ING Direct 2015 Annual Report Download - page 184

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
Retail Banking
As per December 2015, Retail Banking forborne assets amounted to a total of EUR 7.0 billion, which represents 1.6% of the total Retail
Banking portfolio.
2015
2014
Region
Forborne
assets
Of which:
Perfor-
ming
Of which:
Non-Perfor-
ming
Forborne
assets
Of which:
Perfor-
ming
Of which:
Non-Perfor-
ming
Europe
Netherlands
4,262
1,719
2,543
3,659
1,040
2,619
Belgium
1,096
412
684
1,061
473
588
Germany
696
547
149
721
481
239
Turkey
196
124
73
50
44
7
Poland
135
48
88
154
86
68
Spain
59
32
27
60
53
7
Rest of Europe
137
56
81
99
49
51
Africa
1
0
1
1
0
1
America
2
0
1
1
0
1
Asia
1
0
1
1
1
1
Australia
397
304
94
471
326
144
Total
6,982
3,241
3,741
6,279
2,552
3,726
The main concentration of forborne assets is in the Netherlands with 61% of the total forborne assets (2014: 58%) and 68% of the
non-performing forborne assets (2014: 70%). The increase in forborne assets was also mainly driven by the Netherlands, whereby a
large part of the EUR 0.6 billion increase was seen in the consumer portfolio (EUR 0.4 billion). New inflow in the non-performing
forborne assets, following a more active approach to help clients with payment difficulties, was the main driver for the increase. This
increase was compensated by outflow from the non-performing to performing forborne assets, as the 1-year probation period was
reached. The remaining EUR 0.2 billion increase was seen in the non-performing business portfolio and was mainly due to new inflow
of forborne assets in Food, Beverages & Personal Care.
Next to the Netherlands, also Retail Banking in Germany, Australia and Belgium were impacted by the update on the forbearance
policy, resulting in a partial shift of forborne assets from the non-performing to performing portfolio. The forborne assets in Turkey
increased in the business as well as in the consumer portfolio and was mainly driven by new inflow.
Credit risk mitigation
ING Bank’s lending and investment businesses are subject to credit risk. As such, the creditworthiness of our customers and
investments is continually monitored for their ability to meet their financial obligations to ING Bank. In addition to determining the
credit quality and creditworthiness of the customer, ING Bank uses various credit risk mitigation techniques and instruments to
mitigate the credit risk associated with an exposure and to reduce the losses incurred subsequent to an event of default on an
obligation a customer may have towards ING Bank. The most common terminology used in ING Bank for credit risk protection is ‘a
cover’. While a cover can be an important mitigant of credit risk and an alternative source of repayment, generally it is ING Bank’s
practice to lend on the basis of the customer’s creditworthiness rather than exclusively relying on the value of the cover. Within ING
Bank, there are two distinct forms of covers: assets and third party obligations.
Assets
The asset that has been pledged to ING Bank as collateral or security gives ING Bank the right to liquidate it in cases where the
customer is unable to fulfil its financial obligation. As such, the proceeds can be applied towards full or partial compensation of the
customer's outstanding exposure. An asset can be tangible (such as cash, securities, receivables, inventory, plant & machinery and
mortgages on real estate properties) or intangible (such as patents, trademarks, contract rights and licenses).
Third party obligation
Third Party Obligation, indemnification or undertaking (either by contract and/or by law) is a legally binding declaration by a third
party that gives ING Bank the right to expect and claim from that third party to pay an amount, if the customer fails on its obligations
to ING Bank. The most common examples are guarantees (such as parent guarantees and export credit insurances) and letters of
comfort.
Retail Banking: Forborne assets by Geographical Region
ING Bank Annual Report 2015 182