ING Direct 2011 Annual Report Download - page 20

environment. In the short-term the Bank’s priorities are to generate
capital and reach a core Tier 1 ratio of at least 10% by 2013. With
respect to Basel III our focus is also on the liquidity requirements
tobe met from 2013. After this transition period, ING Bank aims
formoderate balance sheet growth in line with GDP growth and
astrong focus on deposits generation. It wants to evolve ING Direct
units into full banks and develop selected growth markets.
Our long-term ambition is to be a strong Northern European Bank
with a low-risk balance sheet producing a competitive Return on
(IFRS-EU) Equity of 10% to 13% through low costs and low risk.
ING Bank has a good starting position with a competitive edge, with
leading banking positions in its home markets of the Netherlands,
Belgium, Luxembourg, Germany and Poland. Furthermore, ING has
key positions in other western, central and eastern European
countries and Turkey. This is coupled with options outside ofEurope
which will give ING Bank interesting growth potential inthe
long-term. It has strong deposit gathering capabilities and astrong
funding mix. It has a well-known brand and it uses the Net Promoter
Score (NPS) methodology as a tool to increase customer centricity.
The Bank is used to operating in lean, competitive markets which
has made us leaders in innovative distribution. It has a leading
position in internet banking with a ‘direct first, advice when needed’
model and a relationship-driven commercial bank offering
competitive products in terms of price, efficiency and effectiveness.
Going forward, the Bank will focus on restoring trust and customer
centricity, on operational excellence and optimising its balance sheet
to meet itsstrategic goals.
INSURANCE/INVESTMENT MANAGEMENT
The main priorities for the insurance and investment management
businesses are improving performance and optimising returns and
value. In 2011 the businesses made good progress on these priorities.
Going forward, ING Insurance/IM will continue to focus on its
customers and distributors by providing exemplary products and
service, as it restructures in preparation for a stand-alone future.
The operating profit for the insurance/investment management
businesses increased compared with the previous year, as measures
taken to improve returns continued to gain momentum. An NPS
programme used in the insurance/investment management
businesses has improved customer service levels in the Benelux,
Central and Rest of Europe, and Asia/Pacific as well asin the sold
Latin American businesses. For more information onNPS, see
‘Earning Trust’ below.
For further explanation on how ING is building stronger banking
and insurance/investment management businesses see the ‘Banking
overview’ and ‘Insurance overview’ sections of this Annual Report.
EARNING TRUST
Building stronger banking and insurance/investment management
businesses is also about earning trust and increasing customer
centricity in both banking and insurance/investment management.
ING’s approach in both its banking and its insurance/investment
management businesses is built on sound business ethics and good
corporate citizenship in order to ensure customer loyalty, employee
engagement, and ultimately to deliver satisfactory returns for our
shareholders. As part of this approach, we have embedded social,
ethical and environmental criteria into our financing and investment
policies and business ambitions. We aim to ensure that our strategic
In the course of the continued streamlining of our business
portfolio we also announced other major divestments. ING Real
Estate Investment Management was sold to the US-based CBRE
Group andto Clarion Partners management in partnership with
Lightyear Capital LLC in two separate transactions for a combined
price of approximately USD 1 billion. These transactions fit our
strategic objectives of reducing exposure to real estate, simplifying
the structure of the company and further strengthening our
capitalbase.
Furthermore, ING Car Lease was sold to BMW’s fleet management
division Alphabet for approximately EUR 696 million.
Going forward, ING plans to continue building on its leading
position as a predominantly European bank with a strong
international network focused on providing customers with
consistently high-quality services.
REPAYING STATE AID AS SOON AS POSSIBLE BUT
WITHPRUDENCE
The total amount repaid on the core Tier 1 securities to the
DutchState by the end of 2011 was EUR 7 billion in principal,
outofthe total capital support provided of EUR 10 billion.
Includinginterest and premium, the payments made to the
DutchState bythe end of 2011 reached a total of EUR 9 billion.
Wehave improved efficiency and built up strong capital buffers
inthe Bankto withstand potential shocks given the uncertain
economic environment, while continuing to increase our lending
tocustomers as much as possible to facilitate economic growth.
Asa result, ING was in a position to repay a second tranche of
support from the Dutch State out of retained earnings in May
2011. This latest repayment of EUR 3 billion (including a EUR 1
billion premium) of capital support to the Dutch State was an
important milestone in ING Group’s efforts to do business
successfully without the financial aid of the Dutch State.
We aim to repay the remaining EUR 3 billion principal ofcapital
support to the Dutch State as soon as possible on terms acceptable
to all stakeholders. Ideally we would like to complete the state
repayment as soon as possible; however, given the current
challenging financial environment in the eurozone and increasing
regulatory capital requirements we will take a cautious approach
and maintain strong capital ratios as we build towards Basel III and
satisfy other regulatory requirements.
BUILDING STRONGER BANKING AND INSURANCE/
INVESTMENT MANAGEMENT BUSINESSES
BANK
ING Bank has delivered on its priorities to strengthen its financial
position, reduce risks, meet the restructuring requirements
imposed by the European Commission and to build a stronger
bank. The Bank continued to make progress on meeting its
Ambition 2013 targets, which are business improvement
programme targets, mostly established in October 2009. These
targets included boosting underlying income, lowering risk and
overall costs, and lifting return on equity. Due to the changing
market circumstances and new regulatory requirements as well as
the fact that ING has realised to a large extent its Ambition 2013
goals, ING has set itself new performance targets as from 2012.
A key factor in developing the updated banking strategy which
waspresented in January 2012 has been the changing regulatory
18 ING Group Annual Report 2011
Strategy continued