DSB Bank (''DSB: Dirk Scheringa Beheer'') was a Dutch

bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets. Because ...

and

insurer Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to Hedge ( ...

that failed in 2009. Its loans were managed under ''Quion'' from June 2013 until June 2016 when ''Finqus'' began operating as the former DSB Bank. In 2018 ''Finqus BV'' took over DSB Bank and operated as a subsidiary of DSB Group. Finqus BV turned over its loan portfolio to

NIBC Bank NIBC Bank N.V. is a commercial bank in the Netherlands offering corporate and retail banking products and services. Its corporate banking activities range from advising, structuring, financing and co-investing across debt and equity in Northwest ...

on 21 July 2021. The company was founded in 1975 by , the sole shareholder. It was originally called ''Buro Frisia'', but in 1998 the DSB Groep ( en, DSB Group) was founded which included Buro Frisia. The bank made the news several times, due to, among numerous things, overpriced mortgages and deferred annuities. On 19 October 2009, the Amsterdam court declared DSB Bank to be in bankruptcy. Currently all bank services are active. No new loan applications are being accepted, and providing advice for payment services has also stopped.

History

, a former

police officer A police officer (also called a policeman and, less commonly, a policewoman) is a warranted law employee of a police force. In most countries, "police officer" is a generic term not specifying a particular rank. In some, the use of the ...

, founded DSB BANK as Buro Frisia in 1975. In 1977 the company had capital worth €25 million and a balance of €300 million, due to stable growth and acquisitions. During the end of the 90s, Scheringa wanted to take his company to the market, the company was estimated to be worth 400 million at the time. However, right before the

IPO An initial public offering (IPO) or stock launch is a public offering in which shares of a company are sold to institutional investors and usually also to retail (individual) investors. An IPO is typically underwritten by one or more investment ...

, Scheringa decided not to through with it, since he supposedly did not agree with the introduction price. He thus remained sole shareholder and found new ways to attract capital. He did so by creating

subordinated debt In finance, subordinated debt (also known as subordinated loan, subordinated bond, subordinated debenture or junior debt) is debt which ranks after other debts if a company falls into liquidation or bankruptcy. Such debt is referred to as 'subordi ...

to add to his capital. Such a debt is a loan which ranks after other debts should a company fall into liquidation or bankruptcy. Such debt is referred to as subordinate, because the debt providers (the lenders) have subordinate status in relationship to the normal debt. DSB bank went through some structural changes and changed its name to DSB Bank NV in 2006. Unlike most other banks, DSB bank's main source of profit was provision revenues from premiums and term life insurance, which were sold simultaneously with the loans. This form of combined sale is prohibited in the Netherlands, but no action was taken until 2009.http://www.rtl.nl/components/actueel/rtlnieuws/2009/10_oktober/01/verrijkingsonderdelen/1001_1700_geschiedenis_dsb_bank.xml In June 2007, Scheringa appointed

Gerrit Zalm Gerrit Zalm (born 6 May 1952) is a retired Dutch politician of the People's Party for Freedom and Democracy (VVD) and businessman. Zalm studied Economics at the Free University Amsterdam obtaining a Master of Economics degree and worked as a ci ...

as chief economist and chief financial officer to succeed the outgoing CFO Jaap van Dijk who had been with DSB from 2002 until November 2007. In November 2008, Zalm left DSB, took a job with

ABN AMRO ABN or abn may refer to: Companies * ABN AMRO Group, a Dutch bank group * ABN AMRO, sometimes referred to as "ABN" in shorthand, is a Dutch state-owned bank * Algemene Bank Nederland, a now-defunct Dutch bank Radio, news and television organizat ...

, and was succeeded as CFO at DSB from March 2009 to May 2009 by Frank de Grave. In July 2009, Ronald Buwalda, another member of

VVD The People's Party for Freedom and Democracy ( nl, Volkspartij voor Vrijheid en Democratie ; VVD) is a Conservative liberalism, conservative-liberalRudy Andeweg, Andeweg, R. and G. Irwin ''Politics and Governance in the Netherlands'', Basingsto ...

became CFO at DSB.

Activities

DSB bank provided

mortgages A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any pu ...

and

consumer loan Credit (from Latin verb ''credit'', meaning "one believes") is the Trust (social sciences), trust which allows one Party (law), party to provide money or resources to another party wherein the second party does not reimburse the first party im ...

savings Wealth is the abundance of valuable financial assets or physical possessions which can be converted into a form that can be used for transactions. This includes the core meaning as held in the originating Old English word , which is from an I ...

and

insurance Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge ...

products to individuals. In the Netherlands, DSB bank had a market share of approximately 17% in the supply of private credit. DSB bank had various trade names, such as Becam, Frisia Financieringen, Lenen.nl en Postkrediet. Dirk Scheringa owned the professional Dutch football club

AZ Alkmaar Alkmaar Zaanstreek (), better known as AZ Alkmaar or simply AZ (), is a Dutch professional football club from Alkmaar and the Zaan district. The club plays in the Eredivisie, the highest professional football league in the Netherlands, and ho ...

and DSB Bank was the main sponsor of the football club. The bank also sponsored a lot of other sports clubs. Next to that Dirk Scheringa opened the Scheringa Museum for Realism in 1997. Dirk Scheringa had over the years acquired a large collection of paintings, mostly Dutch ( Koch, Ket,

Willink Willink is a Dutch toponymic surname.Willink
at the

a.o.) in the magical-realistic genre, with the intention of creating a permanent exhibit in the museum. DSB bank ensured that it was known by creating a lot of television advertisements, unlike other banks in the Netherlands. These commercials were often chosen as ‘most annoying advertisement of the year’, but did provide them with the reputation of a cheap and safe bank. Their slogan was: DSB bank, good for you money.

Causes of bankruptcy

Overpriced mortgages

DSB bank sold

jointly with term

life insurance Life insurance (or life assurance, especially in the Commonwealth of Nations) is a contract between an insurance policy holder and an insurer or assurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death ...

and made their customers pay these simultaneously, which is highly unusual, and illegal in the Netherlands. They charged very high premiums, sometimes 80% of the price of the purchase. This caused the mortgages to be overpriced e.g. the mortgage was worth, sometimes 46% more, than the actual value of the property, instead of the 25% threshold. Customers could only get the mortgage if they paid the term insurance simultaneously. They were drawn by the low

interest rates An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, th ...

, however these rates often increased within a year, increasing the pressure on the obligations of the customers. Customers that wanted to leave DSB had difficulty doing so, since no other bank wanted to take over their risky mortgages. Therefore, customers had no choice but to sell their house and accept the high remaining debt they were stuck with afterwards.

Fines

As this practice of providing mortgages came to light, the DSB bank received two fines from the Dutch Authority of Financial Markets. One for overpricing their credit and one for the lack of information given to customers with a combined value of €120.000¹⁰.

Damage Claims

In 2009, several support funds were created to inform potential clients about the way DSB conducted business. There also were mediation parties to help the duped customers.

Bank run

In 2009, the run on the DSB bank started when Pieter Lakeman, the representative of unsatisfied DSB-customers of the foundation ‘Hypotheekleed’ (roughly translated as: mortgage distress), motivated depositors at the DSB bank to withdraw their money. According to Lakeman it would be better for the depositors if the bank went

bankrupt Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debt ...

, due to the provision of frowned upon mortgages. Already on the same day, depositors withdrew 88 million euro from their bank accounts at the DSB bank, followed by 100 million euro on 2 October 2009 and 127 million euro on 3 October. On 12 October all accounts at the DSB bank were frozen on request of the Dutch central bank, the DNB (

De Nederlandse Bank De Nederlandsche Bank NV (DNB) is the central bank of the Netherlands. Founded by King William I in 1814, it is part of the European System of Central Banks (ESCB). De Nederlandsche Bank is a public limited company (Dutch: '' naamloze vennoots ...

), in order to stop the bank run which could lead to the failure of the DSB bank. At that point more than 600 million euro had already been withdrawn, which was a sign for DNB that the

Solvency Solvency, in finance or business, is the degree to which the current assets of an individual or entity exceed the current liabilities of that individual or entity. Solvency can also be described as the ability of a corporation to meet its long-ter ...

of the DSB bank was under pressure. The

deposit insurance Deposit insurance or deposit protection is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due. Deposit insurance systems are one component of ...

program still guaranteed the deposits at the DSB bank to an amount of 100.000 euro per account. According to the ministry of Finance of the Netherlands this regulation was inevitable. The days before the implementation of this regulation the government, DNB and a group of five banks tried to come up with a solution for the DSB bank, but the risks of this operation were perceived too high and eventually the whole operation was cancelled.

Effects of the bankruptcy

Reactions

‘We did not go bankrupt, we were destroyed’ were the words of DSB bank owner Dirk Scheringa. Together with the board of directors he publicly asked for a parliamentary poll about DSB bank's bankruptcy. According to him it was necessary to investigate how the government could turn a totally healthy company into a failing company. Dirk Scheringa blamed the ministry of Finance, DNB and the media for the bankruptcy. Firstly, the ministry of Finance stated that the DSB bank charged idiotic provisions, but according to Scheringa a lot of other banks charged the same amounts. Secondly, DNB requirements for DSB were far too stringent and totally uncalled for. Thirdly, the media spread the news about a possible takeover of the DSB bank by DNB before the official report was published, this led to massive withdrawals by depositors. Dirk Scheringa promised to resign as chairman and to sell his shares, nevertheless DNB decided to let the DSB bank go bankrupt.

Final attempts to save the bank

During the weekend of 17 October the final attempts to save the DSB bank were presented on television by financial advisor Adrian Dorrepaal under the title ‘Plan B’. He called in the help of 8,500 depositors who accounted for a total of 250 million euro and did not fall under the deposit insurance scheme. Since these depositors would lose their money in case of bankruptcy it was better for them to turn their deposits into shares of the DSB bank. According to Dorrepaal such a transformation would be sufficient to avoid bankruptcy. Once the DSB bank recovered, the depositors would get their money back through dividends. That weekend Dirk Scheringa was working with Gardner Ross Corp. on a possible takeover bid from the American investment company '

Lone Star Funds Lone Star Funds, legal name of main entity Lone Star Global Acquisitions, Ltd. is an American private equity firm that invests in distressed assets in the U.S., Canada and internationally. The founder of Lone Star established its first fund in 1 ...

’. When Lone Star Fund stated not to be interested anymore, Plan B was Dirk Scheringa's last resort. He had until 9 a.m. on 19 October to come up with a solution, otherwise the Court of Amsterdam would declare DSB Bank bankrupt. Already before the deadline Plan B was rejected by the government, which considered the plan too complicated and risk bearing. Besides that, the government believed that the plan would have little positive effects on the liquidity of the DSB bank.

The effects on sponsorships

After the bankruptcy of the DSB bank all sponsoring was stopped. On 13 October all sponsorship towards the DSB bank's ice-skating team was shut down. This happened in the middle of a training camp in Germany, this led to the situation where the ice-skaters themselves had to pay for the rent of the ice-skating track and the transportation back home. On 30 October the official sponsorship of

came to an end. All associations with the bank in and around the stadium were removed. At that time, AZ Alkmaar was the national titleholder. A part of the revenues of the new sponsorship deal with

AFAS Software Behnam Afas (born 17 July 1934) is an Iraqi-New Zealander author and researcher. His studies are mostly in the role of the Christian scholars and missionaries, their effect on the renaissance of Iraq during the 19th century and the early 20th c ...

would accrue to the creditors of DSB bank, since AZ Alkmaar had an open debt of 14 million euro at the DSB bank.

Effects on museum

On 17 November the court of Alkmaar declared DS Art, which encompasses Dirk Scheringa's art collection, bankrupt. Sixteen employees of the museum in Spanbroek were fired. At that time Dirk Scheringa was building a new museum in Opmeer.

ABN Amro ABN or abn may refer to: Companies * ABN AMRO Group, a Dutch bank group * ABN AMRO, sometimes referred to as "ABN" in shorthand, is a Dutch state-owned bank * Algemene Bank Nederland, a now-defunct Dutch bank Radio, news and television organizat ...

impounded 1300 art pieces to serve as collateral for DSB Bank's mortgage-debt of 32 million euro. In March 2012, retired Dutch businessman Hans Melchers bought the bulk of this collection in a deal with

Deutsche Bank Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Sto ...

, who were curator. Melchers is currently looking for a good location to make these paintings (over 1000) available to the public.

References

External links

* {{Dutch financial services companies Defunct banks of the Netherlands Banks established in 1975 Banks disestablished in 2009 Bank failures Medemblik