quite dramatic, especially since the bank received support in 2008 already, and the Dutch financial system doesn’t yet seem any more stable.

SNS Reaal press release and reaction

Today the NRC/Handelsblad newspaper had some news on the developments of SNS Reaal. Nothing substantial has happened yet, but because of all the rumours SNS has released press information. The relevant issues here are that SNS is considering many scenarios which would bring relief to the bank’s capital problems – and preferably solutions by private investors. But the bank explicitly states that it is not clear whether or not such a scenario is feasible.

Furthermore, the bank mentions possible increasing future losses at its property business (the main element of the bank’s problems). The editor of the Economy supplement of the NRC newspaper states that the press release hardly inspires confidence – rather the opposite. He sees it as a ‘last call to the life-boats.’

 

Meanwhile, the Dutch finance minister Jeroen Dijsselbloem has stated that the bank is a systemic bank and therefore too big to fail.