Dutch Finance Minister Wouter Bos has warned that Dutch banks getting into difficulties cannot automatically rely on government's rescue measures as was Belgian-Dutch bank Fortis' case, Dutch daily Financiele Dagblad reported Wednesday.
During Tuesday night's emergency debate in the Dutch parliament on the credit crisis and the Fortis rescue operation, Bos said the banks should not interpret his comments that he will do everything possible to prevent the collapse of banks in the Netherlands as an open-ended arrangement.
Bos denied that he is writing a blank cheque for bankers who are guilty of mismanagement. He said he wanted to prevent the collapse of banks "in situations where the reliability and integrity of the financial system is at risk."
The governments of Belgium, the Netherlands and Luxembourg decided Sunday to jointly invest 11.2 billion euros (about 15.77 billion U.S. dollars) to save Fortis from insolvency. The Netherlands will pay 4 billion euros for a 49 percent stake in Fortis' Dutch operations.
Bos said Tuesday that the regulators and the Finance Ministry are constantly alert and can take timely action, therefore it is not always necessary to immediately use the ultimate instrument.
The point of departure for any support in the future is "to safeguard the public interest in the banking system", said the minister.
Bos and Dutch Prime Minister Balkenende received unanimous support in parliament for their intervention in Fortis. Bos told parliament that the financing of the injection of 4 billion euro in Fortis could be arranged in a way that costs the taxpayer little or nothing.
He hopes to borrow the money at a 4 percent interest. The government will then pay 160 million euros a year in interest, but the expected dividends from Fortis shares will probably cover the interest charges.
Bos also made it clear that he wants to use the financial crisis to change the bonus system and to improve the supervision of banks. "Better coordination between the regulators in different countries is absolutely essential," he said.
Bos refused to increase the amounts of savings and deposits that are guaranteed by the Dutch government. In the Netherlands 38,000 of the first 40,000 euros in savings is guaranteed. In Ireland and Italy at least 100,000 euros is guaranteed.
Bos said raising the guaranteed sum would send the wrong signal that savings are at risk. (1 U.S. dollar = 0.7102 euro)
Source: Xinhua
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