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Final decision European Commission on nationalisation measures SNS REAAL

Wednesday, December 18, 2013

Today the European Commission (EC) announced the main outlines of its final decision on the nationalisation measures in support of SNS REAAL. By decision of 22 February 2013, the EC had already temporarily declared a number of State aid measures in favour of SNS REAAL compatible with the internal market until it had taken a final decision based on the company’s restructuring plan. This plan, drawn up in constructive cooperation between the Dutch State and SNS REAAL, was officially notified by the Dutch State on 19 August 2013. Based on the restructuring plan, the EC has decided the State aid and the proposed restructuring of SNS REAAL to be compatible with the internal market.

In line with the restructuring plan submitted, the Dutch State commits to two structural measures regarding SNS REAAL:

1. Spin-off of the Property Finance activities
2. Divestment of the insurance subsidiary REAAL NV, which includes all the insurance and asset management activities of SNS REAAL.

The spin-off of the Property Finance activities is an important measure to further restore viability, leading to a substantial reduction of risk-weighted assets. It will also facilitate access to liquidity and funding on capital markets for SNS Bank. The spin-off of the Property Finance activities to NLFI is expected to take place before year-end 2013.

The Dutch State and SNS REAAL commit to use the proceeds of the divestment of REAAL NV to reduce the double leverage on the balance sheet of SNS REAAL. In due course, the holding company SNS REAAL will be wound down. The entity resulting from the restructuring will be a standalone bank focused on banking for retail clients and self-employed. In the course of time, the Dutch State is committed to privatising SNS Bank.

“The final decision of the European Commission, based on the restructuring plan, provides clarity for SNS REAAL and our employees. In due time, SNS REAAL will cease to exist in its current form which is a far-reaching but at the same time logical consequence of the nationalisation. The outcome is also in line with the mandate set at the time of the nationalisation by the Minister of Finance to separate the banking and insurance activities.

SNS REAAL will implement the final decision of the European Commission. In the past period we have already taken the necessary preparatory measures to ensure that in 2014 we will make good progress towards the creation of an independent bank and insurer. We will do so in a manner that is respectful of the historical and social origins of both companies, enabling them to continue to focus on serving their clients’ interests,” says Gerard van Olphen, Chairman of the Executive Board of SNS REAAL.

The Dutch State also commits to a number of restrictions for SNS REAAL that will run until the end of the restructuring period, unless specified differently:

  • An acquisition ban will apply for a period of three years starting from the adoption of the EC decision.
  • SNS REAAL will not advertise the fact that it is State-owned nor make any reference to any State support received in its communications with existing or potential customers or investors.
  • SNS REAAL will refrain from making any payments on the hybrid debt instruments outstanding at the time of the EC decision, unless those payments stem from a legal obligation, and not call or buy back those instruments without prior approval of the Commission.
  • Restrictions apply to the remuneration of employees until the end of the restructuring period or until SNS REAAL has repaid the State aid.
  • SNS REAAL commits to transfer the administrative structure currently borne by the holding company to the bank and the insurance company
  • SNS REAAL commits to the phasing out of any financial link between the bank and the insurer.

ADJUSTMENT OF INTRA-GROUP POSITIONS

In the second half of 2013, a number of measures has been taken aimed at strengthening the capital position of the Insurance activities (REAAL NV) and reducing the interdependency between SNS Bank and REAAL NV. The measures are in line with the commitment to phase out the financial links between the bank and the insurer and have been agreed upon by the Dutch Central Bank. All measures concern a re-allocation of available capital and funding within SNS REAAL. They include a reduction of the exposure of SNS Bank to REAAL NV to € 250 million, an additional downstream of capital from SNS REAAL to REAAL NV of € 250 million and a dividend upstream from REAAL Schadeverzekeringen to REAAL NV of € 250 million. The exposure of SNS Bank to REAAL NV will carry a high risk-weighting and the exposure to SNS REAAL will be fully deducted from the capital of SNS Bank.

Including the impact of the above-mentioned measures, the (pro forma) regulatory solvency ratio at REAAL NV as per 30 September 2013 amounted to 178%. Pro forma regulatory solvency ratios for SRLEV and REAAL Schadeverzekeringen amounted to 191% and 258% respectively. The pro forma core Tier 1 ratio of SNS Bank, including the impact from both the spin-off of the Property Finance activities and the above-mentioned measures, was 15.5% per 30 September 2013. Pro forma double leverage at SNS REAAL has increased to € 730 million as per 30 September 2013, while pro forma double leverage at REAAL NV has been reduced to € 415 million.

For more information please contact

Corporate Communications

Chantal van den Berg

Chantal van den Berg

+31 (0)6 - 51 41 49 69

corporatecommunicatie@snsreaal.nl

Jeroen de Graaf

Jeroen de Graaf

+31 (0)6 - 18 30 65 75

corporatecommunicatie@snsreaal.nl

 

Investor Relations

Jacob Bosscha

Jacob Bosscha

+31 (0)30 291 42 46

jacob.bosscha@snsreaal.nl

Kagan Köktas

Kagan Köktas

+31 (0)30 291 42 47

kagan.koktas@snsreaal.nl