ING Direct 2008 Annual Report Download - page 147

145
ING Group Annual Report 2008
Irrevocable facilities mainly constitute unused portions of irrevocable credit facilities granted to corporate clients. Many of these facilities
are for a fixed duration and bear interest at a floating rate. ING Group’s credit risk and interest rate risk in these transactions is limited.
Most of the unused portion of irrevocable credit facilities is secured by customers’ assets or counter-guarantees by the central governments
and exempted bodies under the regulatory requirements. Irrevocable facilities also include commitments made to purchase securities to
be issued by governments and private issuers.
Future rental commitments for operating lease contracts
2009 209
2010 182
2011 166
2012 152
2013 129
years after 2013 166
27 SPECIAL PURPOSE ENTITIES AND SECURITISATION
Securitisation
ING as originator
ING Group enters into synthetic securitisation programmes in order to reduce credit risk on certain assets. In synthetic securitisations, ING
enters into a credit default swap with securitisation Special Purpose Entities (SPEs), in relation to which ING purchases credit protection in
respect of residential mortgage loans and loans to small and medium-sized enterprises. The SPEs have in turn hedged their exposure with
investors through the issue of credit linked notes or credit linked commercial paper. As a result of these transactions, ING Group has
transferred a substantial part of the credit risk related to these loan portfolios to third-party investors. In general, the third-party investors
in securities issued by the SPE have recourse only to the assets of the SPE and not to ING Group.
After securitisation of these assets ING Group continues to recognise them on its balance sheet under Loans and advances to customers.
These transactions are therefore not off-balance sheet arrangements.
Assets under synthetic securitisation programmes
2008 2007
Loans to small and medium-sized enterprises 8,603 8,946
Corporate loans 430
Mortgages 6,101 6,488
Total 14,704 15,864
ING as sponsor of multi-seller conduit
In the normal course of business, ING Group structures financing transactions for its clients by assisting them in obtaining sources of
liquidity by selling the clients’ receivables or other financial assets to an SPE. The SPE issues asset-backed commercial paper to the market
to fund the purchases. ING Group, in its role as administrative agent, facilitates these transactions by providing structuring, accounting,
funding and operations services.
ING Group supports the commercial paper programmes by providing the SPE with short-term standby liquidity facilities. These liquidity
facilities are intended primarily to cover temporarily disruptions in the commercial paper market. Once drawn these facilities bear normal
credit risk. A number of programmes are supported by granting structured liquidity facilities to the SPE, in which ING Group covers at
least some of the credit risk incorporated in these programmes itself (in addition to normal liquidity facilities), and might suffer credit
losses as a consequence. Furthermore, under a Programme Wide Credit Enhancement ING Group guarantees to a limited amount all
remaining losses incorporated in the SPE to the commercial paper investors. All facilities, which vary in risk profile, are granted to the SPE
subject to normal ING Group credit and liquidity risk analysis procedures. The fees received for services provided and for facilities are
charged subject to market conditions. The SPE is included in the consolidation of ING Group. This transaction is therefore not an off-
balance sheet arrangement.
The normal non-structured standby liquidity facilities and the structured facilities are reported under irrevocable facilities.