ING has announced that, together with the Dutch State, it has reached an agreement with the European Commission on significant amendments to the 2009 Restructuring Plan. The amendments extend the time horizon and increase the flexibility for the completion of divestments and adjust other commitments in light of the market environment, economic climate and more stringent regulatory requirements.
As part of the agreement, ING has filed a schedule for repayment to the Dutch State of the remaining E3bn in core Tier 1 securities plus a 50% premium, in four equal tranches in the next three years. A first tranche of E1,125m will be paid on 26th November .
"Since launching our Back to Basics programme in 2009, we have worked hard to safeguard our financial strength, simplify our organisation and further strengthen the focus on our customers, ensuring they are at the heart of everything we do,” said Jan Hommen, ceo of ING Group. “For our employees, the past years of restructuring and insecurity have not been easy. We realize that, against a backdrop of enormous changes in the financial sector and society at large, our work is far from done.
"We are pleased that the agreement announced today gives us more time and flexibility to complete the required restructuring while leaving our strategic objectives unchanged. We will ensure that we maintain the momentum of the programme as we have demonstrated in the past four years. We will continue our efforts to improve our performance, serving our customers, managing risks and controlling expenses to make sure that when the circumstances are right, we will be ready for the next steps.”
As part of the approval by the European Commission in November 2009 for the State support received from the Dutch State during the financial crisis, ING was committed to divest all of its Insurance and Investment Management operations, ING Direct USA and WestlandUtrecht Bank by the end of 2013.
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, the sale of ING Direct USA was completed in February 2012, the first three sales of the Asian Insurance/IM units were announced in October 2012 and this month ING US filed the registration statement for its IPO. Since the start, ING has incurred over E500m in expenses in executing the Restructuring Plan.
Under the amendments announced, the ultimate dates for divesting the insurance and investment management businesses have been extended. The divestment of more than 50% of the Asian Insurance/IM operations has to be completed by year-end 2013, with the remaining interest divested by year-end 2016. The divestment of at least 25% of ING US has to be completed by year-end 2013, more than 50% has to be divested by year-end 2014, with the remaining interest divested by year-end 2016. The divestment of more than 50% of Insurance/IM Europe has to be completed by year-end 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 to that end, provided they are not needed to maintain the leverage of the remaining insurance businesses.
The base case scenario for Insurance Europe and ING US is to become standalone businesses through an IPO process. The actual timing of divestments will depend on market conditions and readiness including performance. The process to divest the remaining units in Asia is on-going. Any further announcements will be made if and when appropriate.