ING Direct 2015 Annual Report Download - page 185

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
General guidelines on cover valuation
General guidelines for cover valuation are established to ensure consistency of the application within ING Bank. These general
guidelines also require that the value of the cover needs to be monitored on a regular basis, in principle at least annually. Covers shall
be revalued accordingly and whenever there is reason to believe that the market is subject to significant changes in conditions. The
frequency of monitoring and revaluation depends on the type of covers.
The valuation method also depends on the type of covers. For asset collateral, the valuation sources can be the customer’s balance
sheet (e.g. inventory, machinery, and equipment), nominal value (e.g. cash, receivables), market value (e.g. securities and
commodities), independent valuer (commercial real estate) and market indices (residential real estate). For third party obligations, the
valuation is based on the value which is attributed to the contract between ING Bank and that third party.
Cover values by risk category
This section provides insight on the type of covers and to which extent a loan is collateralised. The cover disclosures are presented by
risk category: Lending, Investment, Money-Market and Pre-settlement. For each risk category, the cover amounts are presented by
the most relevant collateral forms, being mortgages and financial collateral (cash and securities), and the most relevant third party
obligation being guarantees. ING Bank obtains covers which are compliant to the Capital Requirements Directive IV (CRDIV) and the
related Capital Requirements Regulation (CRR) requirements, as well as those that are not compliant.
The cover values are presented for the total portfolio of ING Bank. Covers of both AIRB and SA portfolios are presented in detail
reflecting the complete ING Bank’s portfolio. Next to that, detailed information is provided on the cover coverage for the performing
and non-performing portfolio. The non-performing loan definition is explained in detail in the section ‘Credit Restructuring’. To increase
the understanding of the reader on the nature of the collateralised loans, insight is given in the industry and geography breakdown of
the ING Bank portfolio as well. Another improvement is that in addition to the lending risk category, the cover valuation tables now
also give insight in the risk categories of Investment, Money Market and Pre-settlement. For comparability reasons with previous
tables, outstandings are used to show ING Bank’s portfolio.
Exposures are categorised into different Value to Loan (VTL) buckets that give insight in the level of collateralisation of ING Bank’s
portfolio. VTL is calculated as the cover value divided by the outstandings at the balance sheet date. The cover values are pre-haircut
and indexed values and exclude any cost of liquidation. Covers can either be valid for all limits, sub-limits or a particular outstanding of
a borrower, the latter being the most common. To prevent erroneous inflation of the level of collateralisation, the coverage of all
outstanding is capped at 100% if there is over-collateralisation on a certain outstanding. As a result, the coverage levels disclosed are
conservative. Each limit is subsequently assigned to one of the six defined VTL buckets: no cover, >0% - 25%, >25% to 50%, >50% to
75%, >75% to <100%, and ≥ 100%. As the nature of the Pre-settlement portfolio determines that collateral is netted, these VTL
buckets are not shown for the Pre-settlement portfolio.
The first two tables give an overview of the collateralisation of the total portfolio of ING Bank.
Cover type
Value to Loan
Outstan-
dings Mortgages
Eligible
Financial
Collateral
Other
CRR/CRDIV
eligible
Guaran-
tees
Non
CRR/CRD IV
eligible No Cover
Partially
covered
Fully
covered
Consumer Lending
297,866
460,892
3,363
475
26,283
35,017
5.3%
18.0%
76.7%
Business Lending
295,987
119,583
16,736
81,729
90,158
130,344
36.8%
27.5%
35.7%
Investment and Money Market
114,116
6
3,113
35
97.5%
1.2%
1.3%
Total Lending, Investment and
Money Market
707,970
580,474
20,105
82,204
119,554
165,396
33.3%
19.3%
47.4%
Pre-settlement3
52,574
Total Bank
760,543
580,474
20,105
82,204
119,554
165,396
33.3%
19.3%
47.4%
1 Including loans to ING Group.
2 Excluding intercompany positions.
3 More information on the credit risk mitigants of the Pre-settlement exposure can be found in the Pre-settlement section.
Cover values including guarantees received - Total ING Bank – 20151,2
ING Bank Annual Report 2015 183