‘Gerrit Zalm ignored DSB bank warnings’

Former finance minister Geerit Zalm ignored several warnings from senior managers about problems at DSB bank while he was on the bank’s board, the Volkskrant reported at the weekend.

And, the paper claims, as CFO, Zalm continued to defend the bank to the financial services regulator AFM despite knowing clients had been oversold mortgages.
The DSB group was declared bankrupt last month following a run by savers, started by customers who were angry at being saddled with too-high debts and insurance policy charges. A major investigation is currently under way into the bank’s collapse.
The paper says it has seen a letter, apparently to the central bank, in which Zalm denies DSB is over-selling mortgages and points out that DSB has more flexible standards for credit requests. The central bank went on to fine DSB for mis-selling.
The paper also says former DSB financial director Jaap van Dijk said in front of Zalm he was leaving because the bank’s founder and owner Dirk Scheringa and a second board member were ignoring his warnings about their risky strategies. Zalm was the bank’s chief economist at the time and went on to take over from Van Dijk.
The paper further claims that when Zalm left to take over as CEO at ABN Amro, he painted a ‘rose-coloured’ picture of the bank to his successor Frank de Grave. De Grave left after two months following a dispute with Scheringa.
Zalm declined to comment on the paper’s claims, but refered instead to his statement issued at the time the investigation was announced.
In the statement Zalm said: ‘I believe that during the period of just over a year I spent as CFO I successfully sought to achieve improvements in policy. I am confident that this will be confirmed by the investigation that has been announced and in which I will obviously fully cooperate.’
Banking licence
Meanwhile, the Financieele Dagblad reports that the central bank itself ignored negative advice from its own officials when granting DSB a full banking licence in 2005.
The paper published a major reconstruction of events at the bank at the weekend. The paper says several sources confirm that the central bank department looking into the expertise and integrity of the bank’s senior staff had its doubts about Scheringa and chief operating officer Hans van Goor.
The central bank sources said the licence was given on the assumption that others would keep the aggressive selling tactics under control.
DSB has had a number of run-ins with the financial service sector regulator AFM before being granted a banking licence, the paper says. For example, in 2002, the AFM fined the bank for breaking the rules surrounding share lease schemes.
A central bank spokesman told the FD is reporting is ‘not complete’and some parts ‘don’t add up’.

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