(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
By George Hay
LONDON, June 6 (Reuters Breakingviews) - The gory details of SNS’s nationalisation will leave Cypriots hopping mad. The Dutch bank has finally unveiled its 2012 accounts, five months after being bailed out. They show how lucky SNS’s senior creditors were to be spared a Cyprus-style bail-in.
At the beginning of the year, SNS was in just as dire straits financially as Cypriot peers like the Bank of Cyprus BOC.CY and Laiki CPBC.CY. After loading up on 7 billion euros of duff real estate loans - half of which were to flaky developers - non-performing loans on its real estate book had almost doubled in a year to an eye-watering 34 percent. Raising the expected losses on these to near 50 percent helped push the bank to a 972 million euro loss for 2012 and a 1.6 billion euro loss in the first quarter of 2013.
So the Dutch government put 2.2 billion euros of fresh equity into SNS. That meant only subordinated bondholders had to take losses - being "bailed in" - to the tune of 1.1 billion euros. Senior creditors were left to be paid back in full. When Cyprus’s banks needed new capital, the government couldn’t afford it. Uninsured depositors are facing losses of between 60 and 100 percent.
The Dutch finance minister that presided over the SNS rescue, Jeroen Dijsselbloem, was also the Eurogroup boss who banged the drum for savage losses during the Cypriot bail-in. He had better hope SNS is now fixed. Luckily, the bank has a 14.9 percent core Tier 1 capital ratio to withstand further losses. If that isn’t enough, Dijsselbloem will have the chance to show just how committed he is to the principle of burden-sharing.
- Reuters: SNS Reaal sees no need for more state funds despite more losses [ID:nL5N0EI0EP] - For previous columns by the author, Reuters customers can click on [HAY/]
(Editing by Chris Hughes and David Evans)
((Reuters messaging: firstname.lastname@example.org)) Keywords: BREAKINGVIEWS SNS/
C Reuters 2012. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing, or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.