ING Direct 2009 Annual Report Download - page 170

recognised as a one-off charge in the fourth quarter of 2009. The remainder of the IABF as agreed in January 2009, including the transfer
price of the securities of 90%, remains unaltered.
The difference between the total sales proceeds of EUR 21.1 billion (EUR 22.4 billion -/- adjustment of EUR 1.3 billion) and the fair value
under IFRS-EU of EUR 15.2 billion represents a ‘Government grant’ under IAS 20. This government grant is considered to be an integral
part of the transaction and is therefore accounted for as part of the result on the transaction.
The transaction resulted in a reduction of the negative revaluation -and therefore an increase in equity- of EUR 4.6 billion (after tax).
The valuation method of the 20% Alt-A securities in the IFRS balance sheet is not impacted by the IABF. The methodology used to
determine the fair value for these assets in the balance sheet under IFRS-EU is disclosed in Note 34 ‘Fair value of financial assets
and liabilities’.
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 of Shareholders.
The 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 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 on 12 May 2009.
Further coupons are to be paid on 12 May of each year (the coupon date) in cash if 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 Groep N.V.’s capital adequacy position is and remains satisfactory both before and immediately after payment in the
opinion of the Dutch Central Bank.
ING Groep N.V. has the right to repurchase all or some of the non-voting equity securities at EUR 15 per security at any time, together with
the pro-rata coupon, if due, accrued to such date. ING Groep N.V. and the Dutch State have agreed in October 2009 that up to EUR
5 billion of the EUR 10 billion core Tier 1 securities may be repurchased at any time until 31 January 2010 at the original issue price of EUR
10 per non-voting equity security, plus a repurchase premium and accrued interest.
ING Groep N.V. also has the right to convert all or some of the non-voting equity securities into ordinary shares on a one-for-one basis
from three years after the issue date onwards, subject to certain conditions. The Dutch State in that case has the right to demand a
redemption payment of EUR 10 per non-voting equity security, together with the pro-rata coupon, if due, accrued to such date.
Both repurchase and conversion of the securities must be approved by the Dutch Central Bank.
Repayment non-voting equity shares
ING Groep N.V. 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. This early repayment option was valid until
the end of January 2010. ING Groep N.V. repurchased EUR 5 billion of the non-voting equity securities on 21 December 2009.
Under the agreement, ING repurchased 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 approximately 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 of the
remaining non-voting equity securities, including restrictions on remuneration and corporate governance, remain unchanged.
In order to finance the repayment of the non-voting equity securities and the associated expenses as well as to mitigate the capital impact
of the additional Illiquid Assets Back-Up Facility payments as part of the overall agreement with the European Commission, ING launched
a capital increase with preferential subscription rights for holders of (depositary receipts for) ordinary shares of up to EUR 7.5 billion. The
rights issue, as disclosed in Note 13 ‘Shareholders’ equity (parent)/non-voting equity securities’ was authorised by the Extraordinary
General Meeting of Shareholders on 25 November 2009. Proceeds of the issue in excess of the above amounts were used to strengthen
ING’s capital position.
Additional information to the consolidated balance sheet of ING Group (continued)
2.1 Consolidated annual accounts
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