The Dutch Central Bank took control of struggling DSB Bank NV on Monday after an ongoing investigation into alleged miss-selling of insurance products spooked clients and caused a run on deposits, and as a last ditch attempt to win support from other Dutch banks collapsed.

The news was a further blow to the Dutch financial system, which was hit hard in the credit crunch, leading to the nationalization of former financial giant Fortis, as well as multi-billion-euro state bailouts for ING Groep NV (ING) and Dutch insurer Aegon NV (AEG).

The Dutch finance ministry insisted that DSB Bank's problems weren't caused by the credit crisis but by the bank's own business practices and uncertainty among its customers.

The Central Bank asked a Dutch court to let it take control of DSB Bank after its solvency came "under great pressure" as account holders withdrew cash. Central Bank President Nout Wellink told reporters that since Oct. 1, EUR600 million, or 17%, of DSB Bank's total deposits were withdrawn.

DSB Bank, a non-listed business with a balance sheet worth about EUR8 billion, hit difficulties after the AFM Dutch financial authority began investigating the bank earlier this year for allegedly pushing borrowers into expensive insurance policies. It was fined EUR120,000 in August as part of the still ongoing investigation.

DSB Bank founder and owner Dirk Scheringa said Monday that the current situation is incomprehensible. "DSB Bank is not in an emergency situation and we were just working on solutions for customers in financial problems," he said. He said he will cooperate with the now appointed administrators to find a solution for his bank's customers and its 2,000 employees.

The bank said it planned to make a formal statement on the situation later Monday.

DSB Bank depositors are currently unable to access all their cash but can withdraw EUR250 a day on their debit cards for the next three days. While DSB Bank cash machines have been frozen, clients can use their cards to take cash via other banks.

The Central Bank said the bank's clients can open accounts with other banks without going through the usual application process, which can usually take several weeks. Under the Dutch deposit guarantee scheme, accounts of up to EUR100,000 are guaranteed by the Central Bank and the scheme is funded jointly by the Dutch banks.

Wellink said that it remained uncertain when DSB Bank depositors will get access to their money. "In the end that is up to the independent administrators who will lead the bank from now," Wellink said.

In the past week, two Dutch DSB Bank customer associations urged DSB Bank clients to withdraw their savings and deposits.

Over the weekend the Central Bank, the finance ministry and a consortium of five banks - ING, SNS Reaal NV (SR.AE), Rabobank, ABN Amro and Fortis Bank Netherlands - attempted to find a solution to DSB Bank's problems. They finally decided that its financial situation was too risky, the Dutch finance ministry said Monday.

Finance Minister Wouter Bos said there would be an independent investigation of the way the bank was managed, and the role played by the bank regulator.

"In this investigation we will also look into the operational functioning of current and former managers," Bos said, including DSB Bank's former chief financial officer, Gerrit Zalm. Zalm is a former Dutch finance minister and is currently CEO of state-owned ABN Amro Bank. Zalm said in a statement that as CFO he was "successful in leading DSB Bank through the credit crisis."

Dutch bank ABN Amro NV, which was taken into state ownership as part of the Fortis bailout, said Monday that it could make substantial losses from its exposure to DSB Bank, without giving more details. ING said it had negligible direct exposure but would have some indirect liability through its contribution to the Dutch deposit guarantee plan.

Dutch bancassurer SNS Reaal said Monday that its banking unit had "very limited" financial ties with DSB Bank and that it had actively reduced its commercial links with the bank in the last two years. It said its solvency and liquidity positions were strong enough to absorb the expected costs of the deposit guarantee scheme, without saying how much they might be.

Company Web site: www.dsbbank.nl

-By Bart Koster, Dow Jones Newswires; +31 20 571 5201; bart.koster@dowjones.com