The Dutch central bank seized control of the troubled DSB Bank today after efforts to preserve it with a consortium of five larger banks failed.
The central bank said it had been appointed administrator of DSB, a privately held bank with about €8 billion in assets. DSB was a well-known lender despite its relatively small size.
The central bank said it sought unsuccessfully to preserve DSB's operations through a consortium of ING, SNS Reaal, Rabobank and the nationalised ABN AMRO and Fortis Bank Nederland.
Those talks failed, the central bank said, over concerns about loan losses and potential claims against DSB.
Customers of the bank are no longer able to access their money except by ATM withdrawal, which will only be available until midnight on Wednesday. After that, customers will have to wait up to three months to get their money back via the state's deposit guarantee scheme.
Though deposits are guaranteed up to €100,000, the central bank's website says they are also offset against debts. A customer who has both savings and a mortgage with the bank, in other words, will have their savings credited against the mortgage balance and will not be able to get cash back.
DSB competitors are likely to feel the pain too, as the deposit guarantees are funded partly by other Dutch banks. Evolution Securities analyst Jaap Meijer, in a note to clients, said ING and SNS were likely to be hurt, given their larger market share for savings.
While small-bank seizures are common some places - 98 in the US this year alone - they are far more unusual in Europe. Generally, small banks in Europe were not able to get themselves in as much trouble as elsewhere.
Yet the takeover culminates a difficult few months for DSB, which made its name with loans at substantially lower rates than its major competitors.
On October 1 the head of a foundation representing angry DSB customers went on national TV and urged DSB clients to withdraw their money.
The bank acknowledged withdrawals increased slightly after that, and it has had problems with access to its Internet banking site since.
His calls followed TV reports in late September that DSB had pushed products inappropriately on clients, which led to calls in parliament for an investigation.
In July, DSB was fined by the market regulator for 'overcrediting', or lending people more than they could afford to borrow.
The failure of DSB and the government intervention come nearly one year to the day after the Dutch government's dramatic intervention in the financial system.
In the space of a few days last October it spent more than €30 billion nationalising the local operations of Fortis and pumping cash into ING, SNS and insurer Aegon.
