Supreme Court: Dutch government must pay SNS Bank bondholders about €1 billion

The Dutch government must pay over 800 million euros in damages plus tens of milions in interest to the group of people and organizations who held bonds and lent money to SNS Reaal and SNS Bank, the Supreme Court said in affirming a ruling of the Ondernemingskamer, the commercial court at the Amsterdam Court of Appeals. While the expropriated debt holders were victorious, the former shareholders again lost out in the latest ruling.

The Ministry of Finance nationalized SNS Reaal in 2013 to prevent the financial group from collapsing. Those who had invested in the financial institution did not receive any compensation at the time because their securities would have become worthless had the bankruptcy been allowed to happen. This led to a lengthy legal process.

In 2021, the Ondernemingskamer determined that the bondholders should be compensated for the amount that they would have received had the SNS group been allowed to go bankrupt instead of being nationalised. The court ruled that the SNS Reaal shareholders did not have a right to receive compensation, because their shares would have become worthless in the event of a bankruptcy.

To be precise, the Ondernemingskamer calculated the compensation at almost 805 million euros. However, that amount will still be increased by the statutory interest. And the State will also have to reimburse other costs related to the legal proceedings.

But the State still appealed to the Supreme Court. The reason for the appeal was that the government considered the amount too high and did not entirely agree with the reasoning of the Ondernemingskamer. The Supreme Court disagreed with the State, and said the Ondernemingskamer’s ruling was “legally correct and understandable.”

Finance Minister Sigrid Kaag said in a letter to Parliament that she will now move forward with the restitution process. “Now that the legal procedure has been completed, I will proceed with the payment of compensation as soon as possible,” she said. According to Kaag, the total compensation will amount to approximately 1 billion euros.

Investor association VEB said it was pleased the bondholders finally achieved clarity, but said shareholders should not be left empty-handed. The organization still wants to try to recover damages from other parties involved. Earlier this year, a formal notice of liability was therefore sent to former executives and supervisory board members, among others.

SNS Reaal no longer exists. The rescued parts were placed in an insurance branch and a banking branch. The first was sold to the Chinese insurance firm Anbang, and was later resold to Athora and NN.

The banking branch is now called De Volksbank and is the parent company of brands such as SNS, ASN Bank, Regio Bank and mortgage lender BLG Wonen.