The Netherlands' Central Bank (DNB) was wrong when it licensed DSB Bank in 2005, according to an independent report published on Tuesday. DSB Bank failed in October 2009 when clients massively withdrew their savings.

Former employees and clients had told media how DSB bank had sold clients mortgages coupled with insurances against excessively high rates. Clients were left unaware by DSB Bank that they had committed themselves to payments which far exceeded their means.

Unacceptable risk
"The shortcomings of the leadership and the organisation of DSB were such that the Central Bank's licensing of DSB constituted an unacceptable risk," commitee chairman Professor Michiel Scheltema wrote in his report. "The Central Bank should have demanded more safeguards."

The committee report argues that the DSB bank leadership was "limited in its aims and not very professional, having too great an interest in earning money and insufficient awareness of the clients' interests".

Popular
The failed DSB bank was dominated by the policies of its founder, who even gave his name to it: Dirk Scheringa Bank. Mr Scheringa was very popular in his home province of North Holland because of his accessibility and for ploughing back the money he earned into the area. DSB sponsored football club AZ Alkmaar and its stadium, financed a professional skating team and built a museum in the town of Spanbroek. The name DSB has been removed from the Alkmaar stadium, the skating team is looking for a new sponsor and the museum's collection has been sequestrated by Rabo Bank.

Settlement
The Netherlands Central Bank is criticised not only for allowing DSB to go into banking, but also for failing to properly monitor the bank's activities. Its criticism in 2009 came too late, Professor Scheltema said, and by then consumer advocate Pieter Lakeman had said on national TV that DSB clients should withdraw their money to bring the bank down, leading to its collapse.

Mr Lakeman said on Monday he is dropping his 2.8 billion euro claim on behalf of ex-clients against DSB, and now wants to negotiate a settlement with the failed bank's official receivers. "A settlement is better for all parties because it will ensure that people get their money back faster," Mr Lakeman explained to NOS TV on Monday.

The Scheltema inquiry into the collapse of DSB Bank was ordered by former Finance Minister Wouter Bos. It is expected that the Lower House in The Hague will debate the report soon.

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