ING Direct 2009 Annual Report Download - page 274

reduce or eliminate our double leverage and strengthen our capital ratios as anticipated and eliminate the constraints on competition
imposed by the EC.
The limitations agreed with the EC on our ability to compete and to make acquisitions or call certain debt instruments could
materially impact the Group.
As part of our Restructuring Plan, we have undertaken with the EC to accept certain limitations on our ability to compete in certain retail,
private and direct banking markets in the European Union and on our ability to acquire financial institutions and businesses that would
delay our repurchase of the Core Tier 1 Securities held by the Dutch State. These restrictions apply until the earlier of: (1) 18 November
2012, and (2) the date upon which we repurchase all remaining Core Tier 1 Securities held by the Dutch State. We have also agreed to
limitations on our ability to call Tier-2 capital and Tier 1 hybrid debt instruments. If the EC does not approve the calling of Tier-2 capital and
Tier 1 hybrid debt instruments in the future, this may have adverse consequences for us, result in additional payments on these
instruments and limit our ability to seek refinancing on more favorable terms. The limitations described above will impose significant
restrictions on our banking business operations and on our ability to take advantage of market conditions and growth opportunities. Such
restrictions could adversely affect our ability to maintain or grow market share in key markets, as well as our results of operations.
Upon the implementation of the Restructuring Plan, we will be less diversified and may experience competitive and other
disadvantages.
Following completion of the planned divestments under the Restructuring Plan, we expect to become a significantly smaller, regional
financial institution focused on retail, direct and commercial banking in the Benelux region and certain other parts of Europe, as well as
selected markets outside Europe. Although we will remain focused on banking operations, we may become a smaller bank than that
represented by our current banking operations. In the highly competitive Benelux market and the other markets in which we operate, our
competitors may be larger, more diversified and better capitalised and have greater geographical reach than us, which could have a
material adverse effect on our ability to compete, as well as on our profitability. The divested businesses may also compete with the
retained businesses, on their own or as part of the purchasers’ enlarged businesses. In addition, the restrictions on our ability to be a price
leader and make acquisitions and on our compensation policies could further hinder our capacity to compete with competitors not
burdened with such restrictions, which could have a material adverse effect on our results of operations. There can be no assurance that
the implementation of the Restructuring Plan will not have a material adverse effect on the market share, business and growth
opportunities and results of operations for our remaining core banking businesses.
Our Restructuring Programs may not yield intended reductions in costs, risk and leverage.
In April 2009, we announced our Back to Basics program to reduce our costs, risk and leverage. In addition to restructuring our banking
and insurance businesses so that they are operated separately under the ING umbrella, the Back to Basics program includes cost-reduction
measures, as well as plans for divestments. On 26 October 2009, we announced that we had reached an agreement with the EC on our
Restructuring Plan, pursuant to which we announced further divestments. Projected cost savings and impact on our risk profile and capital
associated with these initiatives are subject to a variety of risks, including:
• contemplatedcoststoeffecttheseinitiativesmayexceedestimates;
• divestmentsplannedinconnectionwiththeRestructuringPlanmaynotyieldthelevelofnetproceedsexpected,asdescribedunder
‘Risks Related to the Group - 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’;
• initiativeswearecontemplatingmayrequireconsultationwithvariousregulatorsaswellasemployeesandlaborrepresentatives,and
such consultations may influence the timing, costs and extent of expected savings;
• thelossofskilledemployeesinconnectionwiththeinitiatives;and
• projectedsavingsmayfallshortoftargets.
While we have begun and expect to continue to implement these strategies, there can be no assurance that we will be able to do so
successfully or that we will realize the projected benefits of these and other restructuring and cost saving initiatives. If we are unable to
realize these anticipated cost reductions, our business may be adversely affected. Moreover, our continued implementation of
restructuring and cost saving initiatives may have a material adverse effect on our business, financial condition, results of operations and
cash flows.
Because we operate in highly competitive markets, including our home market, we may not be able to increase or maintain
our market share, which may have an adverse effect on our results of operations.
There is substantial competition in the Netherlands and the other countries in which we do business for the types of insurance, commercial
banking, investment banking, asset management and other products and services we provide. Customer loyalty and retention can be
influenced by a number of factors, including relative service levels, the prices and attributes of products and services, and actions taken by
competitors. If we are not able to match or compete with the products and services offered by our competitors, it could adversely impact
our ability to maintain or further increase our market share, which would adversely affect our results of operations. Such competition is
Risk factors (continued)
2.4 Additional information
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