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State aid: Commission approves ING restructuring plan and illiquid asset back-up facility

Commission Européenne - IP/09/1729   18/11/2009

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IP/09/1729

Brussels, 18th November 2009

State aid: Commission approves ING restructuring plan and illiquid asset back-up facility

The European Commission has approved under EC Treaty state aid rules the restructuring plan of Dutch-based financial institution ING, including an illiquid asset back-up facility provided by the Dutch State. The approval of the facility has become possible after an additional agreement between the Dutch State and ING. On the basis of the notified restructuring plan, ING will pay a significant proportion of the restructuring costs, ING's long term commercial viability will be restored, and the aid will not lead to undue distortions of competition. The restructuring plan foresees that ING will reduce the risk profile and complexity of its operations and will sell its insurance activities over time. ING will also carve out, according to a detailed trustee-supervised timetable, a business unit (Westland Utrecht Hypotheekbank (WUH) / Interadvies), to step up competition in the Dutch retail banking market. Based on the proposed plan, the Commission concluded that the measures are compatible with EU rules on state aid to remedy a serious disturbance in a Member State's economy (Article 87(3)(b) of the EC Treaty).

Competition Commissioner Neelie Kroes said: "I am satisfied that the Dutch authorities have adapted the terms of the illiquid asset back-up facility via an additional agreement to bring them into line with EU state aid rules. The restructuring plan is adequate to restore ING's viability, ING is financing a significant share of the restructuring costs and distortions of competition caused by the aid measures are sufficiently addressed."

The group

ING offers banking, insurance and asset management services to over 85 million clients in more than 40 countries. It is one of the biggest financial institutions in the world, with a workforce of about 125 000 people and a balance sheet of €1 332 billion at the end of 2008.

Aid received

ING received a €10 billion capital injection from the Dutch State on 22 October 2008, authorised by the Commission as rescue aid on 13 November 2008 (see IP/08/1699). Given the early redemption of €5 billion before the end of 2009, ING obtained better repayment terms amounting to approximately €2 billion. This demonstrates that, having started the restructuring process, the bank has again become attractive for capital markets.

Moreover, ING received €12 billion of liquidity guarantees under the Dutch liquidity guarantee scheme, approved by the Commission in October 2008 (see IP/08/1610). Finally, on 26 January 2009, the Dutch Government provided ING with an illiquid asset back-up facility covering 80% of a portfolio of $39 billion. The Commission approved the measure on 31 March for six months while at the same time opening an in-depth investigation as regards the valuation of the portfolio and the degree of burden sharing (see IP/09/514).

Commission assessment

The Commission's doubts as regards the illiquid asset back-up facility have been allayed by a series of commitments made by the Dutch authorities to bring the conditions of the measure in line with the Commission guidelines (see IP/09/322). In particular, The Netherlands made the commitment to increase the remuneration in relation to the transaction to be paid by ING by €1.3 billion via an additional payment.

In addition to the carve-out of Westland Utrecht Hypotheekbank (WUH), the Netherlands also committed to temporarily ban ING from acquiring other firms and from exercising price leadership. Furthermore, ING will need formal Commission approval for calling (i.e. repaying) hybrid and subordinated debt capital instruments. These commitments will stay in place during a 3 year period or until the full amount of the capital injection is repaid to the Dutch State, whatever is shorter.

The Commission concluded that the restructuring measures will enable ING to restore its long-term viability, while making a sufficient own contribution to the costs of restructuring. Finally, the Commission is satisfied that the measures proposed are appropriate and proportional to offset the distortions of competition brought about by the aid.

The non-confidential version of the decision will be made available under the case number in the State Aid Register on the DG Competition website. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.

See also MEMO/09/507.


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