ING Direct 2011 Annual Report Download - page 178

Notes to the consolidated annual accounts of ING Group continued
• launch of a EUR 7.5 billion rights issue, in order to finance the repayment of 50% of the non-voting equity securities and a mitigation
ofthe capital impact of the additional Illiquid Assets Back-up Facility payment as part of the overall agreement with the European
Commission to the Dutch State of EUR 1.3 billion;
• execution of the Restructuring Plan before the end of 2013;
• if the overall return on the (remaining) non-voting equity securities (core Tier 1 securities) issued to the Dutch State is expected
tobelower than 10% p.a., the European Commission may consider the imposition of additional behavioural constraints; and
• The calling of Tier 2 capital and Tier 1 hybrids will in the future be proposed case by case to the Commission for authorisation,
fortheshorter period of three years starting from the date of the Commission decision or up to the date on which ING has fully repaid
the non-voting equity securities (core Tier 1 securities) to the Dutch State (including the relevant accrued interest of core Tier 1 coupons
and exit premium fees).
On 28 January 2010, ING lodged an appeal against specific elements of the European Commission’s decision. By judgment of 2 March
2012, the Court partially annulled the Commission’s decision of 18 November 2009, as a result of which a new decision has to be taken by
the Commission. Interested parties can file an appeal against the General Court’s judgment before the Court of Justice of the European
Union within two months and ten days after the date of the General Court’s judgment.
Credit Guarantee Scheme
As part of the measures adopted to protect the financial sector, the Dutch State introduced a EUR 200 billion credit guarantee scheme
forthe issuance of medium term debt instruments by banks (the Credit Guarantee Scheme). ING Bank N.V. issued government guaranteed
debt instruments under this Credit Guarantee Scheme (‘Government Guaranteed Bonds’) as part of its regular medium-term funding
operations. The relevant Rules of the Credit Guarantee Scheme promulgate the rules applicable to any issues under the Credit Guarantee
Scheme and include information such as scope, denomination, tenor and fees payable by the banks. ING Group pays a fee of 84 basis
points over the issued bonds to the Dutch State to participate in the Credit Guarantee Scheme. Reference is made to Note 15 ‘Debt
securities in issue’.
Other
Following the transactions as disclosed in this note, the Dutch State is a related party of ING Group. All other transactions between
INGGroup and the Dutch State are of a normal business nature and at arm’s length.
In the framework of the transactions with the Dutch State disclosed in this note, certain arrangements with respect to corporate
governance and executive remuneration were agreed with the Dutch State which will remain in place as long as the Dutch State owns
atleast 250 million non-voting equity securities or as long as the Illiquid Assets Back-up Facility is in place (whichever expires last).
Thearrangements set forth after the second and the fourth bullet hereunder remain valid as long as any of the Government Guaranteed
Bonds is outstanding. These arrangements require that:
• the Dutch State may recommend two candidates (the ‘State Nominees’) for appointment to the Supervisory Board. Certain decisions
ofthe Supervisory Board require approval of the State Supervisory Board members;
• ING Group must develop a sustainable remuneration policy for the Executive Board and Senior Management that is aligned to new
international standards and submit this to its General Meeting for adoption. This remuneration policy shall include incentive schemes
which are linked to long-term value creation, thereby taking account of risk and restricting the potential for ‘rewards for failure’.
Thisnew remuneration policy must, amongst others, include objectives relating to corporate and social responsibility;
• members of the Executive Board may not receive any performance-related payment – either in cash, options, shares or bearer
depositary receipts – for the years 2008 and 2009 until the adoption of the new remuneration policy in 2010;
• severance payments to Executive Board members are limited to a maximum of one year’s fixed salary, in line with the Tabaksblat Code;
• ING has undertaken to support the growth of lending to corporates and consumers (including mortgages) for an amount of EUR 25
billion, on market conforming terms;
• ING agreed to pro-actively use EUR 10 billion of the Dutch Guarantee Scheme during 2009;
• ING has committed itself to maintaining the Dutch payment system PIN on its payment debit cards as long as other market participants,
representing a substantial market share, are still making use of this payment system; and
• appointment of the Chief Executive Officer of the Executive Board requires approval of the State Nominees.
176 ING Group Annual Report 2011