The Government of the Netherlands nationalized SNS REAAL to prevent SNS Bank from going bankrupt on the first of February 2013. Furthermore, this excessive action was taken to ensure stability of the financial sector and the Dutch economy.
The inducement following the nationalization of SNS REAAL were major challenges in the real estate- and loan portfolio of the bank in 2008. These challenges resulted in a capital deficiency. The Government of the Netherlands then decided to provide an amount of € 750 million in capital support. In 2013, SNS REAAL had not repaid, and could not repay in the near future, the bulk of the aid. Therefore, SNS REAAL was nationalized.
Due to the nationalization of SNS REAAL clients’ savings were secured and bank services remained. With this sanction, the Government of the Netherlands managed to safeguard financial stability in the Netherlands. The Government of the Netherlands acquired in 2008 for the same reason ABN AMRO and ASR acquired.
In order to keep the bank stable, the government has recapitalized SNS REAAL. Also, the source of the problem (the real estate portfolio and non performing loans) is isolated. Creditors who were behind with their claims, paid € 1 billion with the recapitalization. The stabilization of SNS Bank took the State directly € 3.7 billion. This amount consisted of:
- New capital inhections: € 2.2 billion
- Amortization of earlier aid in 2008€ 800 million
- € 700 million for the isolation of the property
In addition, the Government of the Netherlands provided € 1.1 billion in loans and € 5.5 billion in government guarantees. In 2014, the government imposed in addition a one-off levy on the Dutch banks of € 1 billion.
There were severe consequences due to the nationalization of SNS REAAL for shareholders and subordinated bondholders. In 2013, the government expropriated different stocks and bonds of SNS REAAL and SNS Bank . By law, the holders of these stocks and bonds are entitled to compensation. The government should pay them the value that they would have at that time without nationalization.
The government has opted for nationalization, because the problems of SNS REAAL were a serious threat to the financial stability of the country. SNS REAAL, would have gone bankrupt without nationalization, according to the Minister of Finance. He assumed nothing there would be no value in stocks and bonds when the bank would fail. The Minister of Finance therefore made a formal offer on March 4, 2013 for compensation of zero euros.
Amsterdam Court determines the final amount of the compensation. In a first verdict the judge explained that that more and extensive research is needed. Court then formulated principles for the determination of compensation, such as stock market prices at the time of nationalization.
State and representatives of the parties objected to the assumptions and therefore brought an appeal to the Supreme Court. The Supreme Court has revised the principles in a judgment of March 20, 2015. The procedure in the regular court resumed.