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ING Groep Pays 675 Million-Euro Fine in Holland

- By Alberto Abaterusso

ING Groep N.V. (ING) has agreed to pay a 675 million-euro fine to the Dutch authorities for disgorgement. The Dutch authorities were investigating for criminal activities, including money laundering and corruption. Investigation activities began last year.

The news was released by the Dutch multinational bank through its website today, Sept. 4.


The CEO of ING Groep Ralph Hamers has recognized that the bank is fully responsible for not having met the highest standards to preclude any possibility of financial economic crime during the period from 2010 to 2016. The group also announced that it has taken steps towards some senior managers ranging from the suspension of duties to holdbacks of variable remuneration.

The fine of 675 million euros plus another charge of 100 million euros will be debited on the income statement account of the group for the third quarter of fiscal 2018 as special items.

"The settlement announced today does not affect the strength of ING, the execution of our strategy nor our commitment to our customers, shareholders and other stakeholders," added the Dutch bank.

It is possible that following this news the stock will experience some downsides on the New York Stock Exchange, creating a more convenient entry point in one of the most important banks in the world.

As of Sept. 3, the stock in ING Groep is already trading at a compelling valuation. The share price of $13.60 is below the 200-, 100- and 50-day simple moving average lines. The current share price is just 40 cents above the 52-week low of $13.18 and nearly 52% off the 52-week high of $20.58.

The stock has a market capitalization of $53.58 billion on the New York Stock Exchange. Value investors also consider the following ratios. The price-book ratio of ING is 0.95 versus an industry median of 1.24, the price-sales ratio is 2.46 versus an industry median of 3.41 and the price-earnings ratio is 8.89 versus an industry median of 14.76.

In addition, the stock is granting an earnings yield of 11.2% and a forward dividend yield of 4.88%. The earnings yield is already more than double the monthly average spot rate on high quality market corporate bonds. The forward dividend yield is 65% off the industry median of 2.93%. Currently, the dividend yield of the S&P 500 index is 1.76%.

ING Groep N.V. is distributing an annual dividend of 66 cents per common share.

Despite President Trump's disfavor of a tight money policy, the Federal Reserve will proceed with further hikes in the interest rate this year and probably also in 2019. As a result, the whole financial services sector will benefit and ING Groep N.V. as well.

ING Groep is a multinational bank with offices in over 40 countries. The Dutch international bank is serving about 38 million clients in those countries all over the world. The group is providing its customers - private and corporations - with services and products of consumer banking, online and telephone banking, ATMs points of access and private banking to high-net-worth individuals. The Dutch group also acts as a commercial bank, an insurance company against the risk of financial loss and as asset manager.

ING Groep is part of the Euro Stoxx 50 stock market index.

ING Groep stock is composed of 3,889.95 American Depository Receipts, of which 3.59% is held by institutions.

During the second quarter of 2018, Ken Fisher (Trades, Portfolio) has increased his holding by 4.04% to 43,296,870 ADRs.

Disclosure: I have no positions in any security mentioned in this article.

This article first appeared on GuruFocus.