Dutch DSB bank declared bankrupt
AMSTERDAM — A Dutch court declared DSB Bank NV bankrupt on Monday, ending hopes the regional lender, which suffered a run on deposits, might be sold or bailed out.
The privately-owned bank is the first to go bust in the Netherlands since last year, though the government and regulators insist its failure was not directly related to the credit crisis.
"The court concludes that the utmost was done for DSB to continue as a whole entity, and there is no prospect of that anymore," the Amsterdam District Court said in a summary of its ruling.
After a run on deposits, DSB was put into receivership of the Netherlands' central bank a week ago. Customers had withdrawn about a sixth of the euro4.3 billion ($6.4 billion) the bank had in deposits at the start of the month.
The government insures the first euro100,000 of retail bank accounts. Central Bank President Nout Wellink has predicted a liquidation that will result in big losses for creditors and cost many of the 2,000 employees their jobs.
The failure has raised questions about the functioning of Dutch financial institutions, oversight bodies and the government — as well as DSB's own lending practices.
The catalyst for the run on DSB was a call by Pieter Lakeman, an industry gadfly, for customers to withdraw their deposits in protest because the bank had improperly overcharged mortgage customers.
The central bank and Finance Minister Wouter Bos have recommended that DSB consider trying to hold Lakeman liable for damages.
Lakeman has responded that DSB's fall was inevitable and the central bank, which had been aware of problems at DSB for more than a year, failed in its oversight duties.
The bank's founder and main owner Dirk Scheringa also blames the central bank and the government, saying unnecessary investigation tactics and intentional leaks to the media created an air of uncertainty around DSB that proved fatal.
In addition, he has questioned why major Dutch financial institutions such as ING Bank NV, ABN Amro, and Aegon NV received multibillion euro bailout packages when they ran into trouble, but DSB could not arrange comparatively modest assistance.
Finance Minister Bos attempted to broker a deal whereby banks that received government bailouts would buy DSB, but they demanded terms that were prohibitively expensive, he said.
DSB was based in a town called Wognum, 50 kilometers north of Amsterdam but well outside the corridors of political power. Its growth in recent years upset the status quo in a market with just a handful of competitors.
It was best known for television commercials that aired frequently promising low rates on personal loans.
Bos has ordered several independent investigations, and legal procedings by the various parties involved are likely to last for years.
Source: The Associated Press
« Back to Business News
Related News
-
Reliance offering about $12 bln for Lyondell - sources Oct 19, 2009 @ 01:15 AM
MUMBAI, Nov 22 (Reuters) - India's Reliance Industries(RELI.BO) is offering about $12 billion to buy a controllinginterest in bankrupt chemical company LyondellBasell Industries[ACCEIN.UL] to create one of the largest petrochemical firm inthe world, two sources with direct knowledge of the deal said.
-
gmac's Ally Unit to Buy Home Loans From Smaller Banks Oct 19, 2009 @ 01:15 AM
Sept. 25 (Bloomberg) -- GMAC Inc., the auto and home loancompany that received two U.S. bailouts, formed a team to buyresidential mortgages from community lenders, filling a voidleft by the collapse of Taylor Bean & Whitaker Co.
-
Lehman Monday Morning Lesson Lost With Obama Regulator-in-Chief Oct 19, 2009 @ 01:15 AM
Sept. 11 (Bloomberg) -- Less than 24 hours after hisswearing-in ceremony, U.S. Treasury Secretary Timothy F.Geithner surprised Camden R. Fine with an invitation to a one-on-one meeting about the financial crisis.
-
Missing Lehman Lesson of Shakeout Means Too Big Banks May Fail Oct 19, 2009 @ 01:15 AM
Sept. 8 (Bloomberg) -- The warning was ominous: “Massiveglobal wealth destruction.”
-
Deutsche and Sal. Oppenheim in Talks for Tie-Up Oct 19, 2009 @ 01:15 AM
Deutsche Bank said Wednesday it is in talks for a stake in Sal. Oppenheim, a major European private bank that has been hit hard by investments that went sour during the financial crisis, The New York Times’s Carter Dougherty reports.
