The Dutch government took control of one of the country’s biggest financial institutions, SNS Reall, after the troubled company failed to find a private-sector buyer.
Finance Minister Jeroen Dijsselbloem said the government would spend 3.7 billion euros, or $5 billion, in taxpayer money to clean up the bank, which has struggled for years with unprofitable real estate loans. The government will also require the country’s top three banks â€" ING, ABN Amro and Rabobank â€" to contribute 1 billion euros next year in a one-time payment, he said.
The moves comes as Europe continues to deal with a sluggish economic and debt problems. Last year, Spain last year took over Bankia, a mortgage lender also hurt by property deals.
Problems at SNS Reall, which is based in Utrecht, had intensified in the last two weeks as depositors began losing faith, fearing talks with potential buyers would fail. The company had been reportedly negotiating possible investments with CVC Capital Partners and oter funds in the hope of averting disaster.
Mr. Dijsselbloem, the finance minister, said in a statement that the takeover ‘‘was made necessary by the extreme situation’’ of the bank, and the ‘‘serious and immediate threat posed by that situation to the stability of the financial system.’’
Shareholders and subordinated bondholders of SNS Reall will be wiped out, effective immediately, Mr. Dijsselbloem said. The holders of senior debt will be repaid and depositors will not lose their money.
Three top executives of SNS Reall said in a statement that they were stepping down, as ‘‘they do not want to and cannot take responsibility for the nationalization scenario.’’ The three â€" Ronald Latenstein, the bank’s chief executive, Rob Zwartendijk, the chairman, and Ference Lamp, the chief financial officer â€" said they had done ‘‘everything in their power’’ to avoid a bailout.
‘‘The persons in question do not advocate the chosen solution, but re! spect the choice of the Ministry of Finance,’’ according to a statement.
The announcement is the latest in a spate of recent bad news about European banks. On Thursday, Deutsche Bank’s 2.2 billion-euro loss. Monti dei Paschi di Siena, which received a bailout from the Italian government last year, remains troubled.
The case of SNS Reall also adds urgency to efforts to set up procedures to identify and wind down terminally ill banks in a way that does not burden taxpayers. European leaders and regulators agree that they need a way to dispose of bad banks but have not been able to agree on a way to do so.
In fact, some of the impetus for the Dutch government’s action might have come from the planned transfer of bank supervisory responsibility away from national regulators to the European Central Bank, as well as the pressure of new bank regulations. Regulators and industry executives may have decided that it is best to act now rather than let the E.C.B. dictate their actions.
Te move also marked the transfer of another of the Netherlands’ biggest financial institutions into state hands. The Dutch business of ABN Amro was nationalized in October 2008 after the collapse of Lehman Brothers sent the world financial system into shock.
ABN Amro had been taken over and split up by Royal Bank of Scotland, Fortis and Santander in a 2007 deal that has since come to epitomize the worst excesses of the credit bubble. Both Royal Bank of Scotland and Fortis, once the biggest Belgian financial house, were laid low by the debt burdens they took on for the ABN Amro deal when the credit crisis struck.
The ABN Amro deal also marred SNS Reall, which needed a bailout in 2008 after it acquired the broken-up lender’s property business. That bailout has not been fully repaid.
As part of the deal announced Friday, the state will forgive 800 million euros of the unpaid bailout loans, inject 2.2 billion euros into SNS and write off 700 million euros from the bank’s property ! portfolio! . ING estimated that its share of the cost of bailing out SNS Reall would come to 300 million to 350 million euros, but said the impact on its finances would be limited.
