On 11 July, former holders of the third series of Participation Certificates received a proposal for compensation from SNS Bank by regular mail. An investigation conducted by SNS Bank has shown that customers were insufficiently aware of the characteristics and risks of the product at the time they purchased the certificates. SNS Bank apologised to its customers for this. The compensation amounts to the nominal value of the certificates, plus the interest on government bonds for the period they had the participation certificates in their possession.

SNS Bank issued the second series of Participation Certificates in June 2003 at a nominal interest of 5.16%. In subsequent years, these certificates were available for trading on a quarterly basis when there was sufficient supply. From ten years after issuance SNS Bank had the opportunity to redeem these certificates. In February of this year, the certificates came into the possession of the Dutch State. It is, therefore, not possible to redeem these certificates after 10 years, as was the case with the first and second series.

Following the expropriation of the certificates an appeal was lodged with the Enterprise Chamber of the Amsterdam Court of Appeal on the level of compensation by the Dutch State. Independently of this, SNS Bank started an investigation into possible misconduct at the time of offering the Participation Certificates in the past. This investigation shows that customers were insufficiently aware of the characteristics and risks of the product when they purchased the certificates. SNS Bank apologises to its customers for this.

SNS Bank not only investigated its own role, but also investigated the possibility for compensation. Based on the limited risk that should have applied to customers, the bank has now made a proposal for compensation. On 11 July, customers received a proposal for compensation of the nominal value of their participation certificates, plus the interest on government bonds during the period they had the participation certificates in their possession. A (10-year) government bond is a suitable reference product for the participation certificates. The government bonds have a lower risk profile and, therefore, a lower interest rate. In the compensation proposal this lower interest rate is offset with the higher interest rate received by customers on the participation certificates.

SNS Bank consulted with Stichting Compensatie SNS Participatie Certificaten and the Stichting Obligatiehouders SNS during the investigation and on the proposal for compensation. They support the compensation proposal. The Ombudsman for the Dutch Financial Services Industry (KiFiD) looked at the proposal too and agrees with it. During the investigation, SNS Bank also had consultations with other stakeholders.

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