Dutch central bank takes control of DSB Bank (2nd Lead)

Oct 12, 2009, 11:28 GMT

Amsterdam - The Dutch central bank DNB announced Monday that it has taken control of DSB Bank NV in a bid to prevent the ailing bank from going into bankruptcy.

A court in Amsterdam has appointed two curators to enable a 'balanced representation of all account holders and creditors', the central bank said in its statement released at 1000 GMT.

Curators for the insurance division were yet to be appointed.

A guarantee of 100,000 euros (147,500 dollars has been places on savings accounts. The central bank confirmed that customers could not access their money on Monday.

The central bank asked the court for the emergency measure because of a 'major flight of liquidity that would endanger the existence of DSB bank'.

The central bank added that DSB's solvency had come 'under severe pressure'.

The central bank said the curatorship became necessary after attempts by a consortium of five of the country's biggest banks and the Finance Ministry over the weekend to secure a takeover deal had failed.

A DSB Bank spokesman confirmed that the central bank's second court application within 12 hours for control of the bank was successful.

During the first emergency hearing head at 2 am (1200 AM GMT), the court had rejected the bid for control over DSB.

Earlier Monday, DSB Bank spokesman Klaas Wilting denied reports that the bank was on the brink of bankruptcy.

With a balance of some 8 billion euros (11.9 billion dollars), DSB is a relatively small bank in the Netherlands.

It has been the subject of an investigation by the financial markets watchdog AFM for several months.

Extremely aggressive marketing resulted in the bank's rapid expansion in recent years, offering high interest on savings and sub- prime mortgages that were usually combined with complicated and risky financial products.