After years of legal proceedings, the court ruled that the government must pay 804 million euros plus interest to investors in SNS Reaal and SNS Bank. Those investors were expropriated in 2013 when the government nationalized SNS. The bank and insurer then threatened to go bankrupt because of the credit crisis.
Originally, the Ministry of Finance did not want to give investors any compensation at all. During the proceedings, the Ministry said that there could be compensation, but up to EUR 300 million.
The Enterprise Chamber of the Amsterdam Court of Appeal has now decided that this should be considerably more, namely 804 million plus interest. For the most part, that money goes to bond holders. Those were parties that had lent money to SNS.
Shareholders of SNS also want to be compensated. But according to the judges of the Enterprise Chamber, they are not entitled to money. “The shares SNS Reaal represent no value and therefore the expropriated shareholders receive no remuneration”, says the Ondernemingskamer.
Bankrupt instead of nationalized
For the amount of compensation, the Enterprise Chamber considers that it is necessary to consider what amount investors would have received if SNS Reaal and SNS Bank were not nationalised but declared bankrupt.
The Enterprise Chamber has asked experts to calculate that. Stocks would be worth nothing, but bonds would be worth nothing. “This mainly concerns the proceeds from the mortgage portfolios and the proceeds from the sale of Reaals insurance business.”
At the Stichting Bond Holders SNS, which has litigated since 2013, “thank you emails flow in”, says President Frans Faas. He has mixed feelings of his own in the verdict. “Its three-quarters of the value and with the interest rate around 90 percent,” he says. “After eight years of fighting for your money, just as much a loss. And being so taken into account by the state does not make me happy.”
“ It is very sad that shareholders get nothing after 8 years of litigation,” says Deputy Director Paul Coenen of the Association of Securities Owners (VEB). According to him, the last 84 cents share price was the risk of bankruptcy.
Coenen also doesnt want to rule out that shareholders would have gotten money out of the estate in the event of a bankruptcy, “even if you are completely behind the queue.”
The decision of the Enterprise Chamber is not yet final. The government or investors may still be in cassation to the Supreme Court.
The Ministry of Finance says in an initial response only that it is going to study the verdict and that it is deliberating. “Now for the victims it is three months to pinch the butt or the state goes into cassation,” says Faas. “After eight years and with such a devastating verdict, it would be nice if they left it at that.”
The VEB will also study the pronunciation first.