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IP/08/1699

Brussels, 13th November 2008

State aid: Commission approves Dutch emergency recapitalisation of ING

The European Commission has approved, under EC Treaty state aid rules, an emergency intervention in the form of recapitalisation, that the Dutch authorities intend to grant to ING Groep N.V.. The Commission found the measure to be in line with its Guidance Communication on state aid to overcome the current financial crisis (see IP/08/1495). The measure constitutes an adequate means to remedy a serious disturbance in the Dutch economy while avoiding undue distortions of competition and is therefore compatible with Article 87.3.b. of the EC Treaty. In particular, the measure is limited in time and scope, requires an adequate remuneration and provides safeguards to minimise distortions of competition.

Competition Commissioner Neelie Kroes said: "The Commission's decision on the Dutch Government's support for ING once again demonstrates the importance of state aid rules – on the hand; they ensure a level playing field so that there are no subsidy races between Member States and, on the other hand, allow measures which are necessary for financial stability."

On 22 October 2008, the Dutch authorities notified their plans to recapitalise ING Groep N.V. with €10 billion via a special type of securities. These securities are to be issued on 12 November 2008.

In the current financial climate, even fundamentally sound institutions like ING may experience distress and be required to reassure financial markets of their financial stability. Against this background, ING Groep N.V. needed to reinforce its core tier 1 capital position, which will increase from 6.5% to 8% after the capital injection.

The securities to be issued would qualify as core tier 1 capital and produce an annual coupon equal to the higher of:

  • € 0.85 per security, non cumulative, payable annually in arrears
  • 110% of the dividend paid on the ordinary shares in 2009
  • 120% of the dividend paid on the ordinary shares in 2010
  • 125% of the dividend paid on the ordinary shares from 2011 onwards

The coupon will only be paid if a dividend is paid on the ordinary shares. In the event that ING decides to repurchase the securities, the state will receive 150% of the issue price.

The Commission has concluded that the measure complies with the conditions laid down in its Communication on the application of State aid rules to measures taken in relation to financial institutions in the context of the current global financial crisis (see IP/08/1495). In particular, the measures meet the following criteria:

  • necessity: ING has a pivotal function within the Dutch financial sector - a loss of confidence in such a core institution would have led to a further disturbance of the current situation and harmful spill-over effects to the economy as whole
  • limited temporal scope: the Dutch authorities have committed to submitting a restructuring plan after six months
  • appropriate own contribution: the Commission has verified that, even with the uncertainty inherent in such core tier 1 securities, ING would pay, taking into account the annual coupon and the repurchase premium, an adequate remuneration to the state, with an expected return in excess of 10%. Adequate safeguards are in place so that the Commission is informed if there are any deviations and, if necessary, can impose additional behavioural constraints
  • avoidance of undue distortions of competition: the package foresees sufficient behavioural rules to prevent an abuse of the state support, in particular balance sheet growth constraints and the maintenance of a certain solvency ratio.

The non-confidential version of the decision will be made available under the case number N 528/2008 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.


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