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Money Never Sleeps
Per carità abbiamo visto tutto ed il contrario di tutto, ma dal pagare una cedola a novembre (523) e a callare dei PC a dicembre si passa in 15 gg. a parlare di taglio nominale, haircut ed addirittura di intaccare i seniorBREAKINGVIEWS-Dutch headed for good old, 2008-style bank bailoutExpand Story >>
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(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
By George Hay
LONDON, Jan 24 (Reuters Breakingviews) - SNS Reaal's <SR.AS> difficulties show that bank rescues are still stuck in 2008. The Dutch bancassurer is running out of options to address big losses on its commercial property exposures. The government has a chance to test a new law that gives it wide intervention powers . But even with these, the Dutch taxpayer may have to contribute - again.
SNS's biggest problem is that its owns around 4 billion euros of non-core commercial property loans, 41 percent of which are non-performing. Further losses will make it harder to bolster the bank's relatively puny 8.8 percent Basel II capital ratio. Meanwhile, SNS has to pay back 750 million euros of previous bailout cash by December, or face European Commission penalties. A rights issue is out of the question, since the shares are trading below 0.1 times book value.
Under the old Dutch regulatory system, the supervisor's hands were tied. Even though SNS's reliance on wholesale funding leaves it vulnerable to a run - its bank's loans represent 146 percent of deposits - regulators couldn't proactively chop the bank up without triggering shareholder lawsuits. The Intervention Act, voted by parliament last June, makes this easier.
What this means for SNS remains unclear. The government could try to interest private buyers in SNS assets. But the European Commission has banned domestic lenders like ABN Amro and ING <ING.AS> - which were bailed out themselves - from making any acquisitions. The government could also nationalize the company, place the offending property exposure in a bad bank - which could be structured like Spain's so that it is majority owned by private investors - and then sell off the healthy parts.
But what it probably won't do in any case is spare taxpayers. If assets are transferred to a bad bank, they will be at big discounts, which will open capital holes in the size of billions of euros. The best way to fill these would be by haircutting senior creditors: SNS's bank has 22.5 billion euros of that type of funding, some of which is likely to be unsecured.
But don't hold your breath: the Dutch government is unlikely to contemplate burning senior creditors. Denmark tried that in 2011, and senior unsecured financing then dried up for its other banks. And that's the reason why SNS recap money will probably end up coming from taxpayers - as usual.
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