On Friday, February 1, the Netherlands nationalised SNS REAAL, the fourth-largest systemically important bank in the Netherlands, at a cost to the Dutch taxpayer of EUR 3.7bn. Unusually, in addition to expropriating SNS REAAL’s shares, the Dutch state has also expropriated all subordinated bonds issued by SNS REAAL.

The nationalisation brings into question how a Credit Default Swap (CDS) entered into by any bondholder to provide credit protection will operate in the event those bonds are expropriated.

View full memo, "Nationalisation of SNS REAAL: The CDS Consequences"