What Happens When a Systemically Important Financial Institution Fails: Some Company Law Observations Re. SNS Reaal

Abstract

On 1 February 2013, 08:30hs., the Dutch Minister of Finance decided to expropriate all shareholders and subordinated bondholders of SNS Reaal, one of the four largest financial conglomerates in the Netherlands. Various aspects of this case are typically Dutch in nature. Yet the European Commission has undertaken to introduce a Crisis Management Directive so as to provide for harmonised rules for the recovery and resolution of credit institutions and investment firms. This laudable initiative is coupled with proposals for a single supervisory mechanism (commonly referred to as ‘banking union’), harmonised rules on the ringfencing of commercial bank activities from investment bank activities, and, most importantly, a common Eurozone redemption fund. Even if such a far reaching European harmonisation would prove to be politically feasible (which is unclear at best), it would be unlikely that the national idiosyncrasies of company and tort law discussed above would cease to be of relevance.

Keywords: SNS Reaal, Bank resolution, expropriation, financial law, banking union, harmonisation