ING Direct 2004 Annual Report Download - page 106
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104 ING Group Annual Report 2004
FAIR VALUE OF OTHER OFF-BALANCE SHEET FINANCIAL INSTRUMENTS
Estimated Contract Estimated Contract
fair value amount fair value amount
2004 2003
INSURANCE OPERATIONS
Commitments concerning investments in land and buildings 507 507 652 652
Commitments concerning investments in fixed-interest securities 1,424 1,424 1,301 1,301
Guarantees 1,082 1,232
Others 546 605
3,559 3,790
Risk Risk
weighted Contract weighted Contract
value amount value amount
2004 2003
BANKING OPERATIONS
Guarantees 9,680 17,080 8,695 17,115
Irrevocable letters of credit 1,499 6,233 1,017 5,356
Irrevocable facilities 13,074 69,011 12,413 66,640
Other 333 378 303 355
24,586 92,702 22,428 89,466
For the other off-balance sheet financial instruments the following methods are used in order to determine the fair value.
Insurance operations The fair values of the commitments for investments in land and buildings and commitments concerning
investments in fixed-interest securities are the same as their contract amounts on account of their short-term nature.
Banking operations Risk-weighted amounts of the banking operations have been calculated in accordance with the Dutch
Central Bank guidelines which are based on the solvency ratio directives of the European Commission. In view of the lack of
an established market and difficulties involved in segregating the value of these instruments from their underlying degree
of uncertainty, it is not considered to be meaningful to provide an estimate of the fair value for these instruments.
CAPITAL BASE
BREAKDOWN CAPITAL BASE
Group Insurance Bank Group Insurance Bank
2004 2003
Shareholders’ equity 25,866 21,331
Preference shares of group companies 1,283 1,783
Subordinated loans 4,109 3,252
Capital base ING Group 31,258 26,366
Core debt (debt raised to finance subsidiaries) 3,436 4,441
34,694 14,278(1) 20,416 (2) 30,807 12,382(1) 18,425(2)
Third party interests 1,722 508 1,187 553
Subordinated loans ING Verzekeringen N.V. 2,250 2,250
Equity components not included in Tier 1(3) -325 -353
ING Group shares held and consolidation adjustments 22 540 25 449
Capital base:
– ING Verzekeringen N.V. 18,272 15,844
– ING Bank N.V. (Tier-1 qualifying capital) 21,139 19,074
(1) Includes EUR 366 million (2003: EUR 396 million) of subordinated loans to ING Insurance.
(2) Includes EUR 5,025 million (2003: EUR 2,256 million) of subordinated loans to ING Bank. In 2004, new subordinated loans have been granted by ING Groep N.V. to
ING Bank N.V. for an amount of EUR 2,883 million.
(3) Includes revaluation reserve and dividend declared but not yet paid.
ADDITIONAL INFORMATION RELATING TO
THE CONSOLIDATED BALANCE SHEET OF ING GROUP
(continued)
2.1
ANNUAL ACCOUNTS