Dutch Providing $27 Billion for Financial Companies

The Dutch government will set aside 20 billion euros ($27.5 billion) of capital to protect the country's financial companies, Finance Minister Wouter Bos and central bank Governor Nout Wellink said on Thursday.

Bos and Wellink jointly told a late-night news conference that the money was immediately available to protect healthy financial companies in the country of 16 million as the financial crisis and market turmoil deepened on Thursday.

Other European countries were planning similar measures, Bos said, adding that the government wanted to act preemptively rather than saving weakened institutions at the last moment.

The Dutch government stressed that it would make the capital available to companies that are deemed healthy and viable.

"Financial institutions that want to use these facilities have to show financially responsible behavior," Wellink said, adding that details needed to be worked out but would likely include that banks have to make money available to others.

"The Dutch government commits itself to providing capital to any financial institution in the Netherlands that is fundamentally healthy and viable," the Finance Ministry said in a statement.

The move comes nearly a week after the Netherlands nationalized Fortis's Dutch operations and its share of ABN Amro, just after the crumbling of Iceland's financial system and while the United States weighed taking an equity stake in banks ahead of a G7 meeting of economic powers.

The Finance Ministry said the capital injection could involve a participation of the state in the companies involved via preference shares or other ways depending on legal or corporate structures.

Conditions will apply and could include elements such as guaranteed returns, the financing of government costs, executive salaries and representation on company boards, it added.

Deposits Guaranteed

The Netherlands also will protect depositors with money in Icesave, the Dutch operations of Icelandic bank Landsbanki that was taken over by the Iceland government this week, Bos said.

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Bos said depositors will be protected for up to 100,000 euros; the limit was raised just this week from the previous ceiling of 38,000 euros.

But Iceland will have to guarantee the first 20,000 in deposits, Wellink said.

Asked whether data on who had accounts with Icesave was available, Wellink told Dutch television: "I am being told that it's on a USB stick."

He added there were 108,000 icesave depositors and that most accounts held well below 100,000 euros.

Landsbanki's icesave.nl launched 4 months ago and quickly amassed more than 25,000 customers in its first month.

A Dutch delegation is traveling to Iceland tomorrow for talks.

Belgium, the Netherlands and Luxembourg stepped in over the past two weeks to first prop up, and then to nationalize the bulk of Belgian-Dutch financial group Fortis after it had trouble keeping corporate clients and encountered liquidity problems.

Dutch insurer Aegon, whose share price has been sliced in half since the global credit crisis intensified in September, announced impairments of 275 million euros on Thursday and said its capital base was strong.

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