Netherlands nationalizes SNS Reaal at cost of $5 billion
By Thomas Escritt and Anthony Deutsch
THE HAGUE/AMSTERDAM (Reuters) - The Netherlands nationalized bank and insurance group SNS Reaal SR.AS at a cost of 3.7 billion euros ($5 billion) on Friday to shore up confidence in the financial sector after a private investor-led rescue collapsed.
Another state rescue of a financial group will lead to a worsening in the Dutch budget deficit this year - which is already forecast to exceed European Union targets - and is likely to prompt a public outcry given the billions of euros of budget cuts and austerity measures in recent years.
It is also a sign of how many European banks, five years on from the height of the global financial crisis, are struggling to turn a corner amid weak economies and tougher regulations. French bank Credit Agricole CAGR.PA announced over $5 billion of charges on Friday, a day after Deutsche Bank DBKGn.DE also unveiled big writedowns.
The Dutch government paid out nearly 40 billion euros to rescue the domestic financial sector in 2008 when it provided capital injections for ING ING.N, Aegon AEGN.AS and SNS Reaal, as well as nationalizing ABN AMRO ABNNL.UL.
SNS Reaal, the fourth-biggest financial institution in the Netherlands with about 134 billion euros in assets last year, was hit by losses at its property unit and has been trying for months to sell assets and secure additional funding.
The emergency bailout was necessary after SNS Reaal failed to meet a January 31 deadline to come up with a rescue, Finance Minister Jeroen Dijsselbloem told a press conference.
Its collapse "would have unacceptably large and undesirable consequences for financial stability, the Dutch economy and the Dutch tax payer," Dijsselbloem wrote in a letter to parliament.
"I have studied all the alternative solutions in detail. But last night I found there was no acceptable solution. Therefore we have to nationalize," he added in a statement. Continued...