Amsterdam - SNS Reaal has increased its equity capital by 1.25 billion euros (1.57 billion dollars), the Dutch bank and insurance firm announced on Thursday.

Of the total equity increase, 750 million euros originates from the Dutch government, which has purchased securities yielding the Dutch state 8.5 per cent interest on an annual basis.

In addition, the Dutch government acquired the right to appoint two people to SNS Reaal's board. Finally, all SNS managers will give up their bonuses.

The deal is similar to those made between the Dutch government and Dutch bank and insurer ING Group and insurer Aegon.

They received, respectively, 10 and 3 billion euros from the 20-billion-euro-fund made available to Dutch financial companies by Dutch finance minister Wouter Bos (Labour) in October.

Another 500 million euros was provided by the bank and insurer's foundation, Stichting Eigen Beheer SNS.

SNS Reaal suffered a loss of 88 million euros in the third quarter of 2008.

"We had to write down assets just like other financials," financial CEO Ronald Latenstein van Voorst said.

Latenstein van Voorst added the extra 1.25 billion euros in capital was required due to special market circumstances.

"The markets remain volatile, and the solvency demands (for) financials have been raised. Other financial companies undertook similar measures. We had no choice but to boost our solvency," he said. (dpa)