Finance minister Jeroen Dijsselbloem explains his decision to reporters. Photo: Novum

Dutch bank and insurance group SNS Reaal, in trouble because of heavy losses on its property finance division, is to be nationalised, the Dutch finance ministry announced on Friday.

Finance minister Jeroen Dijsselbloem said the state bailout was needed to prevent the Netherlands’ fourth-largest bank from collapsing.

The nationalisation means two of the four biggest Dutch banks are now in state hands. ABN Amro was nationalised following its abortive takeover by an international banking consortium.

‘Today, SNS Reaal has been fully taken over by the Dutch state. Without finding a solution, there was an immediate and dangerous situation for financial stability,’ Dijsselbloem told an early morning news conference. ‘I had to conclude that nationalisation was inevitable.’

Shareholders

The takeover means shareholders will probably lose all their investments. Retail savers with deposits up to €100,000 are protected under the guarantee scheme.

Shareholders lobby group VEB said it was already looking at legal action to ensure compensation for shareholders.

The direct costs of the nationalisation amount to €3.7bn, including a capital injection of €2.2bn – the equivalent of some €220 per person. The state is also providing some €6bn in loans and guarantees for future operations.

Earlier this week, it emerged investment group CVC was interested in taking over the healthy parts of SNS Reaal. But that deal would have involved the state taking a major financial risk without having a say in decision-making, Dijsselbloem told reporters.

Boardroom changes

The nationalisation also means all change among top executives. Chief executive Ronald Latenstein, finance head Ference Lamp and head of the supervisory board Rob Zwartendijk are all out. Gerard van Olphen, CFO at health insurance group Achmea, will take over as CEO.

SNS is the fourth largest banking and insurance group in the Netherlands. In 2008, SNS received a state bailout of €750m which it has not yet repaid.

Earlier efforts to involve the other three big banks, ABN Amro, ING and Rabobank, in the rescue were scuppered by Brussels because ABN Amro and ING themselves have had state aid.