(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.
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(Editing by Chris Hughes and David Evans)
Keywords: BREAKINGVIEWS SNS/
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