December 23, 2010 / 12:03 PM / 7 years ago

Dutch want calls for bank runs made criminal offence

* Punishable by up to 4 years in jail, 19,000 euros fine

* Measures a response to collapse of DSB in 2009

AMSTERDAM, Dec 23 (Reuters) - The Netherlands plans to make it a criminal offence to call for a run on a troubled bank, the finance and justice ministers said on Thursday, a clear response to the collapse of Dutch mortgage lender DSB in 2009.

Anyone found guilty of calling for a run on a bank would face a maximum sentence of four years in prison or a fine of 19,000 euros, the justice ministry said, adding that the proposed law could come into effect next year. DSB failed just a few days after a lawyer for a DSB mortgage holders’ foundation suggested in a television interview that DSB clients should take their money out of the bank.

About one sixth of the deposits were withdrawn, resulting in a liquidity crunch and forcing the Dutch central bank to step in and take over the bank. A week later, an Amsterdam court declared DSB bankrupt. [ID:nLC637889]

The finance and justice ministers said in a joint statement on Thursday that it was important to maintain confidence in the banking system, adding that bank deposits were already protected by a guarantee scheme.

“Those people who deliberately make public statements about the soundness of a bank and call for a run on the bank, expose the bank to the real danger of bankruptcy. To prevent this in future, we need to make greater use of the justice system,” the ministers said.

“There is no justification for calling for a bank run given the existence of the deposit guarantee scheme.”

The collapse of DSB, which advertised heavily on television for mortgage business, led to criticism of the central bank and of Gerrit Zalm, DSB’s chief financial officer at the time who was later tapped by the government to head ABN Amro after its bailout.

“We have mixed feelings about the proposal of a fine on announcements for bank runs with regard to whistleblowers or individuals who call for bank runs,” said Lemer Salah, an analyst at SNS Securities, in a research note.

“However, from the perspective of the bank this proposal is expected to be beneficial”.

Dutch banks, including ING ING.AS, state-owned ABN AMRO, and SNS Reaal SR.AS, are estimated to have to pay a total of between 500 million and 1 billion euros for the national scheme to compensate deposits of failed banks. [ID:nLDE60E058]

Earlier this month, former Manchester United football player Eric Cantona called for a nationwide bank run in France to punish banks for their role in the financial crisis, but his call was largely ignored. [ID:nLDE6B01FR] (Reporting by Sara Webb and Gilbert Kreijger; Editing by Jon Loades-Carter)

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