In my previous blog I took a look at certain events from the SNS bank. Here I will be taking a look at possible solutions. Before we do this we will have to take a look at certain elements that are in this bad bank. Each of these bad decisions is very costly one. Now we must look at what is needed to turn this around. We do have an additional problem. The people who blew up the financial industry (aka Goldman Sachs) had a finger in this solution!
So, can anyone explain to me why people are giving ANY LEVEL OF CREDIBILITY to ANYTHING Goldman Sachs has to offer? Please explain to me why SNS Reaal went for advice to the company who lost 2.1 billion dollars and is one of the major parties behind the 2008 financial meltdown?
OK, let’s get started.
In 2006 Bouwfonds Property Finance (BPF) was acquired. When it changed hands part went to the ABO bank, and this part became part of SNS Reaal. Now, as mentioned by NOS, this part consists of a collection of real estate projects. It is interesting that many searches did not reveal a clear list. Much information is unclear as i was not able to find a complete property list.
A. Business property.
Any business property that is part of SNS or SNS Property Finance and is currently under any mortgage where payments are not up to date kept should be annexed into a government building society for either leasing or rent (no sale allowed). The reason for sale is that sales must be very closely monitored. I fear that certain parties would jump in for a quick deal under ‘dubious’ conditions that cannot be met after a short time, prolonging all this and in the end will stack up costs again and again.
A single example is Energy Business Park Arnhem. This was under mortgage with TNC which is now bankrupt with outstanding debts in excess of 20 million Euros. This is part of TCN UROP SE en TCN Assets B.V. both also bankrupt. This is just ONE example. Loss upon loss upon loss upon bankruptcy. It looks like one building seems to contain the infrastructure for several buildings, all costs, all needing Accountants, lawyers and nothing moving forward on the profit bar. The ‘Bad Bank Inc.’ portfolio is filled with these sorts of issues.
So, let us get back to annexing. These buildings are to be confiscated. Their infrastructure gets disbanded and we try to get some of the money back. If we look at the issues over 2012, than some might remember the complaint on how some of these building directors got way too much money. Well, now they get to earn that extra by turning around some of these places.
B. Consumer properties.
This is a bit harder. Many of these places are not in the Netherlands (Spain). Yet, Spain does remain the most popular holiday choice for the Dutch. I mentioned this place before. It is Mosa Trajectum (possibly more than one project). The question becomes how far payments were made, and how much is still uncovered. If not covered then I say Annex it for the Dutch Government and let they be sold in smaller parts and at reasonable prices. I consider 600,000 Euro to be severely overpriced. Some of these villas can never be sold, however, I think to let them out as holiday bungalows, and get some of the money back that way is not too far-fetched. This is what the original owner had intended. I personally belief he was not very realistic about the approach. Yes, likely some places could be sold to others for a nice fee, and yes, it will remain a loss, but at present someone is still getting some money out of a project that he is not entitled to (if the bills were paid this project would never have made it to the bad bank stack). In addition a sharper look should be taken if there is a possibility to take these places into different directions. I already mentioned that several of these places had an amateur approach to its sale (really bad websites and such). The governments through the courts should assign these places for sale with brokers who have proven to deal in good ways. All parties who have been involved in bad mortgage dealings (no matter how non-illegal) should be auto blacklisted.
This first part is all about trying to sell Consumer properties, renting out the commercial ones. However, the difference is that I want ALL middle men and all traders removed from this financial track. They have no business in a track that made it to the bankrupt pile. They failed, good luck, goodbye and have a nice day. There should also be an additional message attached as mentioned in the sale of consumer properties. Brokers and dealers are to be held accountable. That means those in dubious actions are to be withheld from new options. Their defence that they did nothing illegal is no longer an acceptable answer. It reeks like the German defence from 1945. “we were under orders (befehl ist befehl)” We need to change without softness, the atmosphere of greed driven, vulture approach of stripping places bare and walk away with a hefty handshake, money in the bank and walking with filled pockets towards another endeavour.
We have witnessed for too long how companies operated for years under the approach of conceptual profit and ending up with no revenue. This means that the monitoring efforts of treasury and taxation must change as well. This SNS example is not alone. When we look beneath the surface we see collection of events that go in similar direction. these thoughts come from the following article from the Newspaper Trouw (meaning: faithful) reporting on the 10th of October 2006 that the sale of BPF had gone to SNS Reaal with net profits of 87 million Euro in 2005 and 46 million Euro for the first 6 months in 2006. When we look deeper at this we see two optional paths. In the first path, as presented by all matters of web publications that This person Ronald Ras would be investing 250 million Euros in building a 4 star resort. In addition he had a new investor. An American that would be providing 1000 million in funds (not one billion). And what currency is that in? The article did not mention that. This was an article in April 2012. The source was the IAGTO a golf promoting website. So where are the hard facts? When seeking through web search you can find all matters of web news. Yet, when we seek the sources we should rely on (Reuters, newspapers, on-line news providers) we see that their commitment to facts is lacking completely. This is not about going after Mr. Ras. I personally do not care about the individual. I do care about large organisations like banks that seem to provide annual reports balanced nicely, that they do NOT seem to keep a proper handle on matter. The excuse that the forms look correctly should not hold any water.
This is about solutions, and this is part of that. Banks need to start doing their proper homework. From what I have been searching, reading and discovering in the last 48 hours, it seems to me that there is a massive gap in that area. We should all agree that many facts might not be on-line. However, the parts we read on-line do not seem to add up and red flags should have been raised all over the place. It will be up to the Dutch Justice department to consider the needed steps and actual steps in calling these parties to court, to give evidence and hand over documents proving correct steps were taken. A 10 second message ‘blunders were made’ should not be allowed to cover it. For the former boss “Sjoerd van Keulen”, to silently walk away, dropping his tasks as Chairman of the Holland Finance Centre looks like a joke. The Dutch Finance minister was very outspoken into confiscating previous commissions is a stronger step, and he did mention on the NOS news (2nd Feb 2013) that parts are currently not achievable as the law changes are pending at present. Those changes would give him a lot more abilities in this matter. I would suggest that Mr. Sjoerd van Keulen is placed in a public parliamentary enquiry, where he must show evidence and answer public questions by ministers and Banking CEO’s on his choices, his actions and events. This too is aimed towards a solution. For the simple fact is that the Banks think they can just walk a nice walk. Over the last three days many sources had the same line: “SNS Reaal is the smallest of four Dutch banks designated as systemically important and too big to fail, by the Dutch central bank”. It seems that they auto assumed a government injection of cash, so that they could make a mess a little longer. I think it is important that these citizens see these people live on TV. My only worry is that not unlike the passport scandal in the late 90’s the only response given will be “I do not seem to recollect the details to those facts”. The Jurisprudential fun fare will be complete at that point, but it could push the citizens into forcefully demanding massive banking changes. That is the aim. This scares banks (well more the people receiving fat checks). As long as the people are not awake, they walk away.
The Dutch could set a tone for other governments. This would include France, Italy, Spain and the UK. The simple reason is that I feel certain that this tidal wave WILL CONTINUE! My fear is that the damage will just add and add.
So far the property branch! Let’s take a look at insurances.
Two additional sides are to be seen here.
They acquired SwissLife and Axa. Interesting was that SwissLife was purchased at 16.3 times the annual profit, totalling at 1.5 billion Euro (Source: NRC Handelsblad, a Dutch Newspaper). This happened in 2007. Now, can anyone explain to me how this was a decision anything less than utterly insane? A bank agreeing to a business matter that takes more than 15 years to break even. When I was living there I could not even get a mortgage past 3.5 annual incomes. The insane part is that it has been known to be a bad bank decision less than 4 years after purchase. So this buy was conceived by….? (I am utterly clueless how this became a reality!).
Yet, this is still about solutions. The Netherlands has a few issues with healthcare and Mental Health care, so we could unite the two. Consider the possibility to get 2,000,000 people switch now to SwissLife/Axa, which is roughly 8% of the population. Making these funds all government, we get two things.
First is that the government gets a MASSIVE financial injection. Yes, it comes at the expense that healthcare costs will go up too. Consider however that several of these funds have a board of directors with a very fancy fat check and commission. All that money will now go into the treasury. More important is that those profits could pay for the needed mental health care that is now being scrapped as there are no more funds. This is obviously not a perfect solution, but it is a possible stronger move forward. In addition, the events towards SwissLife/Axa might help to stabilise certain retirement funds. As Swiss life and Axa improve either other funds MUST do better, or their customers would move to SwissLife/Axa. This would mean that retirement funds go towards a non-commercial, government controlled side. Very much like the Swedish system. This might not be a bad idea. I will be the first to admit that many complaints will go up; however this is about more then moving forward. A fundamental change is essential here, and we might as well consider going into another direction all together. In the end if this does work, then SwissLife/Axa can be sold again for with a good profit, which is also nice to add to the empty treasury. I kept the two together as any solution for SwissLife and Axa might require a solution in the same direction.
These sides all need new and adjusted legislation. They need guarantees in place. However, consider that the people are no longer funding some person’s fat check, but it goes on the big stack benefitting all. This means that millions are already saved. Not a bad way to achieve Social Justice.
My ideas remain (highly) debatable, but I feel strongly about two sides. The first is that some financial institutions like Goldman Sachs are to be blacklisted. We seem to revisit places for advice that are at centre of the mess we got into in both 2004 and 2008. In addition, why should nations keep on funding US businesses, whilst its government will not get a decent handle on these corporations, their own debt and their own impending bankruptcy? Several experts in this field keep on claiming that rules and more regulations are not the solution. I am not sure whether they are right or wrong. I do know that those presently in charge are all about greed. THAT is a massive reason for many problems and until those people are under control, they should not have any control at all. We are heading to massive changes. Not just in Europe, but also in most Commonwealth nations. Without those greed icons we might have a chance. With them our chances are zero. In addition, I am not some Social Justice type who opposes Capitalism. I believe that Capitalism can propel any industrialised nation. But this has gone over the top. When it becomes about revenue and shares, and no longer about actual profit, there is no Capitalism! We remain with nothing more than greed and a vulture based decay. Those two I do oppose strongly.