ING Direct 2011 Annual Report Download - page 45

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
43ING Group Annual Report 2011
Commercial Banking continued
Furthermore, in the current economic environment, the L&F
portfolio was reviewed against the criteria of its strategic fit with
the focus of ING Bank across Europe, its performance and its critical
mass in some countries. As a result of this review, ING Car Lease
was sold to BMW Group fleet management division Alphabet, and
decisions have been taken to downsize or discontinue our leasing
operations in certain countries.
The focus of our Leasing business will continue to be on providing
a full service to all customer segments in ING’s home markets,
while the Factoring business which is unaffected by the review
remains positioned as a core growth product within our trade-
focused Transaction Services activities.
L&F has performed well at the operating level, thanks in large part
to a strong performance by ING Car Lease during the first nine
months of the year under ING’s ownership. General Lease has
performed well in a continuingly sluggish environment for capital
investment, while our Factoring businesses have seen increased
volumes. However, the overall performance has been negatively
impacted by higher risk costs in the General Lease business, notably
in Spain and Italy.
The latest statistics from the leasing industry association
(Leaseurope) confirm that ING Lease improved its market share
to6th position in Europe during 2011, demonstrating its ability
tocontinue to support key customers in ING’s focus markets. ING
Commercial Finance Netherlands was voted into 1st place by its
customers (source: Incompany 100 Business Finance survey 2011)
and ING Lease UK was voted ‘2011 Broker Champion of the Year’
inthe Leasing World Awards, cementing their position in the UK.
FINANCIAL MARKETS
Financial Markets (FM) is the global business unit that manages
ING’s financial markets trading and non-trading activities. FM is
managed along three business lines: ALCO manages the interest
rates exposures arising from the traditional banking activities,
Strategic Trading Platform incorporates the primary proprietary risk
taking units and Clients and Products is the primary customer
facilitation business line.
FM continued to be a sizeable and profitable business within
Commercial Banking. Following record years in 2009 and 2010, the
first half of 2011 continued in a similar vein. However, the growing
intensity of the euro sovereign crisis from August 2010 led to an
challenging environment in the second half. Not least of these
challenges was the impairment of Greek government bonds inthe
available-for-sale portfolio, including those maturing after 2020, to
their market valuation at the end of the third quarter. Revenue was
also negatively impacted from August by increased USD funding costs
which impacted Treasury profitability. Client revenues held up in line
with 2010, but the facilitation trading environment wasdifficult,
which depressed profits in the second half.
Within Financial Markets, a Global Equities platform was created,
combining our Cash Equities, Equity Derivatives and Global
Securities Finance franchises.
PCM completed a number of high profile and international
transactions with clients, demonstrating our commitment to
offering solutions across regions (e.g. ING has been appointed by
GDF SUEZ as main bank for payments and cash management in the
Benelux). This resulted in a further strengthening of ING’s position
as a trusted banking partner.
We have strengthened our position as a market leader for
payments processing in the Netherlands and made steady progress
towards becoming a top-tier payments bank in Belgium.
Furthermore, our migration to the Single Euro Payments Area
(SEPA) standards is underway, as our Belgian, Dutch and other
international clients have begun to migrate towards our SEPA
product offering.
STRUCTURED FINANCE
Structured Finance (SF) is a specialist commercial lending business,
providing loans to support capital intensive investments and
working capital. It is managed in three groups: the Energy,
Transport and Infrastructure Group; the Specialised Financing
Group; and International Trade and Export Finance.
The SF business continued to grow in 2011, with revenues
supported by relatively good margins on business originated in
2009 and 2010.
In Trade and Commodity Finance (TCF) there were increases in both
volumes and margins as a result of our consistent approach to the
market over many years. TCF, with its transactional lending
characteristics, is attractive to many banks. We have become the
leading bank in the syndicated loan market for commodity clients.
ING’s efforts in the commodity business were recognised by Global
Trade Review magazine, which named ING the ‘Best Global
Commodity Finance Bank’.
The Energy, Transport & Infrastructure Group specialises in
capital-intensive industry sectors such as oil and gas, mining,
offshore services, shipping, power-utilities and infrastructure. There
is increasing demand for project finance in these sectors, notably
forinvestments in renewable energy, offshore oil production and
infrastructure through public-private partnerships.
The cash flow lending business in Structured Acquisition Finance and
Telecom and Media Finance was affected in previous years by the
slowdown during the financial crisis. However, these sectors have
since stabilised and the year saw an increase in new transaction flows
in our core markets of the Benelux and Central and Eastern Europe.
LEASING AND FACTORING
Leasing and Factoring (L&F) provides financial and operating leasing
services for a wide range of equipment as well as receivables financing
and other factoring solutions for Commercial Banking clients.
The key development during 2011 has been the transformation
ofthe former independent corporate structure of the L&F product
lines into two separate product businesses integrated within
Commercial Banking.