SNS bank receives EUR 750m cash injection
SNS bank is the fifth financial services company to receive the Dutch government’s bailout.13 November 2008
AMSTERDAM - SNS Reaal NV, a Dutch financial services company, said Thursday it will receive a EUR 750 million lifeline from the government to shore up its capital position amid the financial crisis.
SNS will be the third Dutch company to take government money in a month, following the larger ING Groep NV and Aegon NV.
SNS said terms are similar to the previous deals: it will issue new shares to the state, paying 8.5 percent interest, and has an option to repurchase them at 150 percent of the issue price.
In addition, the Utrecht-based company will issue EUR 500 million worth of new shares to a major investor: the Stichting Beheer SNS Reaal, a foundation that exists solely to protect the company's interests.
The combined cash injection of EUR 1.25 billion is almost as large as SNS's entire market capitalisation of EUR 1.3 billion as of Wednesday's close.
Chief Executive Sjoerd van Keulen said in a statement that the company "is focusing first and foremost on reinforcing its solvency and liquidity position".
Separately, the bank posted a third quarter loss of EUR 88 million, down from a profit of EUR 138 million a year ago. The company cancelled dividends and executive bonuses for the rest of the year.
Its stock fell 4.4 percent to EUR 4.78 in early trading and is now down 69 percent since January.
SNS said its Tier 1 capital ratio - the most commonly used measure of a bank's financial health - will be 10 percent after the deals, without specifying what the ratio was before the capital injections.
The bank said it did not lose retail customers during the quarter but in fact won market share.
In addition to bailing out ING and Aegon, the government nationalised the Dutch operations of ABN Amro, the country's largest retail bank, along with those of Belgium's Fortis in early October. SNS's bailout is the fifth government rescue.
[AP / Expatica]