ING Direct 2011 Annual Report Download - page 315

Risk factors continued
In addition, we determine the appropriate level of primary insurance and reinsurance coverage based on a number of factors and from
time to time decide to reduce, eliminate or decline coverage based on our assessment of the costs and benefits involved. In such cases,
the uninsured risk remains with us.
Our business may be negatively affected by adverse publicity, regulatory actions or litigation with respect to us, other
well-known companies or the financial services industry in general.
Adverse publicity and damage to our reputation arising from our failure or perceived failure to comply with legal and regulatory
requirements, financial reporting irregularities involving other large and well known companies, increasing regulatory and law enforcement
scrutiny of ‘know your customer’ anti-money laundering, prohibited transactions with countries subject to sanctions, and bribery or other
anti-corruption measures and anti-terrorist-financing procedures and their effectiveness, regulatory investigations of the mutual fund,
banking and insurance industries, and litigation that arises from the failure or perceived failure by us to comply with legal, regulatory and
compliance requirements, could result in adverse publicity and reputation harm, lead to increased regulatory supervision, affect our ability
to attract and retain customers, maintain access to the capital markets, result in cease and desist orders, suits, enforcement actions, fines
and civil and criminal penalties, other disciplinary action or have other material adverse effects on us in ways that are not predictable.
RISKS RELATED TO THE RESTRUCTURING PLAN
The implementation of the Restructuring Plan and the divestments anticipated in connection with that plan will
significantlyalter the size and structure of the Group and involve significant costs and uncertainties that could
materiallyimpact the Group.
In November 2008 the Dutch State purchased the core Tier 1 Securities, and in the first quarter of 2009 we entered into the Illiquid Asset
Back-up Facility (IABF) with the Dutch State. As a result of having received state aid through the Dutch State Transactions, we were
required to submit a restructuring plan (the ‘Restructuring Plan’) to the EC in connection with obtaining final approval for the Dutch State
Transactions under the EC state aid rules. On 26 October 2009, we announced our Restructuring Plan, pursuant to which we are required
to divest by the end of 2013 all of our insurance business, including the investment management business, as well as ING Direct US, which
operates our direct banking business in the United States, and certain portions of our retail banking business in the Netherlands. The EC’s
approval of the Restructuring Plan was issued on 18 November 2009. On 28 January 2010 ING lodged an appeal with the General Court
of the European Union (the ‘General Court’) against specific elements of the EC’s decision regarding the Restructuring Plan. On 2 March
2012, the Court partially annulled the Commission’s decision of 18 November 2009 and as a result of a new decision must be issued 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.
In connection with the Restructuring Plan, we were required to agree to not be a price leader in certain EU markets with respect to certain
retail, private and direct banking products and to refrain from (i) acquisitions of financial institutions and (ii) acquisitions of other businesses
if this would delay our repayment of the remaining core Tier 1 Securities. Those limitations may last until at least 18 November 2012 and
could adversely affect our ability to maintain or grow market share in key markets as well as our results of operations. See ‘Risks Related to
the Group – The limitations required by the EC on our ability to compete and to make acquisitions or call certain debt instruments could
materially impact the Group’.
There can be no assurance that we will be able to implement the Restructuring Plan successfully or complete the announced divestments
on favourable terms or at all, particularly in light of both the plan’s 2013 deadline and expected challenging market conditions in which
other financial institutions may place similar assets for sale during the same time period and may seek to dispose of assets in the same
manner. Any failure to successfully implement the Restructuring Plan may result in EC enforcement actions and may have a material
adverse impact on the assets, profitability, capital adequacy and business operations of the Group. Moreover, in connection with the
implementation of the Restructuring Plan, including any proposed divestments, we or potential buyers may need to obtain various
approvals, including of shareholders, works councils and regulatory and competition authorities, and we and potential buyers may face
difficulties in obtaining these approvals in a timely manner or at all. In addition, the implementation of the Restructuring Plan may strain
relations with our employees, and specific proposals in connection with the implementation may be opposed by labour unions or works
councils. Furthermore, following the announcement of the Restructuring Plan, several of our subsidiaries have been downgraded or put
oncredit watch by rating agencies. See ‘Risks Related to the Group – Ratings are important to our business for a number of reasons.
Downgrades could have an adverse impact on our operations and net results’.
Other factors that may impede our ability to implement the Restructuring Plan successfully include an inability of prospective purchasers
toobtain funding due to the deterioration of the credit markets, insufficient access to equity capital markets, a general unwillingness of
prospective purchasers to commit capital in the current market environment, antitrust concerns, any adverse changes in market interest
rates or other borrowing costs and any declines in the value of the assets to be divested. Similarly, it may also be difficult to divest all or
part of our insurance or investment management business through one or more initial public offerings. There can also be no assurance
that we could obtain favourable pricing for a sale of all or part of our insurance or investment management business in the public markets
or succeed in turning the relevant subsidiaries into viable stand-alone businesses. A divestment may also release less regulatory capital than
we would otherwise expect.
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information
313ING Group Annual Report 2011