ING Direct 2015 Annual Report Download - page 66

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
2015 – Changes in the composition of the group and other changes
In 2015, ‘Changes in composition of the group and other changes’ of EUR –6 million mainly represents goodwill on ING Lease (UK),
released during the year due to disposal of the remaining portfolios to which it related. Reference is made to Note 22 ‘Result on
disposal of group companies’.
Goodwill is allocated to goodwill reporting units as follows:
2015
2014
Retail Netherlands
Retail Belgium
50
50
Retail Germany
349
349
Retail Central Europe1
427
480
Wholesale Banking1
159
182
985
1,061
1 In 2015, Goodwill allocation to reporting units Retail Central Europe and Wholesale Banking, as at 31 December 2014, are adjusted as a result of changes in
reportable segments. Goodwill allocated to Retail Central Europe, as at 31 December 2014, is decreased by EUR 158 million from EUR 638 million to EUR 480
million, with the corresponding increase in Wholesale Banking.
No goodwill impairment was recognised in 2015 (2014: nil). Changes in the goodwill per reporting unit in 2015 are due to changes in
currency exchange rates.
In 2015, the allocation of goodwill to reporting units changed as a result of the changes in reportable segments as disclosed in Note 32
‘Segments’. Comparative amounts have been adjusted accordingly. The change did not impact the outcome of the impairment test.
Additionally, ING’s Commercial Banking activities are renamed to Wholesale Banking, as of 1 January 2016.
Goodwill impairment testing
Goodwill is tested for impairment at the lowest level at which it is monitored for internal management purposes. This level is defined
as the so called ‘reporting units’ as set out above. Goodwill is tested for impairment by comparing the carrying value of the reporting
unit to the best estimate of the recoverable amount of that reporting unit. The carrying value is determined as the IFRS-EU net asset
value including goodwill. The recoverable amount is estimated as the higher of fair value less cost to sell and value in use. Several
methodologies are applied to arrive at the best estimate of the recoverable amount.
As a first step of the impairment test, the best estimate of the recoverable amount of reporting units to which goodwill is allocated is
determined separately for each relevant reporting unit based on Price to Earnings, Price to Book, and Price to Assets under
management ratios. The main assumptions in this valuation are the multiples for Price to Earnings, Price to Book and Price to Assets
under management; these are developed internally but are either derived from or corroborated against market information that is
related to observable transactions in the market for comparable businesses. Earnings and carrying values are equal to or derived from
the relevant measure under IFRS-EU where available the test includes the use of market prices for listed business units.
If the outcome of this first step indicates that the difference between recoverable amount and carrying value may not be sufficient to
support the amount of goodwill allocated to the reporting unit, an additional analysis is performed in order to determine a recoverable
amount in a manner that better addresses the specific characteristics of the relevant reporting unit.
In 2015, for all reporting units, the first step as described above indicates that there is an excess of recoverable amount over book
value to which goodwill is allocated. A sensitivity analysis on the underlying assumptions did not trigger additional impairment
considerations.
11 Assets held for sale
Assets held for sale includes disposal groups whose carrying amount will be recovered principally through a sale transaction rather
than through continuing operations. This relates to businesses and other significant investments for which a sale is agreed upon but
for which the transaction has not yet closed or a sale is highly probable at the balance sheet date but for which no sale has yet been
agreed.
As at 31 December 2014, Assets held for sale related mainly to the associate ING Vysya Bank and to ING Nationale Nederlanden PTE
Polska, SA. As at 31 December 2014, the Investment in associate of 43% in ING Vysya amounted to EUR 704 million.
Goodwill allocation to reporting unit
ING Bank Annual Report 2015 64