ING to separate banking and insurance operations
(Thomson Reuters ONE) - * STRATEGIC DECISION IS PART OF FINAL RESTRUCTURING PLAN FILED WITH EC - All Insurance and Investment Management activities to be divested over time - Divestments to be executed through IPOs, sales or combination thereof - Negotiations with EC finalised; formal approval expected before EGM on 25 November 2009* RESTRUCTURING PLAN CONTAINS FINANCIAL AND STRATEGIC MEASURES - ING to eliminate double leverage and significantly reduce balance sheet - In order to get EC approval ING needs to divest ING Direct USA by 2013 - Divestment of Interadvies and existing consumer lending portfolio in the Netherlands - Restructuring to be completed by end of 2013* ADDITIONAL AGREEMENTS WITH DUTCH STATE - Agreement with Dutch State to facilitate early repayment of capital injection - ING to repurchase EUR 5 billion of Core Tier 1 securities in December 2009 at a premium - Additional payments to Dutch State in form of fee adjustments for Illiquid Assets Back-up Facility - Additional IABF payments lead to one-off pre-tax charge of EUR 1.3 billion in Q4 2009 - EUR 7.5 billion rights issue to finance repayment and cover charge for additional IABF payments - Further repayments to be financed from internal resources and divestment proceedsING announced today that it will move towards a complete separationof its banking and insurance operations as part of its ongoing reviewof the Group's strategy and as a logical next step in its Back toBasics programme. This will be achieved over the next four years by adivestment of all Insurance operations (including InvestmentManagement). ING will explore all options, including initial publicofferings, sales or combinations thereof.Jan Hommen, CEO of ING, commented: "Today we are announcing acomprehensive set of actions that, taken together, provide a clearplan for resolving the uncertainty created by the financial crisisand will launch a new era for ING. A little over one year ago, INGbegan to experience the direct impact of the financial crisis,resulting in two instances of government support to strengthen ourcapital position and to mitigate risk. Over the last six months, wehave worked tirelessly - both inside ING and with the DutchGovernment and the European Commission - to devise a plan that willenable us to pay back the Dutch State, address the EC's requirementsfor viability and fair competition, and return our focus to thebusiness and what matters most to our customers. We recognize theconsiderable efforts of the Dutch Government and the EC, and arepleased to have achieved understandings with them about how we willmove forward.""Splitting the company is not a decision we took lightly. ING has aproud history as a global financial services leader and has been astrong advocate for combining banking and insurance in one company.The combination provided us with advantages of scale, capitalefficiency and earnings stability through a diversified portfolio ofbusinesses. However, the financial crisis has diminished thesebenefits. Now, the widespread demand for greater simplicity,reliability and transparency has made a split the optimal course ofaction. We will work carefully in the coming months and years tomanage the separation in a way that will support the success of ourbusinesses in the interests of our customers, employees, shareholdersand other providers of capital," added Jan Hommen.Earlier this year ING presented the Back to Basics programme tostreamline the company and reduce risk, costs and leverage. Asannounced, ING's banking activities will be based on the provenstrengths of gathering savings, distribution leadership, simplepropositions and strong marketing. The bank will be predominantlyfocused on Europe with selective growth options elsewhere. TheInsurance business will focus on its long-term structural leadershippositions in life and retirement services. The business will bemanaged regionally, with key building blocks including the operationsin the Benelux, US, Central Europe, Latin America and Asia.A key goal of the Back to Basics programme was to reduce complexityby operating the Bank and Insurer separately under one Groupumbrella. Negotiations with the European Commission on theRestructuring Plan have acted as a catalyst to accelerate thestrategic decision to completely separate banking and insuranceoperations. These negotiations have been finalised and formalapproval of the Restructuring Plan is expected before anExtraordinary General Meeting of Shareholders, scheduled for 25November 2009.In order to get approval from the EC on ING's Restructuring Plan, INGneeds to divest ING Direct USA by the end of 2013. ING regards theoperation as a very strong franchise and the US market offerspotential for growth. It is anticipated that a divestment will takeseveral years and will not be completed before the end of 2013. Inthe meantime, ING will ensure that it continues to grow the value ofthe business and offer a superior customer experience. This agreementhas no impact on other countries. ING remains committed to the INGDirect franchise, as a strong contributor to ING's growth goingforward. The unique customer proposition, simple transparent productsand market-leading efficiency are at the heart of ING's bankingstrategy.Also as part of the Restructuring Plan, ING will create a new companyin the Dutch retail market out of part of its current operations, bycombining the Interadvies banking division (including WestlandUtrecht and the mortgage activities of Nationale-Nederlanden) and theexisting consumer lending portfolio of ING Retail. This business,once separated, will be divested. The combined business is profitableand currently has a balance sheet of EUR 37 billion, with around200,000 mortgage contracts, 320,000 consumer lending accounts,500,000 savings accounts and 76,000 securities contracts. Thebusiness has a mortgage portfolio amounting to approximately EUR 34billion, equal to a market share of around 6%.ING has agreed not to be a price leader in any EU country for certainretail and SME banking products and will refrain from acquisitions offinancial institutions that would slow down the repayment of the CoreTier 1 securities. These restrictions will apply for the shorterperiod of three years or until the Core Tier 1 securities have beenrepaid in full to the Dutch State.The restructuring measures, including steps already taken as part ofour Back to Basics programme, are expected to result in a pro formabalance sheet reduction of around EUR 600 billion by 2013, equal toapproximately 45% of the balance sheet at 30 September 2008. Thiswill be achieved via divestments and through further deleveraging ofthe bank balance sheet. Including estimated organic growth, it isexpected that ING's balance sheet by the end of 2013 will beapproximately 30% smaller than at 30 September 2008. The proceedsfrom divesting the insurance operations will be used to eliminatedouble leverage and further repay the Dutch State.ADDITIONAL AGREEMENTS WITH DUTCH STATEIn conjunction with the Restructuring Plan filed with the EC, ING hasreached an agreement with the Dutch State to alter the repaymentterms of the Core Tier 1 securities, in order to facilitate earlyrepayment. This early repayment option is valid until the end ofJanuary 2010. ING intends to use this window of opportunity torepurchase EUR 5 billion of Core Tier 1 securities in December 2009,financed by an underwritten rights issue.Under the agreement, ING can repurchase the first EUR 5 billion ofthe securities at the issue price (EUR 10) plus a premium of up toapproximately EUR 950 million consisting of the accrued coupon and arepayment premium. The 8.5% coupon payment is estimated to be aroundEUR 260 million at the time of repayment. The repayment premiumdepends on the ING share price at the time of repayment. The premiumhas a minimum value of EUR 333 million and increases if the ING shareprice at the time of repayment rises above EUR 11.16. The premium iscapped at EUR 691 million corresponding with a share price of 12.40or above.In January 2009 ING and the Dutch State agreed on an Illiquid AssetsBack-up Facility (IABF). A full risk transfer was realised on 80% ofthe portfolio of Alt-A RMBS at ING Direct US and ING InsuranceAmericas. In order to get approval from the EC on ING's RestructuringPlan, ING has agreed to make additional payments to the Dutch Statecorresponding to a reduction of 50 basis points on the funding feemonthly received by ING and an increase of 82.6 basis points on theguarantee fee annually paid by ING. In total, these annual extrapayments will amount to a net present value of EUR 1.3 billion, whichwill be booked as a one-off pre-tax charge in the fourth quarter of2009. Under the agreement, the IABF as announced in January 2009,including the transfer price of the securities of 90%, will remainunaltered. The additional payments will not be borne by ING's USsubsidiaries.In order to finance the repayment of the Core Tier 1 securities forEUR 5 billion plus a premium of up to approximately EUR 950 millionand to mitigate the EUR 1.3 billion pre-tax capital impact of theadditional payments for the IABF, ING plans to launch a EUR 7.5billion rights issue. Proceeds of the issue in excess of the aboveamounts will be used to strengthen ING's capital position. INGexpects to finance any further repayments of Core Tier 1 securitiesfrom internal resources, including proceeds from the divestment ofthe insurance operations. Further details on the agreement on CoreTier 1 securities and the rights issue can be found in a separatepress release issued today.All of the above mentioned restructuring measures are expected to beexecuted by the end of 2013. Details on the measures will beannounced when appropriate. The strategic decision to divest theInsurance operations (including Investment Management) will bepresented for approval to an Extraordinary General Meeting ofshareholders, scheduled for 25 November 2009 in Amsterdam. Inaddition, several of the intended measures are conditional on theapproval or advice of the Works Council and various regulators andthe formal approval by the European Commission.NOTE FOR EDITORSJan Hommen will address the announcements made today in an analystand investor conference call at 9:00 CET. Members of the investmentcommunity can join in listen-only mode at +31 20 794 8497 (NL) or +44207154 2688 (UK) and via live audio webcast at www.ing.com.A press conference will be held at 11:30 CET. Journalists are invitedto join the conference at ING House, Amstelveenseweg 500, Amsterdam,Journalists can also join in listen-only mode at +31 20 794 8500 andvia live audio webcast at www.ing.com.Press enquiries Investor enquiriesPeter Jong Raymond Vermeulen ING Group Investor Relations+31 20 541 5457 +31 20 541 5682 +31 20 541 5460Peter.Jong(at)ing.com Raymond.Vermeulen(at)ing.com Investorrelations(at)ing.comWeblink to analyst presentationING PROFILEING is a global financial institution of Dutch origin offeringbanking, investments, life insurance and retirement services to over85 million private, corporate and institutional clients in more than40 countries. With a diverse workforce of about 110,000 people, INGis dedicated to setting the standard in helping our clients managetheir financial future.IMPORTANT LEGAL INFORMATIONCertain of the statements contained herein are statements of futureexpectations and other forward-looking statements. These expectationsare based on management's current views and assumptions and involveknown and unknown risks and uncertainties. Actual results,performance or events may differ materially from those in suchstatements due to, among other things, (i) general economicconditions, in particular economic conditions in ING's core markets,(ii) performance of financial markets, including emerging markets,(iii) the frequency and severity of insured loss events, (iv)mortality and morbidity levels and trends, (v) persistency levels,(vi) interest rate levels, (vii) currency exchange rates (viii)general competitive factors, (ix) changes in laws and regulations,(x) changes in the policies of governments and/or regulatoryauthorities, (xi) conclusions with regard to purchase accountingassumptions and methodologies, (xii) ING's ability to achieveprojected operational synergies and (xiii) the implementation ofING's restructuring plan to separate banking and insuranceoperations. ING assumes no obligation to update any forward-lookinginformation contained in this document.General, limitations on distribution, no offerNot for release, publication or distribution, directly or indirectly,in or into Australia, Canada, Japan, their territories andpossessions. The release, publication or distribution of thisdocument in certain jurisdictions may be restricted by law orregulations. Therefore, persons in such jurisdictions in which thisdocument is released, published or distributed must inform themselvesabout and observe such restrictions.The issue, exercise and sale of rights which may be attributed in therights offering ("subscription rights") and the subscription andpurchase of bearer depositary receipts in respect of shares of theCompany ("shares") are subject to specific legal and/or regulatoryrestrictions in certain jurisdictions. The Company assumes noresponsibility in the event there is a violation by any person ofsuch restrictions.This document does not constitute an offer to sell, or thesolicitation of an offer to buy or subscribe for, any securities, andcannot be relied on for any investment contract or decision. Thisdocument does not constitute a prospectus within the meaning of Art.13 of the EC Directive 2003/71/EC of the European Parliament andCouncil dated November 4, 2003 (the "Prospectus Directive"). Theoffer will be made solely by means of, and on the basis of, asecurities prospectus which is to be published. Any investmentdecision regarding any subscription rights or shares should only bemade on the basis of the prospectus which will be prepared inconnection with the rights offering, and investors are advised toconsult with their bank, broker or investment advisor before takingany such investment decision. The approved prospectus may benotified by the Netherlands Authority for the Financial Markets(Stichting Autoriteit Financiële Markten) to the competentauthorities in other jurisdictions in accordance with Article 18 ofthe Prospectus Directive. The prospectus is expected to be publishedbefore the start of the subscription period for the subscriptionrights and when available, copies of the prospectus may be obtainedat no cost through the website of Euronext Amsterdam by NYSE Euronext(Dutch residents only) and the website of the Company atwww.ing.com.United KingdomThis communication is directed only at persons (I) who are outsidethe United Kingdom or (II) who have professional experience inmatters relating to investments falling within article 19(5) of theFinancial Services and Markets Act 2000 (Financial Promotion) Order2005 (as amended) (the "Order") or (III) who fall within article49(2)(A) to (D) ("high net worth companies, unincorporatedassociations etc.") of the Order (all such persons together beingreferred to as "Relevant Persons"). Any person who is not a RelevantPerson must not act or rely on this communication or any of itscontents. Any investment or investment activity to which thiscommunication relates is available only to Relevant Persons and willbe engaged in only with Relevant Persons. Persons distributing thiscommunication must satisfy themselves that it is lawful to do so.European Economic AreaThe Company will not authorize any offer to the public of shares orsubscription rights in any Member State of the European Economic Areaother than the Netherlands and any other jurisdiction into which theprospectus for the offering of shares or subscription rights will bepassported. With respect to each Member State of the EuropeanEconomic Area other than the Netherlands (and any other jurisdictioninto which the prospectus for the offering of shares or subscriptionrights will be passported) and which has implemented the ProspectusDirective (each, a "Relevant Member State"), no action has beenundertaken to date to make an offer to the public of shares orsubscription rights requiring a publication of a prospectus in anyRelevant Member State.Notice to U.S. PersonsThe issuer has filed a registration statement (including aprospectus) with the Securities and Exchange Commission (the "SEC")for the offering to which this communication relates. Before youinvest, you should read the prospectus in that registration statementand other documents the issuer has filed and will file with the SECfor more complete information about the issuer and this offering.You may get these documents, once filed, for free by visiting IDEA onthe SEC Web site at www.sec.gov. Alternatively, the issuer, anyunderwriter or any dealer participating in the offering will arrangeto send you the prospectus after filing if you request it by callingING at +31 20 541 5460.http://hugin.info/130668/R/1349937/325533.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 26.10.2009 - 06:59 Uhr
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