ING Direct 2013 Annual Report Download - page 31

inMarch 2014. In November 2013, ING announced that it had
reached an agreement with the Dutch State on the unwinding of
the Illiquid Assets Back-up Facility (“IABF”). In February 2014 ING
and the Dutch State completed the unwinding of IABF.
BALANCE SHEET OPTIMISATION
ING Bank worked hard to optimise its capital structure and met
most of the CRD IV requirements before they were implemented.
InNovember ING Bank announced and also executed a number of
liability management actions to optimise the capital structure in
anticipation of the upcoming CRD IV implementation.
ING Bank’s balance sheet has also been reduced and strengthened.
The balance sheet declined following the transfer and sale of
EUR 8.3 billion of assets and EUR 3.7 billion of liabilities from WUB
to Nationale-Nederlanden Bank, and the sale of EUR 2.2 billion of
Dutch mortgages and EUR 1.0 billon of US Real Estate Finance
(“REF”) Loans. The balance sheet was also impacted by the
divestment ofING Direct UK in the first quarter of 2013 and the
sale of EUR 0.8 billion mortgage portfolio in Australia in the second
quarter of2013.
ING Bank is on track to reach the target of EUR 54 billion balance
sheet integration (excluding off-balance positions) by 2015. Balance
sheet integration refers to the continuous efforts we put into trying
to minimise balance sheet inefficiencies that may arise because of
the fact that our client asset base and our client liability base do not
always grow at the same pace over time and across countries. This
also includes looking for synergies between different ING units
thathave different balance sheet structures (some are client deposit
driven, others are client asset driven).
Since 2011, we have completed EUR 48 billion of balance sheet
integration to optimise local balance sheets, of which EUR 14 billion
was realised in 2013.
ING Bank attracted a net inflow of funds entrusted (adjusted for
WUB transfers, the divestment of ING Direct UK and currency
impacts) of EUR 27.3 billion during the year. Retail Banking
generated EUR 18.8 billion of net inflow, driven by continued
growth outside of the Netherlands. Total net lending grew by
EUR 5.5 billion (also adjusted for the sale of Dutch mortgages and
US REF loans), despite muted demand and pricing discipline.
COST CONTAINMENT
In February 2013 a second phase of ING Bank’s Retail Netherlands’
cost reduction programme was announced on top of the
programme announced in November 2011, followed by an
extension of the existing cost-saving programme in the fourth
quarter of 2013. Including this extension, total headcount
reductions are 4,400 FTEs and will result in EUR 460 million annual
cost savings by 2015. Since the start of the programme, there has
been a reduction of about 2,900 FTEs and EUR 279 million has
been saved.
The projects announced by ING Belgium at the beginning of 2013
to align its products and services with the new mobile banking
environment are on course. ING Belgium’s cost-saving target by
2015 is EUR 160 million. By the end of 2013 cost savings of EUR
41million have been achieved.
Commercial Banking’s restructuring programme is also on track and
by the end of 2013 cost savings of EUR 138 million were realised.
Commercial Banking continued with its global change programmes
which aim to save EUR 260 million by 2015 and at the same time
improve product delivery and enhance the One Bank client
experience. An example is the integrated client coverage approach,
focusing on unifying the sales force and harmonising client services.
For more information see the chapter on Commercial Banking.
The previously announced cost-saving initiatives are expected to
reduce expenses at ING Bank by EUR 880 million by 2015, of
whichEUR 458 million has already been achieved since the start of
the programmes.
CUSTOMER CENTRICITY
As a bank we play an important role in helping our retail and
commercial customers make the right decisions by providing them
with products and services that meet their needs. Our role is to
support the economy; ING Bank can only achieve long-term
business success if it contributes towards economic development,
ahealthy environment and a stable society.
We strive to meet growing demand from customers for products
that not only generate good financial results, but also serve social
and environmental objectives. We do this by integrating
sustainability considerations into our business and by managing
thesocio-environmental risks of our transactions and
engagements. We updated our Environmental and Social Risk
Framework and embedded client screening as part of the client
on-boarding process.
Some of our products help relieve social and environmental
problems. For example, we offer retail customers in the
Netherlands an ING Savings Account for UNICEF which supports
UNICEF, the UN children’s charity; and in India we offer farmers
products to cover their credit needs before, during and after
harvest time.
In our lending and saving activities, ING’s Groenbank helps
businesses make their activities more sustainable. ING Groenbank is
the number two green bank in the Netherlands and was the lead
arranger of a record EUR 100 million green loan to a Dutch energy
company in 2013. ING has also created a Sustainable Lending team
to identify and support sustainable business opportunities within
commercial banking. The team has a global mandate, to identify
and promote growth areas in the sustainability arena.
Microfinance can help under-banked communities gain access
tofinancial services, contributing to poverty reduction. ING’s
microfinance portfolio, financed by ING Groenbank, is active in
India, Africa and, since 2013, in Turkey. ING Turkey’s microfinance
activities are facilitated by an ING Groenbank loan of EUR 30
million which is part of the total microfinance portfolio of EUR
75million.
We continue to innovate. In 2013 we launched “responsive”
websites for example at ING Austria, ING Czech Republic and ING
Italy. These are sites where no matter what device is being used
(smartphone, tablet or PC), the site content will always fit in
thescreen.
ING Vysya Bank introduced an iPhone-based mobile app to extend
its reach into remote cities and rural areas. ING Bank Slaski was the
first bank in Poland, and one of the first in the world, to offer
contactless ATM technology, increasing the number of contactless
ATMs. Using best practices from around the ING world, ING Turkey
29ING Group Annual Report 2013
1 Who we are 2 Report of the Executive Board 3 Corporate governance 4 Consolidated annual accounts 5 Parent company annual accounts 6 Other information 7 Additional information