AMSTERDAM — The Dutch central bank shuttered DSB Bank NV, a struggling consumer and mortgage lender, after a run by depositors that followed a call from a consumer group to pull money out of the controversial institution.
The government said it would begin an investigation into what happened at the bank, a privately owned institution with reported assets of some €8 billion ($11.77 billion).
The DSB seizure was described by the government as a one-off situation unconnected with last year’s financial crisis. However, it dealt a further blow to a financial system hit hard by a global credit crunch that resulted in the nationalization of former financial giant Fortis and in multi-billion-euro state bailouts for ING Groep NV and insurer Aegon NV.
The takeover of DSB, which said it had 1.3 million clients, came after weekend talks between the government and the country’s five main banks failed to find a way to save it.
The central bank won an emergency court order Monday morning that put DSB into the hands of administrators. It described DSB’s solvency as being “under serious pressure.” Nout Wellink, the central bank president, told reporters that €600 million, or 17% of DSB Bank’s total deposits, had been withdrawn since Oct. 1.
DSB, based in the north of the Netherlands, ran into difficulties after AFM, the Dutch financial regulator, began investigating it earlier this year for allegedly pushing mortgage customers into expensive up-front insurance policies. The regulator fined the lender €120,000 over those product sales in August as part of a continuing investigation . At the time, DSB apologized, saying it regretted the practices and would work with customers to find solutions. This month, a bank customer association calling itself Mortgage Suffering urged clients to withdraw their savings and deposits from DSB.
The bank is named after founder and owner Dirk Scheringa, a former policeman who also owns AZ Alkmaar, the Dutch soccer champions.
Monday, Mr. Scheringa said the takeover was “incomprehensible and undeserved.”
“DSB Bank is not in an emergency situation and we were just working on solutions for customers in financial problems,” he said. He added that he wants to cooperate with the court-appointed administrators to find solutions for his bank’s customers and its 2,000 employees.
Finance Minister Wouter Bos said there would be an independent investigation of the way the bank was managed, and the role played by the bank regulator.
“In this investigation, we will also look into the operational functioning of current and former managers,” including DSB Bank’s former chief financial officer, Gerrit Zalm, he said.
Mr. Zalm is a former Dutch finance minister and is currently chief executive of state-owned ABN Amro NV. Mr. Zalm said in a statement that as CFO he was “successful in leading DSB Bank through the credit crisis.”
Over the weekend, talks between the central bank, finance ministry and five banks — ING, SNS Reaal NV, Rabobank, ABN Amro and Fortis Bank Netherlands — failed in part “owing to uncertainty surrounding possible claims on DSB”, the central bank said.
DSB Bank depositors are unable to access all their cash but can withdraw €250 a day on debit cards for the next three days. While DSB Bank cash machines have been frozen, clients can use their cards to take cash via other banks. The central bank said DSB Bank clients can open accounts with other banks without going through the usual weeks-long application process. Under the Dutch deposit-guarantee system, accounts of up to €100,000 are guaranteed by DNB through a plan funded jointly by the Dutch banks.
Mr. Wellink said it remains uncertain when DSB Bank depositors will get access to their money. “In the end, that is up to the independent administrators who will lead the bank from now,” he said.
ABN Amro said its exposure to DSB Bank could result in substantial losses, without giving more details. ING said it had negligible direct exposure but would have some indirect liability through its contribution to the deposit-guarantee plan.
Bank and insurer SNS Reaal said its banking unit had “very limited” financial ties with DSB Bank and that it had actively reduced commercial links with the bank in the last two years. It said its solvency and liquidity positions were strong enough to absorb the expected costs of the deposit-guarantee scheme, without saying how much they might be.
By BART KOSTER and STEPHEN FIDLER
OCTOBER 13, 2009
Source: The Wall Street Journal