Will Volksbank remain a state bank, as a majority of the House of Representatives wants, according to a motion adopted on Thursday? Or will the bank, which wants to rename itself ASN Bank, be sold or listed on the stock exchange in a few years?
The House of Representatives has fiercely debated this in recent weeks with Minister of Finance Eelco Heinen, who previously, as a VVD MP, was already strongly in favor of privatization. Heinen accused MPs of playing banker and marketer, with motions about maintaining the branch network and preserving the Volksbank name. The House blames the minister for not being sufficiently open to alternative scenarios for the bank, and only wanting to strive for ‘maximum proceeds’ for the treasury in the event of a sale.
The question that was not raised, neither by the House nor by the minister: is it possible to keep de Volksbank in state hands?
SNS Reaal, the predecessor of de Volksbank, was one of the last victims of the financial credit crisis in 2013. As one of the last banks in Europe, the bank was nationalized, as happened to ABN Amro in the years 2008-2009, as well as many other banks in other countries. The state’s nationalizations and capital injections were given the green light at the time because exceptional circumstances had arisen due to the credit crisis: the collapse of financial institutions threatened the entire economy.
Brussels’ idea was: if market conditions recover and banks perform normally again, the banks must stand on their own two feet again. The Dutch government also explicitly promised this to the European Commission at the time. The English-language consent for state aid to what was then called SNS Reaal states that the Netherlands “is committed to privatize that bank”.
Publicly, this was not a condition set by Brussels. But a source who was involved in the nationalization at the time says NRC that this requirement was made behind the scenes. In one letter to Parliament from then Minister of Finance Jeroen Dijsselbloem (PvdA) from the year that SNS Reaal was nationalized (2013) it is stated explicitly: “In accordance with the final restructuring plan and the agreements reached with the Commission, the bank and insurer will be split and sold separately.”
The requirement is likely to be included in the parts of the state aid decision that have not been made public due to market sensitivity. An obligation to sell, perhaps with a deadline, is an excellent example of this: a possible buyer will probably make a much lower offer if he knows that the seller must sell at a certain time.
Renegotiation
Tom van der Lee, the member of parliament from GroenLinks/PvdA who submitted the adopted motion, is convinced that remaining in state hands is still an option for de Volksbank. After all: if there is an agreement with Brussels, it can also be negotiated.
If so, what would be the possible conditions for this? Dionysios Pelekis conducts research into state aid rules in Europe at Utrecht University. He thinks that keeping de Volksbank in state hands can be seen as prohibited state aid. This is the case when the regular market is disrupted by state intervention.
By keeping de Volksbank in state hands, the Chamber wants to ensure that the bank’s network of branches remains open – three-quarters of the 850 bank branches in the Netherlands belong to the subsidiaries SNS and Regiobank.
If that happens, it would mean that what the bank itself considers a loss-making activity with state support would still be accepted – after all, the state would then accept that the bank would become financially unhealthier. According to Pelekis, this could constitute state aid. Support for de Volksbank customers, because customers of other banks do not receive the same service. And support for de Volksbank compared to other banks. Because they do not get the space from the state to continue loss-making activities.
One option that can be explored is to invoke the exception that may be made to the ban on state aid if it concerns ‘a service of general economic interest’. Think of the railways, public broadcasting or postal delivery. The conditions for this are strict, says the Greek researcher. Part of this will probably involve separating Volksbank’s commercial activities from the ‘utility function’ that the branches fulfill – resulting in a potentially unhealthy bank, and thus new state aid.
Minister Heinen reiterates in a written response NRC what he said earlier in Parliament: that preparations for a private sale or IPO of de Volksbank will continue. The attitude of not exploring other options may cause “a hard clash” later with the House, Van der Lee warned during the debate on Wednesday. On the other hand, stopping the process of reprivatization would lead to a… clash can lead with Brussels. To be continued.