ING Direct 2011 Annual Report Download - page 144

Without prejudice to the fact that the cumulative preference shares, when issued, will be junior securities of ING Groep N.V., no specific
dividend payment restrictions with respect to the cumulative preference shares exist.
Furthermore, ING Groep N.V. is subject to legal restrictions with respect to repayment of capital to holders of cumulative preference
shares. Capital may be repaid to the holders of cumulative preference shares pursuant to (i) an amendment of ING Groep N.V.’s articles
ofassociation whereby the cumulative preference shares are written down or (ii) a resolution to redeem and cancel the cumulative
preference shares.
Pursuant to the Dutch Civil Code, capital may only be repaid if none of ING Groep N.V.’s creditors opposes such a repayment within
twomonths following the announcement of a resolution to that effect.
LIABILITIES
14 SUBORDINATED LOANS
Subordinated loans
Interest rate Year of issue Due date Notional amount in original currency
Balance sheet value
2011 2010
9.000% 2008 Perpetual EUR 10 10 10
8.500% 2008 Perpetual USD 2,000 1,527 1,469
8.000% 2008 Perpetual EUR 1,500 1,500 1,485
7.375% 2007 Perpetual USD 1,500 1,176 1,111
6.375% 2007 Perpetual USD 1,045 804 773
5.140% 2006 Perpetual GBP 66 79 692
5.775% 2005 Perpetual USD 364 292 741
6.125% 2005 Perpetual USD 700 533 504
4.176% 2005 Perpetual EUR 169 168 498
Variable 2004 Perpetual EUR 563 527 994
6.200% 2003 Perpetual USD 500 376 363
Variable 2003 Perpetual EUR 432 424 729
7.200% 2002 Perpetual USD 1,100 839 748
7.050% 2002 Perpetual USD 800 603 528
8,858 10,645
Subordinated loans consist of perpetual subordinated bonds issued by ING Groep N.V. These bonds have been issued to raise hybrid capital for
ING Verzekeringen N.V. and Tier 1 capital for ING Bank N.V. Under IFRS-EU these bonds are classified as liabilities. They are considered capital for
regulatory purposes.
On 12 December 2011 ING announced the launch of three separate exchange offers in Europe and tender offers in the United States of America,
on a total of seven series of outstanding subordinated securities of ING entities with a total nominal value of approximately EUR 5.8 billion. Of this
amount, EUR 4.8 billion relates to securities issued by ING Groep N.V. and EUR 1.0 billion issued by ING Verzekeringen N.V. All tender and exchange
offers announced on 12 December 2011 were successfully completed on 23 December 2011 with an average participation of approximately 60%.
As part of this initiative, EUR 0.9 billion intercompany debt from ING Bank N.V. to ING Groep N.V. was repaid. In addition, ING Group issued one
new senior bond with a nominal value of EUR 0.7 billion and ING Bank issued two new senior bonds with a nominal value of GBP 0.4 billion and
EUR 0.4 billion respectively. The overall transaction resulted in a total gain of EUR 955 million (EUR 716 million after tax), including related hedge
results and transaction costs. This gain is recognised in Other income. From this amount, EUR 767 million (EUR 574 million after tax) relates to ING
Groep N.V., EUR 93 million (EUR 71 million after tax) to ING Bank N.V. and EUR 95 million (EUR 71 million after tax) to ING Verzekeringen N.V. This
affects the subordinated securities as disclosed in this note and in Note 16 ‘Other borrowed funds’.
Except for the 9% 2008 perpetual of EUR 10 million (a private placement) and EUR 750 million of the 8% 2008 perpetual, these loans have been
subsequently provided as subordinated loans by ING Groep N.V. to ING Verzekeringen N.V. and ING Bank N.V. under the same conditions as the
original bonds as follows:
Subordinated loans provided by ING Groep N.V. to ING Bank N.V. and ING Verzekeringen N.V.
2011 2010
ING Bank N.V. 6,141 7,147
ING Verzekeringen N.V. 1,957 2,003
8,098 9,150
Notes to the consolidated annual accounts of ING Group continued
142 ING Group Annual Report 2011