Banks can use the media to create a positive image of themselves. On the other hand, bad publicity can bring a bank to its knees.

The Dutch DSB bank is a recent example of dissatisfied customers and bad publicity threatening the survival of a bank. Yesterday, the DSB bank was put under the control of the Dutch central bank, the DNB.

Debts
The DSB Bank, founded by soccer mogul Dirk Scheringa, has been the subject of criticism for a while, amongst others because of their aggressive sale of annuities. Employees were instructed to sell as many large annuities as possible, without consideration for the financial position of their customers, causing many to fall into deep debts.

Critical media coverage of the DSB’s methods led to a crisis. An important factor was the call of Pieter Lakeman of the Stichting Hypotheekleed (Foundation for Mortgage suffering) to DSB customers. He suggested customers should withdraw their money from the DSB bank.

According to Lakeman, a bankruptcy of the DSB bank would cause mistreated customers to be compensated for their damages.

Freeze all accounts
The resulting bank run – customers withdrew 622,7 million euros in the course of eleven days – threatened the solvability of the DSB bank, and ultimately the survival of the bank.

Last weekend, the Dutch minister of finance, Wouter Bos, attempted to split up and sell the bank to five Dutch banks: Rabobank, ABN Amro, ING, Fortis and SNS. These banks declined, amongst others for fear of claims over the aforementioned misconduct. This led the Dutch central bank to seize control over the DSB and freeze all accounts this monday.

Although the DSB bank did everything they could to repair their image in the media, by promising customers to help solve their financial problems, the damage was done. The ‘DSB crisis’ makes the power of consumers and the power of the media painfully visible. The DSB bank has been brought to the brink of bankruptcy, not as a direct result of the current economic crisis, but by angry customers.

What’s your opinion?
Accurate and concise media coverage may be bad for banks, but it is important for customers to be well informed. Whether Lakeman’s call for a bank run was justified and should have received such broad media attention is subject of discussion.

For one, the jobs of many DSB employees have come under threat. And many politicians, amongst them right wing liberal Frans Weekers, say that Lakeman has only worsened the situation. “We are currently further away from a solution.” What’s your opinion?