ING and Dutch State reach agreement on unwinding of Illiquid Assets Back-up Facility
(Thomson Reuters ONE) -
ING announced today that it has reached an agreement with the Dutch State on the
unwinding of the Illiquid Assets Back-Up Facility (IABF). The facility was
established in 2009, at the depth of the financial crisis, in order to reduce
the risk and uncertainty for ING from a portfolio of US Alt-A mortgage
securities. Market developments now allow the unwinding of the facility,
including selling the securities, with a cash profit for the Dutch State.
"While we are grateful for the support the Dutch State extended to us in 2009,
we are pleased that today we can announce the end of the Alt-A arrangement,"
said Ralph Hamers, CEO of ING Group. "Over the past years we have worked hard to
make ING stronger and simpler and to limit risks. We are looking ahead to take
ING through the last phase of our restructuring and work on further focusing our
company on serving our customers."
ING and the Dutch State formed the IABF in January 2009. The Dutch State took
over the risk on 80% of ING's portfolio of US Alt-A mortgage securities with a
nominal value of EUR 24 billion. Under the arrangement, the State receives all
interest and principal payments from the securities in the portfolio. To fund
this purchase of economic ownership, the State received a loan from ING equal to
90% of the nominal value, or EUR 21.6 billion, to be repaid over time. The State
also pays ING fees for funding the loan and managing the portfolio. In return
ING pays the State a guarantee fee. In order to obtain approval from the
European commission for the arrangement, ING agreed in 2009 to pay to the State
additional guarantee fees, for which a one-time pre-tax provision was booked
against 2009 results.
Since the start of the arrangement, market prices for the securities have
recovered to around 71%. The total nominal value of the portfolio has decreased
from the original EUR 24 billion to EUR 9.0 billion as of 30 September 2013,
predominantly through regular repayments on the underlying mortgages by
homeowners. The State has used all repayments and net fees received to pay off
the loan from ING, reducing the amount outstanding from EUR 21.6 billion in
January 2009 to EUR 6.0 billion at 30 September 2013.
Under the agreement announced today, the IABF in its current form will be
terminated, regular fee payments will be settled and the other restrictions as
part of the IABF agreement will no longer be applicable. The Dutch State intends
to sell the Alt-A securities in the market in the coming year. Announcements on
process or actual transactions will be made if and when appropriate by the Dutch
State Treasury Agency. At current market prices, the portfolio has a market
value of approximately EUR 6.4 billion. Proceeds of divesting the securities at
that price would enable the State to pay off the remaining loan from ING of EUR
6.0 billion, leaving a direct cash profit for the State of approximately EUR
0.4 billion.
In addition, under the terms of the agreement, ING will transfer to the State
EUR 0.4 billion of the remaining provision it formed in 2009 for the additional
guarantee fees. The release of what remains of the provision after this transfer
will not have a material impact on ING's results. Unwinding the IABF will also
result in eliminating a counter-guarantee that ING extended to the Dutch state
in connection with the divestment of ING Direct USA in 2012. This will reduce
ING Bank's Risk Weighted Assets by EUR 2 billion. On a pro forma basis, the
unwinding of the IABF is expected to add approximately 10 basis points to ING
Bank's core Tier 1 ratio. The terms of the agreement announced today have been
discussed with the European Commission, but are still subject to approval by the
EC.
Press enquiries Investor enquiries
Raymond Vermeulen ING Group Investor Relations
+31 20 576 6369 +31 20 576 6396
Raymond.Vermeulen(at)ing.com Investor.Relations(at)ing.com
ING PROFILE
ING is a global financial institution of Dutch origin, offering banking,
investments, life insurance and retirement services to meet the needs of a
broad customer base. Going forward, we will concentrate on our position as an
international retail, direct and commercial bank, while creating an optimal
base for an independent future for our insurance and investment management
operations
IMPORTANT LEGAL INFORMATION
Certain of the statements contained in this document are not historical facts,
including, without limitation, certain statements made of future expectations
and other forward-looking statements that are based on management's current
views and assumptions and involve known and unknown risks and uncertainties
that could cause actual results, performance or events to differ materially
from those expressed or implied in such statements. Actual results,
performance or events may differ materially from those in such statements due
to, without limitation: (1) changes in general economic conditions, in
particular economic conditions in ING's core markets, (2) changes in
performance of financial markets, including developing markets, (3)
consequences of a potential (partial) break-up of the euro, (4) the
implementation of ING's restructuring plan to separate banking and insurance
operations, (5) changes in the availability of, and costs associated with,
sources of liquidity such as interbank funding, as well as conditions in the
credit markets generally, including changes in borrower and counterparty
creditworthiness, (6) the frequency and severity of insured loss events, (7)
changes affecting mortality and morbidity levels and trends, (8) changes
affecting persistency levels, (9) changes affecting interest rate levels, (10)
changes affecting currency exchange rates, (11) changes in investor, customer
and policyholder behaviour, (12) changes in general competitive factors, (13)
changes in laws and regulations, (14) changes in the policies of governments
and/or regulatory authorities, (15) conclusions with regard to purchase
accounting assumptions and methodologies, (16) changes in ownership that could
affect the future availability to us of net operating loss, net capital and
built-in loss carry forwards, (17) changes in credit-ratings, (18) ING's
ability to achieve projected operational synergies and (19) the other risks
and uncertainties detailed in the risk factors section contained in the most
recent annual report of ING Groep N.V. Any forward-looking statements made
by or on behalf of ING speak only as of the date they are made, and, ING
assumes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information or for any other reason.
This document does not constitute an offer to sell, or a solicitation of an
offer to buy, any securities.
PDF version of press release:
http://hugin.info/130668/R/1739881/584092.pdf
This announcement is distributed by Thomson Reuters on behalf of
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(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: ING Group via Thomson Reuters ONE
[HUG#1739881]
Unternehmensinformation / Kurzprofil:
Datum: 01.11.2013 - 07:59 Uhr
Sprache: Deutsch
News-ID 311721
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Kategorie:
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