ING Direct 2011 Annual Report Download - page 164

Notes to the consolidated annual accounts of ING Group continued
Contingent liabilities and commitments
2010
Less than
1 month
1–3
months
3–12
months
1–5
years
Over 5
years
Maturity not
applicable Total
Banking operations
Contingent liabilities in respect of
– discounted bills 1 1 1 3
– guarantees 15,555 472 1,132 1,350 3,202 21,711
– irrevocable letters of credit 7,333 6,070 1,914 192 31 15,540
– other 333 22 64 9 428
23,222 6,565 3,111 1,551 3,233 37, 6 8 2
Insurance operations
Commitments 1,515 117 66 200 13 103 2,014
Guarantees 8 10 523
1,515 117 66 208 23 108 2,037
Irrevocable facilities 38,082 16,552 5,251 24,686 5,456 90,027
62,819 23,234 8,428 26,445 8,712 108 129,746
Guarantees relate both to credit and non-credit substitute guarantees. Credit substitute guarantees are guarantees given by ING Group
inrespect of credit granted to customers by a third party. Many of them are expected to expire without being drawn on and therefore do
not necessarily represent future cash outflows. In addition to the items included in contingent liabilities, ING Group has issued guarantees
as a participant in collective arrangements of national industry bodies and as a participant in government required collective guarantee
schemes which apply in different countries.
Irrevocable letters of credit mainly secure payments to third parties for a customer’s foreign and domestic trade transactions in order
tofinance a shipment of goods. ING Group’s credit risk in these transactions is limited since these transactions are collateralised by the
commodity shipped and are of a short duration.
Other contingent liabilities include acceptances of bills and are of a short-term nature. Other contingent liabilities also include contingent
liabilities resulting from the normal operations of the Real Estate business including obligations under development and construction
contracts. None of the items included in Other contingent liabilities are individually significant.
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. The
unused portion of irrevocable credit facilities is partly 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.
Furthermore, ING Group leases assets from third parties under operating leases as lessee. The future rental commitments to be paid under
non-cancellable operating leases are as follows:
Future rental commitments for operating lease contracts
2012 305
2013 247
2014 189
2015 171
2016 156
Years after 2016 285
28 SPECIAL PURPOSE ENTITIES AND SECURITISATION
Securitisation
ING Group as originator
ING Group enters into synthetic securitisation programmes in order to reduce credit risk on certain assets. In synthetic securitisations, ING
Group enters into a credit default swap with securitisation Special Purpose Entities (SPEs), in relation to which ING Group 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.
162 ING Group Annual Report 2011