Netherlands | Milestone

ING Group repays government bailout monies owed from crisis.

Marking the close of another chapter in the global financial crisis of 2008, Netherlands-based ING Group announced on November 7 that it had made the final installment in its repayment of a €10 billion bailout ($12.4 billion) received from the Dutch government in 2008. ING has also paid €3.5 billion in interest and dividends.

The final payment in November was €1.03 billion, consisting of €683 million in principal and €342 million in interest and dividends. ING stressed that the funds came from the parent ING Group, not from ING Bank, meaning that the payment had no impact on the bank’s capital ratios.

As a part of the restructuring agreement between ING, the Dutch government and the European Commission, ING agreed to several of what it called “bans,” according to an email sent by a company spokesman to Global Finance. Some of the bans remain in place, such as the prohibition on acquiring other financial institutions and a price leadership ban on some product lines in businesses domiciled outside of the Netherlands.

Those bans were scheduled to remain in place until November or until ING had sold 50% or more of its remaining stakes in some of its insurance and investment businesses. ING still owns 68% of its European insurance arm NN Group, according to the spokesman’s email.

Several factors, including losses on US mortgage-backed securities, triggered ING’s problems in 2008 and made the bailout necessary. In early October that year the Dutch government  announced plans to make capital available to viable financial institutions, a move welcomed by ING Group at the time. Back then, ING revealed plans to issue nonvoting securities for the €10 billion government loan and stated that proceeds would bolster its insurance balance sheet and reduce ING Bank’s debt/equity ratio to around 10%.

During the restructuring period from Q4 2008 to Q1 this year, ING made 31 divestments in various countries, according to a summary provided to Global Finance by the company. Between Q2 2010 and Q3 this year it sold 14 smaller stakes in financial companies in several countries.