Dutch central bank takes control of DSB Bank
* Dutch central bank takes control after liquidity crunch
* Effort to keep DSB open with bank consortium fails
* Clients can get money until end of day Wednesday
* Savings deposits will be offset against debts
(Recasts with details on guarantees)
AMSTERDAM, Oct 12 (Reuters) - The Dutch central bank seizedcontrol of the troubled DSB Bank on Monday after efforts topreserve it with a consortium of five larger banks failed.
The central bank said in a statement it had been appointedadministrator of DSB, a privately held bank with about 8 billioneuros in assets that was a well-known lender despite itsrelatively small size.
The central bank said it sought unsuccessfully to preserveDSB's operations through a consortium of ING (ING.AS), SNS Reaal(SR.AS), Rabobank [RABN.UL] and the nationalised ABN AMRO[ABNNV.UL] and Fortis Bank Nederland [FORTH.UL].
Those talks failed, the central bank said, over concernsabout loan losses and potential claims against DSB.
DSB was not immediately available to comment. The centralbank and the finance ministry planned a press conference for1130 GMT to discuss the takeover.
Customers of the bank are no longer able to access theirmoney except by ATM withdrawal, which will only be availableuntil midnight Wednesday. After that, customers will have towait up to three months to get their money back via the state'sdeposit guarantee scheme.
Though deposits are guaranteed up to 100,000 euros, thecentral bank's website says they are also offset against debts.A customer who has both savings and a mortgage with the bank, inother words, will have their savings credited against themortgage balance and will not be able to get cash back.
DSB competitors are likely to feel the pain too, as thedeposit guarantees are funded partly by other Dutch banks.Evolution Securities analyst Jaap Meijer, in a note to clients,said ING and SNS would likely be hurt, given their larger marketshare for savings.
ING shares rose 1.7 percent to 12.665 euros at 1105 GMT, andSNS Reaal shares were also 1.7 percent higher at 6.204 euros,only slightly underperforming the Amsterdam blue chip index.AEX.
DSB, founded in 1975, claims a market share of 0.5 percentin mortgages and 15 percent in consumer loans.
It is wholly owned by its founder Dirk Scheringa, who alsoowns reigning Dutch football champions AZ Alkmaar. Scheringareceived royal honours from Queen Beatrix in April 2003.
DIFFICULT FEW MONTHS
While small-bank seizures are common some places -- 98 inthe United States this year alone -- they are far more unusualin Europe. Generally, small banks in Europe were not able to getthemselves in as much trouble as elsewhere.
Yet the takeover culminates a difficult few months for DSB,which made its name with loans at substantially lower rates thanits major competitors.
On Oct. 1 the head of a foundation representing angry DSBcustomers went on national TV and urged DSB clients to withdrawtheir money. [ID:nL1318370]
The bank acknowledged withdrawals increased slightly afterthat, and it has had problems with access to its Internetbanking site since.
His calls followed TV reports in late September that DSB hadpushed products inappropriately on clients, which led to callsin parliament for an investigation.
In July, DSB was fined by the market regulator for"overcrediting," or lending people more than they could affordto borrow. Those loans were made in early 2008 while formerfinance minister Gerrit Zalm was DSB Bank's Chief FinancialOfficer.
The government has defended Zalm, who it plucked from DSB torun the nationalised ABN AMRO, and Zalm has denied wrongdoing.
The failure of DSB and the government intervention comenearly one year to the day after the Dutch government's dramaticintervention in the financial system.
On Oct. 3, 2008, the government nationalised Fortis's(FOR.BR) local operations at a cost of 16.8 billion euros. A fewdays later it pumped nearly 14 billion euros into ING, SNS andinsurer Aegon (AEGN.AS).
It will also revive memories of online bank Icesave, whichfailed suddenly last October and left customers unable to accesstheir money. Please double-click on the newslinks below for recent storiesabout: [NL-FIN-RTRS-LEN] Dutch financial sector [NL-MCE-RTRS-LEN] The Dutch economy (Reporting by Ben Berkowitz and Gilbert Kreijger; Editing byDavid Holmes and Hans Peters) ($1=.6795 Euro)
Source: Reuters
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