Chaos In Public Housing

undertheradar's picture

On January 30, Het Financiele Dagblad reported that Vestia, the biggest Public Housing Corporation in the Netherlands with 79 thousand rental units, had had a margin call of 1.6 billion euros on its interest rate derivative portfolio. Vestia had doubled its derivative contracts to 10 billion dollars (in notional value) in 2010 on a loan portfolio of 6 billion euros. They say they had arranged the extra “coverage” already for potential future loans.


The loan to cover the shortfall had secretly been provided by the fund guaranteeing Public Housing Corporations, the Warborgfonds, since September 2011. Recently Vestia was able to secure a replacement loan from the De NederlandseWaterschapsbank.


According to RTLZ, Vestia's Contract Support Annexes will have to be examined in detail to figure out exactly what the conditions are. The Interior Minister has been promised the results of this examination sometime in March.


Twenty Woningcorporaties are preparing to guarantee Vestia liquidity of another billion euros. They will demand strict conditions on this sum according to NRC. They want assurances that they will not have to contribute to the Centraal Fonds Volkshuisvesting (CNV) so-called reorganization support if any other corporations get into trouble.


It is not entirely clear how many Woningcorporaties have derivative contracts but newspaper Trouw estimates there to be 148 of them. A fall in interest rates of one percent would require 24 to seek additional funding, according to Interior Minister Spies in NOS news. Another 24 on the other hand have been rumoured to be able to withstand this scenario. RTLZ reports that 20 of them have already had margin calls on their derivative products.


It could all lead to a viscous spiral downwards in the sector according to NRC Handelsblad. In fact, four directors of other Woningcorporations anonymously state in Trouw that Public Housing corporations are too lax in offering guarantees to each other through the Waarborgfonds. If the government or the CNV intervenes, it could alarm bankers who will call in all outstanding Vestia loans (NRC). This is not likely according to Vestia mouthpiece Ronald Florisson because the corporation now has enough funding on hand thanks to the winding down of the derivative contracts. Florisson is “very thankful” for the arranged backstop.


Vestia has jacked up the rents for new renters by 9 percent. Several opposition parties are not amused and are going to protest in Parliament this week.


Director Eric Staal left Vestia with a rather unusual golden handshake of 3.5 million euros, allegedly to secure his pension requirements. He had earned 500 thousand euros a year, two or three times the norm for directors of public and semi-public institutions. However this is all being investigated. The PVV (Partij Voor de Vrijheid) is demanding the seizure Staal's Caribbean villa.


Vestia's Advisory Board has recently confirmed that the current director is being paid according to the “Balkenende norm” set by government for the sector. These semi-public servants are allowed to earn 130 percent of a Government Minister's salary, which was 187 340 euros in 2011, plus expenses of 7560 euros. Despite the fact that the salaries of these directors of semi-public institutions have to be published, there are regular scandals in which they have been found to receive much more.


Another noteworthy example of things coming unhinged in the Public Housing sector involves a management company working for one of the corporations. These companies stand between buyers and renters of Woningcorporatie properties and do investment and development work in the sector.


It was reported on 23 February that management concern Redema had had the Owners' Associations savings accounts put into bank accounts in its own name and went bankrupt. It will cost 'hundreds' of families at least 1.5 million dollars. Since more and more public housing is being sold off instead of rented, the whole phenomenon of Owners' Associations is relatively new for many people.


So there is lots of uncertainty in Public Housing these days. The entire Public Housing Corporation sector has loans (I don't believe they issue bonds) outstanding of around 85 billion euros, ultimately guaranteed by government. According to writer Peter Verhaar at, Standard and Poors rates the sector “extremely strong”. Verhuur argues that the problems are largely due to Public Housing having undergone a fake privatization.


Undertheradar's goal is to give an impression of the state of economics, finance and politics in the Netherlands and compare it to its partners in the eurozone.

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Tompooz's picture

The Netherlands now sports a minister of Foreign Affairs by the name of Uri Rosenthal.  The xenophobic PVV leader, Geert Wilders is financed by Likud Nederland and egged on by his Israeli friends to start a War on Islam, not just in the Netherlands, but in most of Western Europe, if his fascist supporters can pull it off.

The PVV, "Party for Freedom" (hah!) is hell-bent on turning the country into a nasty police state.

Treason Season's picture

God verdomme! What the hell has happened to little Holland! It used to be one of the most well run countries in the world and now just another fucked up nwo colony. Maybe it always was and the veneer is just wearing off. When I lived there years ago the Dutch were so proud of their gov't, so honest and transparent they bragged. And the royalty so exhalted. Liitle did they bother to look behind the guilded trappings. Ha! Murderering Serbs in NATO jets, aiding and abetting the slaughter of Moslems in Bosnia, overrun in their homeland with Turks, and Moroccoans and Guyanese, well at least the Turks work for a living. Getting suckered on the Guilder/Euro transition, reportedly the worst exchange rate in all the Euro zone. And now foreigners can't even smoke a joint in A'dam! Wat jammer. Tot ziens Nederlanders, ne tot straks. Hope for your sakes you can kick the modern day euronazis out like you did once before and reclaim your country. Veel succes!

Reptil's picture

Privatisation happened. and it had nothing to do with a free market.

"Na de hoogmoed komt de val."

Actually, ordinairy dutch are still the same, quite independent and not that corrupt. But they have been sleeping. The "management" lives by other rules. NO one owns gold here, private mortgage debt is one of the highest in the world. That was ok, because real estate never devalues (in real money), right?




undertheradar's picture

I have to add a link because it contains information on Vestia's additional position taken over 2011. Vestia's position in interest rate swaps were 20 billion euros notional, and the margin call was 2.5 billion euros sometime in 2011. Interesting that the information was conveniently left out in the Dutch press I sourced. And of course I hardly believe in the silverlining comment I posted below, but it is being used by these institutions as realistic :) I think most of you can draw your own conclusions anyway on the rather bland stuff I include. Things like if this was being solved in September, were there absolutely no politicians in the know? The people in on it were and are at an incredible advantage or not depending on if they are found out, and when an insurance facility gets plundered people ought to know...

VonSalza's picture

Dutch publichousing sector gonna become a shitblizard real soon.

Fed_Printstone's picture

 It's called "WAARborgfonds" with double-a.


On the other hand "WARborgfonds" just sounds comical in Dutch and means "Fund for Assurance of Insanity/Confusion"... (E.g. "verwarring") subliminal truth in advertising perhaps?



Also.. "It could all lead to a viscous spiral downwards" LOL, no shit!

I've said it before on ZH: the entire Dutch real estate sector is one huge ticking nuclear bomb just waiting to go off. The decades upon decades of BS regulation has left it beyond effing broken and the entire country still believes it's the best in the world.

undertheradar's picture

Thanks Fed_Printstone. It'd be nice to find someone to edit these posts. The second last paragraph should also read 1.5 million euros. In the meantime, I'm glad you're having a laugh ;)

onebir's picture

I had a bit of a giggle too. But it was a good article, and something unlikely to be covered in English, so thanks! :)

non_anon's picture

time to get those euthanasia mobiles rolling in the Netherlands

undertheradar's picture

Hey there,

Thanks for your comment. In future posts I will try to explain how we in the Netherlands are straining (and perhaps losing the battle) under an incredible debt burden, much of that in mortgages. But there has already been stuff on that here and if you dig into links you will find a lot. So I risk repeating the work of others, which I will inevitably do. So I will add a link here:

I forgot to mention, that Warborgfonds "bridging loan" I guess I will call it had used up the insurance facility's entire fund for at least 5 months. The silver lining is that if interest rates go up, these corps may actually get some benefit from these contracts, or at least see their collateral return in bits.

RafterManFMJ's picture



You guys in the Nethelands better be careful less you find your houses underwater.

Reptil's picture

Actually I'm renting (for quite some time now) until this whole thing comes down in a vertical movement.

Surprisingly it's held together until now.

The management left with the table silver... surprise surprise..

HungrySeagull's picture

After pawning the bridal cups I bet...

Pawn = Old American way to gain credit via cash percentage of value.

Ghordius's picture

Actually the "homeowners" quota of the Netherlands is about 60%. Which is somewhat higher than the typical EU quota of 50%.

The "stability" of a housing market is heavily dependent on this. Push the quota higher (some nation's favorite pasttime) and you can have a runaway overpriced market.

Keep the rental quota high and you have a comparison that keeps some sanity in the market - the option is there to sell and rent. See above.

Which just reminds me that the article is pointing to the toxic accumulation of derivatives on a rental company's balance sheet - which is a scandal that has only indirectly something to do with the Dutch housing market.

andyupnorth's picture

Semi-public corporations = crony capitalism

Zero Govt's picture

public-private partnerships = bankrupt taxpayer propped-up monopolies

Clowns on Acid's picture

Ahhh...this is nothin' compared to the fraud of Fannie Freddie, Public housing (projetcs) in all major US cities, and the Gov't enforced no doc loan bs as legilated by the CRA Act in the US.

The Netherlands? Puh feckin' leeze, They could never, in their wildest socilsit dreams feck it up worse than the DEM party has in the US.



Reptil's picture

There is absolutely NOTHING that is socialist about this country anymore, for quite some time. (Corporatist model state, Polder-fascism)
Apart from Jan met de Pet (Joe Sixpack) having to pay the bill, eventually.
But yeah, it could be worse.