DSB bank bankrupt, two rescue bids fail

Monday 19 October 2009

Amsterdam district court declared DSB bank bankrupt on Monday morning after two last minute rescue bids at the weekend failed.

One bid involving a US financial institution, said by most papers to be Lone Star Funds, failed when the potential buyer pulled out. 'The company we were in talks with did not want to meet the conditions set by the court,' DSB financial director Ronald Buwalda told NOS tv.

A second attempt to save DSB, which would have involved a capital injection from the state of €100m, floundered because of EU rules, according to the Financieele Dagblad.

That plan required savers to switch some €100m of their savings in DSB into shares. Matched by €100m from the state, the bank's solvency would have been strengthened enough to continue, the paper said.

According to the Volkskrant, the letter to finance minister Wouter Bos asking for the money started with the sentence: 'Dear Wouter, without your help, the bank will be declared bankrupt tomorrow.'

But under rules from Brussels, the state can only put money into a struggling financial institution if its problems have been caused by the credit crisis. That is not the case with DSB.

Deadline

DSB boss Dirk Scheringa had been given until 9am on Monday morning to come up with a plan to keep his bank functioning.

The bank got into financial difficulties after a run on savings prompted by a campaign by angry customers who say they were oversold mortgages and charged too-high fees on insurance policies.

According to the Telegraaf, Scheringa emptied his own DSB savings account of €700,000 at the beginning of October. He was apparently angry because the central bank had ordered him to step down as CEO.

But after calming down, he put the money back into DSB, the paper says, quoting RTL tv.

Savings of up to €100,000 are guaranteed if a bank fails.

More to follow

© DutchNews.nl

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