ING Direct 2009 Annual Report Download - page 134

Non-voting equity securities (Core Tier 1 securities)
On 12 November 2008, ING Groep N.V. issued one billion non-voting equity securities to the Dutch State at EUR 10 per non-voting equity
security, resulting in an increase of ING Group’s core Tier 1 capital of EUR 10 billion. The nominal value of each security is EUR 0.24. The
non-voting equity securities do not form part of ING Group’s share capital; accordingly they do not carry voting rights in the General
Meeting.
These non-voting equity securities are deeply subordinated and rank pari-passu with ordinary shares in a winding up of ING Group.
On these non-voting equity securities a coupon is payable of the higher of:
EUR 0.85 per security, payable annually in arrears, with a first coupon of EUR 0.425 per security paid on 12 May 2009; and•
110% of the dividend paid on each ordinary share over 2009 (payable in 2010);•
120% of the dividend paid on each ordinary share over 2010 (payable in 2011);•
125% of the dividend paid on each ordinary share over 2011 onwards (payable in 2012 onwards).•
Since ING Groep N.V. had already paid an interim dividend of EUR 0.74 per ordinary share in August 2008, ING recognised a coupon
payable of EUR 425 million to the Dutch State as of 31 December 2008. This coupon was paid out on 12 May 2009.
Further coupons are to be paid on 12 May of each year (the coupon date) in cash if the dividend on ordinary shares is paid in cash or to be
paid in scrip securities in the event of a scrip dividend on ordinary shares. Coupons are only due and payable, on a non-cumulative basis
and if a dividend is paid on ordinary shares over the financial year preceding the coupon date, either on an interim or a final dividend basis,
provided that ING Group’s capital adequacy position is and remains satisfactory both before and after payment in the opinion of the Dutch
central bank.
ING announced on 26 October 2009 that it reached an agreement with the Dutch State to alter the repayment terms of the non-voting
equity securities issued in November 2008, in order to facilitate early repayment. Under the agreement, ING repurchased on 21 December
2009 EUR 5 billion of the securities, representing half of the non-voting equity securities, at the issue price (EUR 10) plus the accrued
coupon and a repayment premium. The 8.5% coupon payment was EUR 259 million at the time of repayment and the repayment
premium was EUR 346 million. The total payment amounted to EUR 5,605 million. The terms for the remaining non-voting equity
securities, including restrictions on remuneration and corporate governance, remain unchanged. Reference is made to Note 33 ‘Related
parties’.
Cumulative preference shares
Pursuant to the Articles of Association of ING Groep N.V. as amended on 8 October 2008, the authorised cumulative preference share
capital consists of 4.5 billion cumulative preference shares, of which none have been issued. The par value of these cumulative preference
shares is EUR 0.24.
The cumulative preference shares rank before the ordinary shares in entitlement to dividend and to distributions upon liquidation of ING
Groep N.V.
The dividend on the cumulative preference shares will be equal to a percentage, calculated on the amount compulsorily paid up or yet to
be paid up. This percentage shall be equal to the average of the Euro OverNight Index Average (EONIA) as calculated by the European
Central Bank. During the financial year for which the distribution is made, this percentage is weighted on the basis of the number of days
for which it applies, increased by 2.5 percentage points.
If and to the extent that the profit available for distribution is not sufficient to pay the dividend referred to above in full, the shortfall will
be made up from the reserves insofar as possible. If, and to the extent that, the dividend distribution cannot be made from the reserves,
the profits earned in subsequent years shall first be used to make up the shortfall before any distribution may be made on shares of any
other category.
ING Groep N.V.’s Articles of Association make provision for the cancellation of cumulative preference shares. Upon cancellation of
cumulative preference shares and upon liquidation of ING Groep N.V., the amount paid up on the cumulative preference shares will
be repaid together with the dividend shortfall in preceding years, insofar as this shortfall has not yet been made up.
Cumulative preference shares - Restrictions with respect to dividend and repayment of capital
ING Groep N.V. is subject to legal restrictions regarding the amount of dividends it can pay to the holders of its cumulative preference
shares, when issued. Pursuant to the Dutch Civil Code, dividends can only be paid up to an amount equal to the excess of the company’s
own funds over the sum of the paid-up capital, and reserves required by law.
2.1 Consolidated annual accounts
ING Group Annual Report 2009
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Notes to the consolidated balance sheet of ING Group (continued)