ING Direct 2013 Annual Report Download - page 234

Notes to the consolidated annual accounts of ING Group continued
Amendments to the Restructuring Plan in 2012
The amendments to the 2009 Restructuring Plan as announced in November 2012 extended the time horizon and increase the flexibility
for the completion of divestments and have adjusted other commitments in light of the market circumstances, economic climate and more
stringent regulatory requirements.
Under the amendments announced in 2012, the ultimate dates for divesting the insurance and investment management businesses
changed as follows:
• The divestment of more than 50% of ING’s interest in its Asian insurance and investment management operations has to be completed
by year-end 2013, with the remaining interest divested by year-end 2016;
• The divestment of at least 25% of ING’s interest in ING U.S. has to be completed by year-end 2013, more than 50% has to be divested
by year-end 2014, with the remaining interest divested by year-end 2016;
• The divestment of more than 50% of ING’s interest in its European insurance and investment management activities has to be
completed by year-end 2015, with the remaining interest divested by year-end 2018; and
• As ING has committed to eliminate double leverage, proceeds from the divestments will be used to that end while ensuring adequate
leverage ratios of the insurance holding companies.
A divestment of more than 50% of ING’s interest as mentioned in this paragraph and furthermore below also means that ING Group (a)
no longer has a majority of representatives on the Boards of these operations and (b) has deconsolidated these operations from ING
Group’s financial statements in line with IFRS accounting rules.
Under the terms of the original Restructuring Plan, ING was required to divest WestlandUtrecht Bank. However, due to market
circumstances and changing regulatory requirements, a divestment of WestlandUtrecht has not occurred. Instead, under the amended
Restructuring Plan, the commercial operations of WestlandUtrecht Bank were combined with the retail banking activities of Nationale-
Nederlanden, which is to be divested as part of ING’s insurance and investment management operations in Europe. The result has to be
that Nationale-Nederlanden Bank is a viable and competitive business, which stands alone and is separate from the businesses retained by
ING. To this end ING already needs to ring-fence Nationale-Nederlanden Bank up to the divestment of more than 50% of NN Group.
On 1 July 2013 EUR 3.8 billion of WestlandUtrecht Bank’s Dutch mortgage portfolio, EUR 0.1 billion of consumer lending and EUR 3.7
billion of Dutch savings portfolio were transferred to Nationale-Nederlanden Bank. In addition approximately 400 of WestlandUtrecht
Bank’s employees were transferred to Nationale-Nederlanden Bank. All assets and liabilities were transferred at the existing carrying value
as included in ING Bank’s balance sheet. This transaction was completed on 1 July 2013.
ING has committed, amongst others, that Nationale-Nederlanden Bank will reach certain targets for mortgage production and consumer
credit until the date on which more than 50% of the Insurance/IM Europe operations has been divested, or until 31 December 2015 if the
European Commission requires so. Furthermore, ING has agreed to a maximum ratio for mortgage production at ING Retail Banking
Netherlands in relation to mortgage production of Nationale-Nederlanden Bank until year-end 2015.
The 2009 Restructuring Plan included restrictions on acquisitions and price leadership for certain products in EU markets. These restrictions
will continue to apply until 18 November 2015 or until the date on which more than 50% of each of the Insurance/IM operations has been
divested, whichever date comes first.
The price leadership restrictions in Europe have been amended to reflect specific conditions in various local markets. Under the
amendments, the constraint no longer applies in the Netherlands, and ING Direct in the EU will refrain from offering more favourable
prices than its best priced direct competitor among the ten financial institutions having the largest market share in the respective countries.
The calling or buy-back of Tier 2 capital and Tier 1 Hybrid Securities will continue to be proposed for authorisation to the European
Commission on a case by case basis until ING has fully repaid the core Tier 1 securities to the Dutch State, but ultimately until 18 November
2014, whichever date comes first. Notwithstanding this restriction, ING was allowed to call the EUR 1.25 billion Hybrid originally issued by
ING Verzekeringen N.V. on 21 December 2012.
The 2012 amended Restructuring Plan includes a repayment schedule for the remaining core Tier 1 securities to the Dutch State as
described in the above-mentioned section ‘Repayment non-voting equity shares’.
The implementation of the commitments and obligations set out in the (amended) Restructuring Plan will be monitored by a monitoring
trustee who is independent of ING until 31 December 2015.
The 2012 amended Restructuring Plan was formally approved by the European Commission, by decision of 16 November 2012. As a result,
the Commission closed its formal investigations as announced on 11 May 2012 and ING also withdrew its appeal at the General Court of
the European Union, filed in July 2012. For principal legal reasons, the European Commission has continued with its appeal against the
General Court ruling of March 2012. However, ING, the Dutch State and the European Commission agreed that any outcome of this
procedure will not affect the approval of the amended Restructuring Plan. It is expected that this judgment will be rendered in April 2014.
232 ING Group Annual Report 2013