Brussels, 30th November 2010
State aid: Commission rejects ING's request to repay hybrid capital to private investors
The European Commission has rejected ING's request for an early repayment of around €1.2 billion in hybrid capital to private investors as it has yet to fully reimburse the Dutch State for the support it received, a condition set in the Commission State aid decision of 2009 (see IP/09/1729). As a consequence, the call by ING on the hybrid tier 1 instrument cannot go ahead on 31 December 2010.
Commission Vice-President in charge of competition policy Joaquín Almunia said: "ING cannot repay its private hybrid capital holders until it has repaid the capital it received from the Dutch State in full. This is to ensure a fair distribution of the rescue burden in the first place."
On 16 November 2010, the Netherlands asked the Commission to allow ING to reimburse holders of Group Hybrid Tier 1 Instruments bearing an interest rate of 8.439% for a total of $1.5 billion (approximately € 1.2 billion). The first date for calling the hybrid instrument in question is 31 December 2010.
The Commission has rejected the request on the grounds that the ING restructuring plan, approved by the Commission in November 2009, foresees that the bank and its capital holders need to contribute an adequate own share to the cost of restructuring, along with the state support. This requires, among others, that the state aid is paid back in full, before hybrid capital holders can be repaid.
ING received a €10 billion capital injection from the Dutch State in October 2008, €5 billion of which were reimbursed a year later. Furthermore it also received €12 billion in liquidity guarantees under the Dutch liquidity guarantee scheme. The Dutch government, at the beginning of 2009, also provided ING with a back-up facility covering 80% of a portfolio of $39 billion in illiquid assets (see IP/09/1729)
The non-confidential version of the decision will be made available under the case number C10/2009 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.