Black Friday in Netherlands as SNS nationalised, pensions cut and house price down again

Investors in the Netherlands were today nursing losses after the government announced the nationalisation of SNS Reaal, one of the country’s four biggest banks.

Announcing the takeover, finance minister Jeroen Dijsselbloem is reported saying the state bailout was needed to prevent the Netherlands’ fourth-largest bank from collapsing. quoted Dijsselbloem saying: “‘Today, SNS Reaal has been fully taken over by the Dutch state. Without finding a solution, there was an immediate and dangerous situation for financial stability. I had to conclude that nationalisation was inevitable.”

The Dutch news service also reported the direct costs of the nationalisation as €3.7bn including a capital injection of €2.2bn. The state is set to provide €6bn in loans and guarantees for future operations.

Shareholders and lower tier creditors are set to loose their investments. Shares in the bank fell 57% in the past year before being suspended today in Amsterdam, reported Bloomberg

The move means that two of the country’s four biggest banks are now under government control: SNS Reaal and ABN Amro. The latter was bailed out and taken over by the state after a disastrous aquisition deal in which ABN Amro was bought by a consortium of RBS, Fortis and Santander, in what was then the biggest ever European banking takeover. The price was too high, however, and of the takeover troika only Santander escaped the subsequent financial crisis unscathed. RBS fell back on UK taxpayer support, while Fortis was firstly bailed out then broken up by Benelux governments.

It was reported earlier this week that private investment group CVC Capital was in discussions with the government about a proposed takeover of SNS Reaal, but that was dismissed because it would have left the state holding risk without equal say in corporate decisions. Discussions involving other Dutch banks ABN Amro, ING and Rabobank failed because two of these, ABN Amro and ING themselves have had state aid, and therefore there were objections from authorities at the EU in Brussels.

SNS CEO Ronald Latenstein, CFO Ference Lamp and supervisory board chairman Rob Zwartendijk are leaving their roles. Latenstein will be replaced by Achmea BV CFO Gerard van Olphen.

Pensions, housing

As if to compound the misery for Dutch investors today the country’s statistics organisation CBS reported that Spain and Ireland were the only two other European countries where house prices fell more sharply in the past four years.

Prices across Europe as a whole have stabilised – relatively speaking – having recorded a fall of -2.5% in the third quarter of 2012 compared to the same period a year earlier. But in the Netherlands the fall year-on-year was recorded as -8.7%. Prices in Spain fell -15% and Ireland -10%. In contrast prices rose about 8.5% in both Norway and Estonia.

Also today, it has been reported that retired engineering workers in the Netherlands face cuts of more than 5% to their pensions.

Cuts of 6.3% will hit scheme members in the PMT engineering and technical workers fund. Members in the PME electrical engineering fund will see a cut of 5.1%.

The cuts are a response to the deficit in their respective coverage ratios – the ratio of assets to liabilities. By law Dutch pension funds must maintain a ratio of 101%, but both funds are reported as having ratios below 95%.


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