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ING Groep N.V. Message Board

  • zk2013 zk2013 Nov 19, 2012 4:45 AM Flag

    ING Restructuring Deadlines all are postponed by EU

    Since the inept ING management was unable in 3 years to complete the promised conditions for the Dutch state aid, the Eu Comission was practically cornered and finally gave in:
    The amendments extend the time and increase the flexibility for completing divestments and adjust other commitments in the light of the market environment, economic climate and more stringent regulatory requirements.

    -Dutch state gets repaid not this year, but in 4 instalments, to be completed in 2015
    -Asian divestments to be completed in 2016
    -Eu divestments 50% until 2015, 50% until 2018

    AMSTERDAM (dpa-AFX) - Dutch bancassurer ING Group NV (ING) Monday announced an agreement with the European Commission that significantly amends the 2009 Restructuring Plan, by extending the dates for divesting the insurance and investment management businesses, among others.

    ING received 10 billion euros capital support from the Dutch State during the financial crisis and as part of the approval by the European Commission for that support ING was committed to divest all its Insurance and Investment Management operations, ING Direct USA and WestlandUtrecht Bank by the end of 2013.

    As part of the new agreement, ING has filed a schedule for repayment to the Dutch State of the remaining 3 billion euros in core Tier 1 securities plus a 50 percent premium, in four equal tranches in the next three years. A first tranche of 1.125 billion will be paid on November 26.

    A second tranche will be paid in November 2013, the third in March 2014 and the final tranche in May 2015. After the last payment, ING will have paid 13.5 billion euros to the Dutch State.

    Jan Hommen, CEO of ING Group, said, 'Since launching our Back to Basics programme in 2009, we have worked hard to safeguard our financial strength, simplify our organisation...We realize that, against a backdrop of enormous changes in the financial sector and society at large, our work is far from done.'

    The operational separation of the Insurance and Banking activities was completed at the end of 2010. The Latin-American Insurance/IM operations were sold in 2011 and the sale of ING Direct USA was completed in February 2012.

    ING announced the first three sales of the Asian Insurance/IM units in October 2012 and this month ING U.S. filed the registration statement for its IPO. ING has so far incurred over 500 million euros in expenses in executing the restructuring plan.

    The amendments extend the time and increase the flexibility for completing divestments and adjust other commitments in the light of the market environment, economic climate and more stringent regulatory requirements.

    As per the amendments, the divestment of more than 50 percent of the Asian Insurance/IM operations has to be completed by the end of 2013, with the remaining interest divested by the end of 2016. The divestment of at least 25 percent of ING U.S. has to be completed by year-end 2013.

    More than 50 percent has to be divested by year-end 2014, with the remaining interest divested by the end of 2016. The divestment of more than 50 percent of Insurance/IM Europe has to be completed by the end of 2015, with the remaining interest divested by year-end 2018.

    As ING has committed to eliminate double leverage, proceeds from the divestments will be used for that, if they are not needed to maintain the leverage of the remaining insurance businesses.

    ING was previously required to divest WestlandUtrecht Bank, comprising some mortgage, savings, investments and consumer lending activities. However, amid challenging markets, that did not happen.

    Under the amended plan, the commercial operations of WestlandUtrecht Bank will be combined with the retail banking activities of Nationale-Nederlanden, which is to be divested as part of Insurance/IM Europe.

    Of WestlandUtrecht Bank's 36.4 billion euros Dutch mortgage portfolio, 2.6 billion euros will be transferred to Nationale-Nederlanden Bank. ING Bank will retain the remaining 33.8 billion euros mortgage portfolio and will contribute 350 million euros to the capital of Nationale-Nederlanden Bank. This reorganization will lead to job losses, which is not yet calculated now.

    The amended agreement has been formally approved by the European Commission. The Commission will close its formal investigations and ING will withdraw the appeal at the General Court of the European Union that it filed in July.

    The stock settled at 6.51 euros in Amsterdam on Friday.

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    • The contradictionary statements on ING future from ING, from Dutch state, from Dutch Central Bank and from EU sitting asa cloud of smog for 2 months now is getting cleared by this new agreement.

      ING has been given another five years to sell its insurance and asset management units by the European Union. The CEO added it might be able to divide the company in a stock-split among existing shareholders, without selling, provided the group’s other financial commitments are met.

      ING is part-way through a restructuring and downsizing plan that was imposed on it by European competition authorities.

      In this process this statement is the very first time ING hinted to make something for the existing shareholders, by splitting-out some parts of Insurance business as separate company. This might be the good part of the news. The bad part is that ING remains under close EU and state supervision much longer than originally promised. And ING is not allowed to pay dividend, which further postpones the price recovery.

      So net-net this is a compromise where the shareholders first have to wait more years to ING's recovery process to complete, in return for a vague promise (coming from the very unreliable mouth of a failed CEO) to get something in return which was originally clearly theirs- the ING Insurance business.
      I think this is something hard to call a great step forward.

    • EU was not being practical, with this worldwide financial resturcturing going on why would you force someone into selling assets at fire sale pricing. This is good news for all concerned.

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