DutchNews.nl - Regulators divided over Zalm at ABN Amro

The Dutch government said on Monday ABN Amro chief executive Gerrit Zalm can remain at the head of the nationalised bank even though the financial services regulator AFM says he should go.

Caretaker finance minister Jan Kees de Jager told MPs that other research by the Dutch central bank showed Zalm, a former finance minister for the VVD Liberal party, had carried out his previous role as chief financial officer at DSB bank 'carefully'.

DSB collapsed last October after a run on the bank following claims that customers were being deliberately oversold mortages and unnecessary expensive insurance. A string of inquries has been set up into the bankruptcy and the main players. The two reports into Zalm are the first to be published.

In its report, the financial services sector regulator AFM said Zalm had paid 'insufficient attention' to the 'risk of claims and reputation damage due to DSB's sales methods.' Nor did Zalm act as a strong enough counterweight to the commercially-orientated management board, it said.

Zalm was Dutch finance minister for 12 years, prior to joining DSB. He left after one year to oversee the merger of ABN Amro and Fortis. He was succeeded at DSB by another former VVD politician who quit within a few months.

Despite the AFM's doubts, De Jager told MPs 'there is no reason at all not to follow the clear decision of the central bank'.

Lawyer Michiel Scheltema, appointed by the finance ministry to double-check the two regulators' work, agreed that the central bank research be given more weight. 'The AFM did not put forward enough arguments to come to this conclusion,' he was quoted as saying.

The central bank had been charged with monitoring if the bank was financially healthy while the AFM represented the interests of customers.

Nevertheless, finance minister De Jager is known to be unhappy about the difference of opinion and has asked to meet both regulators later this week.

Weakening

And, according to the Financieele Dagblad, the division does weaken Zalm's position.

'This is a very unfortunate conclusion for both Zalm and AFM chairman Hans Hoogervoorst,' one source told the paper. Hoogervoorst is also a former Liberal party minister.

MPs have also called for an explanation of the differences and several parties have called on Zalm to resign. 'There is still too much doubt. The AFM carried out a wide-ranging and substantial inquiry,' said socialist MP Ewout Irrgang in the FD.

and therein lies the key to the global financial crisis. The authority charged with monitoring the machinations of the markets (of which the depoliticised Central Banks are mere parts) are ignored, made toothless, ridiculed and overruled by the parties that caused the s**t in the first place.

By john | March 2, 2010 12:35 PM

This is a case of politics and politicians getting in the way of competency and progress.

By Buzzer | March 2, 2010 3:24 PM

this is only the reality of the situation - this is something that will bring this country a lot of problems, because it is everywhere

By Dusan Ilic | March 3, 2010 9:08 AM