ING Gets $13 Billion For 8.5 Percent Stake

ING House, ING headquarters in AmsterdamImage via WikipediaLargest Bank In The Netherlands

Dutch financial giant ING received a little help over the weekend from the Dutch government. For the 2nd time in less than a month, The Netherlands has had to step in to shore up their part of the meltdown. Earlier, Fortis was broken up with parts of it sold off and the remaining parts nationalized.

ING, the largest bank in The Netherlands, posted a $500 million loss after writing down around $2 billion from their investments. Added to that was a sudden 27% drop in share prices last Friday. From The Independent

The capital boost followed a weekend of talks with the Dutch government following ING’s announcement on Friday that it had lost €500m in the third quarter of the year, the first such loss in its history, after making €2bn of writedowns on investments.

That revelation – and a 27 per cent fall in ING’s share price on Friday – rang alarm bells with the Dutch authorities, which had already set aside €20bn to provide funds as and when needed to the country’s banking system.

While ING insisted its capital position was strong, the bank’s core tier one ratio prior to the government injection was around 6.5 per cent. By contrast, the British banks participating in the UK government’s £37bn bail-out have agreed to raise this ratio to around 8 per cent.

“Our capital position was in line with previously targeted levels and regulatory requirements,” said Michel Tilmant, the bank’s chief executive. “However, market conditions have changed dramatically in recent weeks and have led to an internationally recognised belief that going forward, in this market environment, capital requirements for financial institutions should be higher.”

While Mr Tilmant claimed the fund raising was “in the long-term interests of all stakeholders”, the Dutch government has extracted a number of commitments from ING that investors and executives may find difficult.

Although the securities acquired by the Dutch government do not confer voting rights, it will be entitled to nominate two members of the ING board. The bank’s existing directors have already agreed to waive all bonuses, whether in cash, options or shares, for this year, and to limit pay-offs to one year’s salary if they step down. In addition, ING has promised to review its remuneration policy “to align it with new international standards”.

The article goes on to say that there appears to be little to no risk of ING failing, but that in the ‘worst case scenario’ all savers at ING would be able have recourse through the Dutch system.

I am Jon, and I think ING has a nice HQ building (photo top right).
I wonder if it flies?