ING Direct 2013 Annual Report Download - page 390

Sovereign credit risk disclosure
The table below presents the READ, segmented by relevant factors, and the analysis for the exposure class ‘Sovereigns’.
The figures per geography for each exposure class are based on the country of residence of the obligor. As such, these figures do not
represent the risk associated with a country transfer risk event, such as a restriction on the convertibility of local currency into internationally
tradable currencies, as local and foreign currencies are combined and converted into Euro equivalent for presentation. The definitions
associated with ING Bank’s transfer risk positions and economic country risk exposure can be found in the Risk Management paragraph.
Sovereigns - credit risk disclosure in READ
2013 2012 Delta %
Sovereigns Total per rating 92,164 88,525 4%
Performing 92,135 88,524 4%
Impaired/Non-performing 29 14179%
Sovereigns Geography/business units 92,164 88,525 4%
Africa 262 313 –16%
America 308 487 –37%
Asia 5,112 5,677 –10%
Australia 3,338 261 1178%
Europe 83,145 81,787 2%
Europe 83,145 81,787 2%
Netherlands 19,419 19,393 0%
Belgium 13,529 16,372 –17%
Germany 18,881 16,174 17%
Other Europe 31,316 29,847 5%
Sovereigns Product Type 92,164 88,525 4%
Bond Investments 57,219 53,491 7%
Revolving 14,726 13,833 6%
Money Market 10,277 10,445 –2%
Term Loans 6,133 4,743 29%
Derivatives 1,758 1,819 –30%
Other 2,052 4,193 –42%
Sovereigns PD Bands 92,164 88,525 4%
<0.05% 73,738 70,958 4%
0.05% to 0.5% 15,424 14,422 7%
0.5% to 5% 2,591 2,971 –13%
5% to 10% 161 126 58%
10% to 20% 198 45 260%
20% to 50% 23 2819%
>50% 29 14179%
Includes both AIRB and SA portfolios; excludes equities and ONCOA.
The growth in the Sovereign portfolio was heavily impacted by increased retail customer liabilities. In preparation of the Basel III liquidity
requirements, increased customer deposits require larger levels of high quality liquid assets. The primary source of high quality liquid assets
is sovereign bonds which showed the most significant increase.
As a result of constant review of exposure classes certain public institutions have been reclassified from Corporates to Sovereigns, resulting
in an increase in READ, in mainly the Term loan portfolio in the Netherlands.
In addition, ING Bank has intensified its payments and cash management offering which often requires additional revolving credit facilities.
Since these facilities are often linked to payment services, there can be volatility in these figures depending on usage at any balance sheet date.
Given that a major purpose of sovereign credit exposure is to support high quality liquid assets, it is consistent that most exposure is in the
best quality risk bands. Limited amounts of higher risk exposure exist due to ING Bank activities in countries with similar ratings.
Additional Pillar 3 information continued
388 ING Group Annual Report 2013