The nationalisation of SNS – lessons learned

Author: | Published: 14 Oct 2014

By Scott Morrison (of counsel) and Stephen Phillips (partner) at Orrick, Herrington & Sutcliffe's restructuring group in London

On February 1 2013 De Nederlandsche Bank (DNB) nationalised SNS Reaal Group. The Dutch central bank used powers granted to it under the local implementation of the Bank Recovery and Resolution Directive (BRRD), the Special Measures for Financial Corporations Interventions Act.

Shareholders and subordinated creditors were expropriated without compensation as a last resort to prevent systematic contagion throughout the Dutch financial sector.

Whilst the intervention act provided an important tool to prevent the collapse of SNS, some crucial aspects of the BRRD were not in place early enough to prevent the deterioration of SNS, most importantly a requirement for financial institutions to plan and prepare for scenarios that could lead to their failure, and early intervention measures allowing regulators to intervene in the management of banks.

In the light of the current regulatory...