ING Direct 2015 Annual Report Download - page 175

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
ING Bank as Sponsor
In the normal course of business, ING Bank structures financing transactions for its clients by assisting them in obtaining sources of
liquidity by selling the clients’ receivables or other financial assets to an Special Purpose Vehicle (SPV). The transactions are often
funded by the ING Bank administered multi seller Asset Backed Commercial Paper (ABCP) conduit Mont Blanc Capital Corp. (rated A-
1/P-1). Mont Blanc Capital Corp. continues to fund itself externally in the ABCP markets. In its role as administrative agent, ING Bank
facilitates these transactions by providing structuring, accounting, funding and operations services. ING Bank also provides support
facilities (liquidity and program wide enhancement) backing the transactions funded by the conduit. Mont Blanc is fully consolidated
into the ING Bank financial accounts.
More information on securitisations is included in the Pillar III section.
Credit risk tools
Credit risk policies
ING credit risk policies provide for generic rules and roles and responsibilities that should always prevail within ING Bank. While
allowance is given for discretionary variation to comply with local regulations, such variations must always comply with the content of
a global ING Bank wide credit risk policy and approved by (local) credit risk. All credit risk policies are created according to the policy
development standards and reviewed on a regular basis. Each policy has a credit risk sponsor and is created in close consultation with
the various stakeholders within credit risk, front office and where applicable other corporate departments. All policies require approval
by the Credit Risk Committee (CRC) and where applicable by the Global Credit Committee (GCC).
Credit risk systems and data standards
The acceptance, maintenance, measurement, management and reporting of credit risks at all levels of ING Bank is accomplished
through promotion of single, common credit risk data standards and the integration into common credit risk tools that support
standardised and transparent credit risk practices. ING has chosen to develop the credit risk tools centrally. The philosophy is to re-use
the same data for all purposes, in an integrated approach that overlaps the three key areas of ING Bank policy, the regulatory
environment in which we operate, and the daily processes which are active throughout the group. Overlapping these three areas is the
essential requirement to ensure data quality standards and discipline remains high.
The customer-centric data model conforms strongly to the three core business needs of ING Bank:
• To transact efficiently with our counterparties;
• To be compliant with our internal and external obligations;
• To monitor the risks we undertake.
The customer-centric approach ensures that ING Bank can react quickly to changing regulations, business needs and best practices in
our dealings with our clients and prospects.
Guiding principles regarding data elements
The guiding principles are that each data element should only be input once, and should have a clear ‘home’ system or database
which is leading throughout all uses of that data element. From the data ‘home’, the data may then be redistributed to other systems
or databases that may require that data in an automated Straight through Processing (STP) method. Depending on the need, the data
may be transferred in real time, near real time, daily, weekly or monthly. This frequency of underlying data transfer is independent
from the data transfer that may take place for consolidation purposes.
Credit risk portfolio
ING Bank’s credit exposure is mainly related to traditional lending to individuals and businesses followed by investments in bonds and
other securitised assets. Loans to individuals are mainly mortgage loans secured by residential property. Loans (including guarantees
issued) to businesses are often collateralised, but can be unsecured based on internal analysis of the borrowers’ creditworthiness.
Bonds in the investment portfolio are generally unsecured. Securitised assets such as Mortgage Backed Securities and Asset Backed
Securities are secured by the pro rata portion of the underlying diversified pool of assets (commercial or residential mortgages, car
loans and/or other assets) held by the security‘s issuer. The last major credit risk source involves pre-settlement exposures which arise
from trading activities, including derivatives, repurchase transactions and securities lending/borrowing and foreign exchange
transactions.
Risk rating buckets per line of business
Risk rating buckets are defined based upon the quality of the exposures in terms of creditworthiness, varying from investment grade
to Non-performing loan expressed in S&P, Moody’s and Fitch equivalents.
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