Dutch SNS Bank Fails On Real Estate Losses: First "Too Big To Fail" Nationalization In Five Years

Tyler Durden's picture




 

Earlier today we got one hint that not all is well in the European banking system, as far less than the expected €200 billion was tendered back to the ECB in the second LTRO repayment operation, when just 27 banks paid back some €3.5 billion. Another, perhaps far bigger one, comes courtesy of AAA-rated Netherlands, which just experienced its first bank failure since 2008 following the nationalization of SNS Reall NV, as the previously announced bad loan writedown finally claimed the bank. As a reminder, half a month ago we got news that "SNS Reaal NV (SR), a Dutch bank and insurer struggling to wind down a money-losing real estate lending unit, fell the most in more than two months after a report said it may have to post a 1.8 billion-euro ($2.4 billion) writedown on property-finance loans." Today we got the inevitable conclusion: nationalization, one which will cost taxpayers about $5 billion to avoid contagion to what many see as Europe's "strongest" banking system.

From Bloomberg:

The move, aimed “at stabilizing the SNS Reaal group,” will cost taxpayers 3.7 billion euros ($5 billion), the Dutch Finance Ministry said in a statement today. SNS’s property- finance unit will be separated from the company.

 

“I scrutinized all alternative solutions involving market parties,” Finance Minister Jeroen Dijsselbloem said. “Yesterday night I found myself compelled to conclude no acceptable total solution was offered. I therefore had to use the instrument of last resort, which is nationalization.”

 

The lender, which acquired ABN Amro Holding NV’s property- finance unit in 2006, has been hurt by losses on real estate loans that have left it struggling to repay a government bailout before next year’s deadline and bolster capital buffers. The nationalization includes all issued shares, core tier 1 capital securities and subordinated bonds, the ministry said.

 

SNS shares were suspended in Amsterdam. They last traded yesterday at 84 cents, valuing the company at 242 million euros, and have declined 57 percent in the past year.

 

...

 

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.

 

“Nationalization would safeguard financial stability and prevent serious damage to the economy,” Dijsselbloem said. “I want the private sector to contribute as much as possible.”

 

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, according to a Nov. 15 presentation. ING, Rabobank Groep and ABN Amro are its three largest competitors.

So if one of the most stable banking systems in Europe is not quite as stable as expected, one can only imagine what is going on in Spain and Italy, and how many hundreds of billions more in taxpayer aid will have to be shelved out once the soaring bad loans in these two countries can no longer be swept under the rug. 

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Fri, 02/01/2013 - 08:24 | 3205600 blabam
blabam's picture

FUCK YOU DIJSSELBLOEM!

Fri, 02/01/2013 - 08:28 | 3205612 DutchDude
DutchDude's picture

Dijsselbloem and central banker Klaas Knot are the same kind of BanksterBuddy as DeJager and Wellink were

Fri, 02/01/2013 - 09:12 | 3205720 Poetic injustice
Poetic injustice's picture

There is never one cockroach.

Fri, 02/01/2013 - 09:30 | 3205768 Silvarouvres
Silvarouvres's picture

The juicy part has not been mentioned yet. Using a brand new law on nationalization (2012), shareholders and bondholders are wiped out. Fitch specifically warned that if the dutch government were to do this, it would downgrade the entire European banking sector. Interesting start for Dijsselbloem, new head of the Euro group. He also let no room for interpretation whether or not this part of the new law would be applicable in the SNS Reaal case: "I can sympathise easily with the resistance many will feel because we again will need to use a large amount of public money,” Mr Dijsselbloem said. “This is why I want the private sector to pay as large a share as possible of the rescue of SNS Reaal.” "

http://www.ft.com/intl/cms/s/0/3e1d027e-6c47-11e2-b73a-00144feab49a.html#axzz2JeBRPYKX

http://blogs.ft.com/economistsforum/2013/01/go-fitch-go/

Fri, 02/01/2013 - 11:00 | 3206058 Silvarouvres
Silvarouvres's picture

Shareholders and subordinated bond holders lose their money, ordinary bondholders do not it seems

Fri, 02/01/2013 - 11:13 | 3206165 HoaX
HoaX's picture

First of all a heartfelt FUCK YOU to Fitch for threatening a downgrade of all European banks if Shareholders where to lose a single cent on this. They and subordinate creditors rightfully pay for the risks they took in exchange for higher interest rates in case of the latter.

Secondly their wasn´t much of a choice and I think Nationalization in this case was the only solution, as much as I bet you Americans would have preferred a European Lehmans.

Fri, 02/01/2013 - 14:09 | 3206782 glenlloyd
glenlloyd's picture

The pattern has become very clear...it's always some excuse about how they need money from the public purse.

This is just throwing more good money after bad to save something that cannot be saved.

Fri, 02/01/2013 - 09:40 | 3205823 unrulian
unrulian's picture

there are only two things i hate in this world...intolerence....and the Dutch

Fri, 02/01/2013 - 09:50 | 3205853 marathonman
marathonman's picture

Well played unrulian.  Well played....

Fri, 02/01/2013 - 13:33 | 3206680 Xandrino
Xandrino's picture

So which third world piece of shit country are you from? Dying for the answer

Fri, 02/01/2013 - 14:55 | 3206908 WTFUD
WTFUD's picture

Pluto! I am Plutonite. Got a problem with that earthling? Stay the fuck away from my planet or i Zirp and zarp you.

Fri, 02/01/2013 - 08:30 | 3205614 GetZeeGold
GetZeeGold's picture

 

 

Oh you're just begging for some little Dutch boy with wooden clogs to come and kick your ass.

Fri, 02/01/2013 - 08:24 | 3205604 LongSoupLine
LongSoupLine's picture

I pray it's a contagion event and Bernanke is in the fucking path of the fucking train. Motherfucker.

Fri, 02/01/2013 - 09:03 | 3205699 Banksters
Banksters's picture

Hopefully the bond and equity holders are made whole.  It is only fair...   Barf

Fri, 02/01/2013 - 09:10 | 3205714 EscapeKey
EscapeKey's picture

I was about to suggest that the Dutch central bank buy all the troubled assets - like they do in the US?

Fri, 02/01/2013 - 14:58 | 3206919 WTFUD
WTFUD's picture

that will be the windmills drying the socks! clean energy bud.

Fri, 02/01/2013 - 08:26 | 3205607 news printer
news printer's picture
Suicide bomber strikes US Embassy in Ankara

http://goo.gl/WLnhM

Fri, 02/01/2013 - 08:35 | 3205616 GetZeeGold
GetZeeGold's picture

 

 

The UN should outlaw that crap.

Fri, 02/01/2013 - 09:08 | 3205708 nmewn
nmewn's picture

Or at least issue a strongly worded statement breathlessly reported by Ann Compton!

Fri, 02/01/2013 - 08:44 | 3205639 Sudden Debt
Sudden Debt's picture

in Ankara... JEeezz.... that's not news! Over there it's probably just some kids playing suicide bomber! Perfectly normal...

The only question I pose is this: IF IT'S A KIDS WHO KILLED HIMSELF FOR ALLAH, WILL HE ALSO GET 7 VIRGINS?!

just saying because when I was a kid I didn't like girls and only wanted to play with my friends... so this kid will be bored as hell!

SO HEAVEN WILL BE HELL!

 

That's some deep shit he? Yep... on fridays, I mostly get phylosfical when I don't get my boose on time...

Fri, 02/01/2013 - 09:00 | 3205687 Diplodicus Rex
Diplodicus Rex's picture

"7 VIRGINS" or when it is accurately translated from the Arameic, "7 white raisins".

Fri, 02/01/2013 - 09:01 | 3205694 Acet
Acet's picture

+1 For semi-incoherent ranting due to lack of booze

Fri, 02/01/2013 - 08:29 | 3205609 Troy Ounce
Troy Ounce's picture

Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run..........

Fri, 02/01/2013 - 08:33 | 3205624 Zwelgje
Zwelgje's picture

In Holland it is forbidden to call for bank runs. Yet they claim to have freedom of speech.

Fri, 02/01/2013 - 08:57 | 3205686 Troy Ounce
Troy Ounce's picture

Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run Bank run bank run bank run bank run bank run bank run

Fri, 02/01/2013 - 09:02 | 3205692 GetZeeGold
GetZeeGold's picture

 

 

Clean up on aisle 5.

Fri, 02/01/2013 - 08:29 | 3205610 Troy Ounce
Troy Ounce's picture

Bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run bank run..........

Fri, 02/01/2013 - 08:30 | 3205611 francis_sawyer
francis_sawyer's picture

It's hard to build houses out of tulips...

Fri, 02/01/2013 - 08:33 | 3205623 kridkrid
kridkrid's picture

The tulip bubble was so irrational. Assigning so much value to something that was basically worthless... Crazy. Shit, I forgot to get to the ATM. Kids need lunch money.

Fri, 02/01/2013 - 09:28 | 3205766 GetZeeGold
GetZeeGold's picture

 

 

Don't leave the house without your Bitcoins kids.

Fri, 02/01/2013 - 09:13 | 3205725 WmMcK
WmMcK's picture

Or seashells or paper ...
and while Au is ductile and malleable the damn contractors keep running off with the materials!

Fri, 02/01/2013 - 15:05 | 3206955 WTFUD
WTFUD's picture

only tulips from amsterdam. . .but in france the twolips are to die for. lip service! back to holland some of those manufactured window breasts, well, you could shelter in those; just sayin

Fri, 02/01/2013 - 08:34 | 3205625 youngman
youngman's picture

So bank staaaak....or gold and silver.....you make the call

Fri, 02/01/2013 - 08:34 | 3205626 orca
orca's picture

DSB Bank failed in October 2009.

Fri, 02/01/2013 - 08:42 | 3205630 Sudden Debt
Sudden Debt's picture

In Holland, almost everything is under water... it's only because of the dikes that they're not drowning.

And Holland sure does have a lot of dikes...

But... give global warming a bit more time...

AND POOF!!! MORE SEAFRONT PROPERTY FOR BELGIUM!!!

BOEYAAAAAHHHH!!

According to ancient records from the middle ages, I should be able to see the sea from my house!

Seaside => More expensive => MO MONEY FOR ME!!! => DROWN YOU DUTCH!!

 

Fri, 02/01/2013 - 09:02 | 3205693 Sudden Debt
Sudden Debt's picture

looks like already 2 EVIL DUTCH GUYS ALREADY DOWNED ME!

or 2 dikes who don't like to be called dikes...

SAME SAME!

Fri, 02/01/2013 - 10:40 | 3206033 Joe A
Joe A's picture

Only 20% of the country lies below sea level, not most of the country.

Fri, 02/01/2013 - 08:46 | 3205633 THE DORK OF CORK
THE DORK OF CORK's picture

A new commuter rail station in Zaragoza Spain which sees just 60 passengers a day..............

 

http://www.youtube.com/watch?v=yDwL9EPq_Qw

 

es.wikipedia.org/wiki/Estación_de_Miraflores

 

Although this station is badly located - being away from much apartments and houses (other then the local football stadium) , Spain like all ALL euro countries is seeing a chronic lack of domestic demand & local commerce  as a result of the use of the euro dud note which is far too hard a currency for use as a medium of exchange.

 

It is not in fact a currency like a national token but a capital token that now ironically cannot use & distribute capital.

Fri, 02/01/2013 - 08:49 | 3205657 Sudden Debt
Sudden Debt's picture

So? In Belgium half of the stations half almost NO passengers!

I had to take the train a few month ago because my car broke down, so I went to the station about 4 miles from my home.

A train stops every 20 minutes, and I was there all alone!

Off course, we still piss money so it's not a real problem for us....

Fri, 02/01/2013 - 09:10 | 3205715 THE DORK OF CORK
THE DORK OF CORK's picture

@Sudden debt.

 

Well the purpose of the eurozone seems to be the export of capital to other shores so your obervations make some sense......

 

We don't piss money in the eurozone...........where is the supply ?

We piss capital.

Fri, 02/01/2013 - 09:21 | 3205740 Ghordius
Ghordius's picture

money is not capital - and your request of further monetary easing does not increase capital, it just changes it's allocation and it's market value in (fiat) money terms

Fri, 02/01/2013 - 10:43 | 3205760 THE DORK OF CORK
THE DORK OF CORK's picture

I have already made that distinction ..........see above.

 

Monetary easing ?

Its not really monetary / banking stuff I am talking about.

 

A real nation can just deposit real money into peoples accounts.............no need for double entry stuff even.

 

The money we use in Europe is not local to its economic hinterland.

 

 

 

i.e. You deposit euros into peoples accounts and it will just suck in imports.

 you deposit pesatas into Spanish peoples accounts and it will stimulate local demand.......

 

People will have enough money tokens to go and watch the soccer match etc etc.

Though it would inflate the cost of car  /air travel and other high energy input activities.

 

My argument orbits around the fact that the Euro is not real money.

It is not a creature of the nation state.

 

PS

And the above actions  can increase the amount of surplus capital.............if people don't drive their cars  ,real surplus capital can be freed for other uses.

Although in the euro market state any sacrifices made by people is only wasted on free banking grot as the free banks capture all the available surplus to express short term profits.

 

These sort of entreport activites are no longer sustainable at such a high $ oil price.

 

http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-SF-12-051/EN/KS-SF-...

 

 

The Amsterdam Entrepot.

en.wikipedia.org/wiki/Amsterdam_Entrepôt

 

PS the recent Irish horsemeat in beefburgers scandal did not highlight any real health scandal as such - rather the absurd nature of inter european trade so as to avoid labour value.

 

The non national Euro is the vehicle for this darkness.

Its strength enables it to buy oil rather then local labour , increasing profits.

But now as labour value is subtracted there is less and less demand and indeed progressive local skill shortages develop throughout the euro market state over time......... beginning I should think since about 1980 ~

 

Fri, 02/01/2013 - 12:20 | 3206420 Ghordius
Ghordius's picture

interesting theory, but I find it has a hole you'd have to fix first

my understanding of a national currency is based on taxes - whatever the nation-state collects as taxes is the currency

be it copper coins, or francs, or euros, or tally-sticks, or gold coins

Fri, 02/01/2013 - 13:09 | 3206543 THE DORK OF CORK
THE DORK OF CORK's picture

@Ghordius

 

Of course - the issue  / tax thingie is government fiat - that is so obvious I did not think it worth talking about.

 

That was not my point (see above ) .

 

Goverments cannot issue euros - they must get permission to issue fiat.

 

In the case of Anglo they got permission as long as the state was willing to tax in the interests of bondholders.

I think it was called a letter of comfort or something.

Given the polticans interests now fully align with the bankers it works like a charm.

 

The entire fiat thingy has been turned around 180 degrees by the bankers.

 

Its a wonderfull but dastardly construction when seen from their point of view.

 

They can hyperinflate credit and turn it into fiat without devaluation ............a perfect bank job , don't you think ?

 

Fri, 02/01/2013 - 09:13 | 3205723 Acet
Acet's picture

Don't have that much opinion of Belgium.

What really stuck in my mind about Belgium:

  1. When I was driving my car to Holland from France, as soon as I entered Belgium the road was suddenly crap and as soon as I left it, the road was suddenly good again.
  2. One of the great tourist sights of Brussels, the Manneken Pis turns out to be this miniscule statue of a kid pissing in a street that's but one step above a dark alley
  3. There is an entire street in the center Brussels with restaurants which are the most expensive turist traps in the whole Western Europe

At least I can speak both Dutch and French. I can but imagine how far turists that can't speak either are taken advantage of ...

 

Fri, 02/01/2013 - 09:17 | 3205734 Ghordius
Ghordius's picture

you have to avoid Brussels, the rest is quite nice, imho

Fri, 02/01/2013 - 09:32 | 3205771 Acet
Acet's picture

Well, I was told that both Gent and Antwerp are actually worse than Brussels, but Brugges is well worth visiting.

Only really went to Brussels on a day trip because one can get the fast train there from Amsterdam. Frankly, getting the TGV or Thalys to Paris is more fun and doesn't take much longer.

 

Fri, 02/01/2013 - 12:42 | 3206470 Whiteshadowmovement
Whiteshadowmovement's picture

Lol, most expensive tourist traps in Europe huh? Ever happen to get tricked into having lunch at a cafe on the Bahnhofstrasse in Zurich?

Last time this happened to me, I was there with 2 other people, we had 5 beers, 2 salads and 3 mains (zuricher geschnaetzltes)

Total bill: $200 USD

God how we laughed and laughed when that check came, it was almost worth it for the joy at brought to our loves!

Fri, 02/01/2013 - 13:11 | 3206585 Sudden Debt
Sudden Debt's picture

Oh it was happy hour 2 for one he?!

Don't visit : tourist recommendation sites.

they are only for tourists and entering a plac like that makes you a joke to the locals.

Every city has those places, you don't visit them in your own place, and yet... on vacation... you do...

Fri, 02/01/2013 - 14:59 | 3206925 Whiteshadowmovement
Whiteshadowmovement's picture

Lol I know, I actually know Zurich pretty well but the other 2 didnt and we were all hungry and I didnt want to sound like a cheapskate by pointing out these places are only for the gullible

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