During the 2008-2009 banking crisis, the Dutch government and the central bank (DNB) made serious mistakes when they stepped in to save ABN Amro, ING and Fortis Bank Nederland from collapse. Prior to the crisis, ING was too slow to realise that the US subprime bubble would cause problems. These are the damning conclusions of a parliamentary inquiry into the government's handling of the crisis.

In its final report Lost Credit II - a Balance, the De Wit Inquiry concludes that ING had too positive an image of its position in spite of problems with US mortgages. Just before the bank was forced to ask the government for billions of euros to salvage it, ING had planned to take over ABN Amro and Fortis Bank Nederland. The banks had got into difficulties as a result of their own actions and had put the country's financial stability in danger.

In addition, the committee criticises DNB's supervisory role over ING. Signals that the bank was getting into difficulties were ignored. The Ministry of Finance is also accused of not recognising ING’s vulnerable position.

In the end, financial action was needed twice to save the bank, once in October 2008 and once a few months later. In the first salvage operation, the government injected 10 billion euros of capital into the ailing bank and, in the second, the Dutch state took over 80 percent of the risk on its US mortgage portfolio.

High risks
The government and DNB were caught off guard by the crisis. Socialist Party MP Jan de Wit, who headed the inquiry committee, says the government made huge mistakes when it pumped billions of capital into Fortis and ABN Amro. Finance Minister Wouter Bos then failed to inform parliament promptly and sufficiently.

The committee conclude that Fortis was nationalised too late and that the price was too high. The government paid 16 billion euros at first - but ended up paying more than 30 billion euros, which bore no relation to its business value. The intervention itself was understandable but the risks taken by the state were high, says the committee. The government based its calculations on incorrect and incomplete information during the take-over of parts of the Dutch Fortis concern.

During the inquiry, the committee spoke to numerous senior banking executives and ministers from the crisis period. It has presented its report to parliament. Mr de Wit says it is up to parliament whether there will be political consequences for the government's failures. Wouter Bos is no longer in office, but his successor and then deputy minister Jan Kees de Jager may have to answer for his predecessor's decisions.

(nc/imm)