ING Direct 2015 Annual Report Download - page 144

Contents
Who we are
Report of the
Management
Board
Corporate
Governance
Consolidated
annual accounts
Parent company
annual accounts
Other
information
Additional
information
Notes to the Consolidated annual accounts of ING Bank - continued
It was agreed that these restrictions would apply for the shorter period of three years or until the non-voting equity securities have
been repaid in full to the Dutch State:
• An agreement with the Dutch State to alter the repayment terms of 50% of the non-voting equity securities;
• Repayment of EUR 5 billion of the non-voting equity securities issued in November 2008 to the Dutch State;
• Additional Illiquid Assets Back-up Facility payments as part of the overall agreement with the European Commission will have to
be made to the Dutch State in the form of fee adjustments relating to the Illiquid Assets Back-Up Facility which resulted in a one-
off pre-tax charge to ING of EUR 1.3 billion in the fourth quarter of 2009;
• Launch of a EUR 7.5 billion rights issue, in order to finance the repayment of 50% of the non-voting equity securities and a
mitigation of the capital impact of the additional Illiquid Assets Back-up Facility payment as part of the overall agreement with the
European Commission to the Dutch State of EUR 1.3 billion;
• Repayment of the non-voting equity securities (core Tier 1 securities) issued to the Dutch state with a return of at least 10% per
annum. The EC could impose additional behavioural constraints in the event that the return was lower;
• Restrictions on the calling of Tier 2 capital and Tier 1 hybrids, for the shorter period of three years starting from the date of the
Commission decision or up to the date on which ING had fully repaid the non-voting equity securities (core Tier 1 securities) to the
Dutch State (including the relevant accrued interest of core Tier 1 coupons and exit premium fees); and
• Execution of the Restructuring Plan before the end of 2013;
Amendments to the Restructuring Plan in 2012
ING announced in November 2012 that, together with the Dutch State, it had submitted significant amendments to the 2009
Restructuring Plan to the EC. The EC approved these amendments by Decision of 16 November 2012.
The amendments to the 2009 Restructuring Plan as announced in November 2012 extended the time horizon and increased 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 had 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 Voya had to be completed by year-end 2013, more than 50% had to be
divested by year-end 2014, with the remaining interest to be divested by year-end 2016;
• The divestment of more than 50% of ING’s interest in its European insurance and investment management activities had 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 were to 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 meant that ING Group
(a) no longer had a majority of representatives on the Boards of these operations and (b) had deconsolidated these operations from
ING Group’s financial statements in line with IFRS-EU accounting rules.
Under the terms of the original Restructuring Plan, ING was required to divest Interadvies (at that point in time named
WestlandUtrecht Bank). However, due to market circumstances and changing regulatory requirements, a divestment of
WestlandUtrecht had 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 was to be divested as part of ING’s insurance
and investment management operations in Europe. The result had 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 needed to ring-fence
Nationale-Nederlanden Bank up to the divestment of more than 50% of NN Group. ING committed, amongst others, that Nationale-
Nederlanden Bank would reach certain targets for mortgage production and consumer credit until year-end 2015. Furthermore, ING
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 continued to apply until the date on which more than 50% of each of the Insurance/IM operations was divested. The price
leadership restrictions in Europe were amended to reflect specific conditions in various local markets. Under the amendments, the
constraint no longer applied in the Netherlands, and ING Direct in the EU needed to 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.
ING Bank Annual Report 2015 142