Dutch banks and insurers will be allowed to repay about 40.8 billion euros of emergency financing ahead of schedule, the Dutch finance ministry said on Friday, a sign of the sector's recovery and ability to tap capital markets.
When Dutch financial institutions were hit by the global credit crisis in 2008 the finance ministry agreed to guarantee up to 200 billion euros ($265 billion) in corporate bonds, enabling banks and insurers to issue state-backed bonds.
ING, Fortis Bank Nederland, SNS Reaal, NIBC and other financial institutions raised a total of 50.3 billion euros from such state-backed bonds, but the ministry said on Friday that the scheme had not been used since December 2009 and would end on Friday.
Some of that debt has already matured, however, and by December 1 there was still 40.8 billion euros in outstanding debt. To encourage companies to seek alternative sources of funds, the ministry will allow banks over the next six months to repay the state-backed loans and refinance in the market.
Prices for two of the state-backed loans, one issued by Fortis Bank Nederland which is now part of ABN Amro and the other issued by ING, fell slightly after the finance ministry statement, but analysts said this was more likely due to quiet end-of-year trading.
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