Dutch finance minister to investigate DSB
The finance ministry would limit the consequences for DSB clients and also examine the roles of the bank directors.The Hague – Dutch Finance Minister Wouter Bos promised an independent investigation into the ailing DSB bank after news that it was taken over by the Dutch central bank broke.
DSB was placed under administration at the behest of central bank on Monday to halt a client run on deposits, state and court officials said.
"The court has awarded an application by the central bank for emergency regulations to be instituted at DSB," said a statement from the Amsterdam district court.
It said an independent administrator will be appointed to represent the interests of bank creditors for a period of 18 months.
The Dutch minister said the investigation would look into the role of the bank’s directors, among them Gerrit Zalm, who now heads ABN Amro. Zalm said he was confident about the outcome of such an investigation.
Bos emphasised the problems at DSB were not caused by the global credit crisis. Instead, the bank’s troubles were due to poor management, client unrest and muddled communications.
"It is about an individual, relatively small bank that landed in problems through its management, disquiet among clients, unclear communication and the uncertainty this created," said the minister.
It would do everything possible to limit the consequences for DSB clients, the minister added.
Savers would be able to claim back up to EUR 100,000 under a government deposit guarantee system, to be administered by the central bank, "probably in the short term."
The central bank said other banks in the Netherlands had agreed to help DSB clients speedily open new accounts with them. They will be able to draw money from other banks using their DSB bank cards until midnight on Wednesday.
Where it had all gone wrong
The central bank said the court ruling meant that DSB clients would "temporarily not be able to access their money".
It explained that it had sought the measure due to a "large outflow of liquidity that has put the survival of DSB under threat in the short term."
The bank has recently been in the news over claims that it sold clients insurance policies they did not need and extended mortgages they could not afford, prompting some to lodge claims for damages.
DSB account holders withdrew some EUR 600 million in recent weeks, Dutch central bank president Nout Wellink was quoted as saying by Dutch news agency ANP -- about a sixth of all the savings still with the bank.
DSB bank, which recorded a profit of EUR 45.4 million in 2008, says on its website that it holds 17 percent of the market for consumer credit in the Netherlands and has some 1.3 million clients, including in Belgium and Germany.
It is also the main sponsor of top Dutch football club AZ Alkmaar.
The Dutch finance ministry said the court's ruling meant the freezing of all the bank's assets and debts.
"It is an unusually far-reaching measure, with major consequences for all concerned -- especially the clients and employees of DSB but it was unavoidable," the ministry said.
The central bank and a consortium of five other Dutch banks -- Rabo, ANB Amro, ING, Fortis Bank Netherlands and SNS, held talks at the weekend to consider alternative solutions, including buying DSB, "but the risks for all parties were too big," the ministry added.
According to a spokesman from the central bank, these risks arose partly from DSB "over-crediting" clients -- issuing loans bigger than they could pay back.
DSB was fined EUR 120,000 in May by the financial markets watch-dog body AFM, partly for not taking steps against "over-crediting".
AFP / Radio Netherlands / Expatica