Dutch ING Group gets $13 bn from governmentOctober 20th, 2008 - 4:27 am ICT by IANS
Amsterdam, Oct 20 (DPA) Bank and insurance company ING Group is to receive 10 billion euros ($13.4 billion) in government support, the company announced Sunday evening.Speaking at a press conference, Dutch Finance Minister Wouter Bos, Dutch central bank president Nout Wellink and ING Chairman Michel Tilmant said that in exchange the government will receive securities worth 10 billion euros.
The price of the securities was fixed to be the same as that of ING stock Friday at closing time, at 7.33 euros.
On top of receiving the securities - expected to generate some 8.5 percent interest per year - the government will appoint two members in ING’s managing board.
ING emphasised that the securities are not part of ING’s so-called core capital. Consequently, current ING share capital will not be watered down due to the government support.
The two government board members will have veto rights concerning all fundamental decisions and investments involving more than 25 percent of ING’s equity.
ING Group is the second bank to receive Dutch government support. On Oct 4, the Dutch government nationalised Fortis Netherlands, which also comprises Dutch ABN Amro bank.
However, in its statement to the press, the Dutch central bank (DNB) emphasised that the situation of ING should not be compared to that of former Belgian-Dutch bank and insurance giant Fortis.
ING is a “healthy, robust and well managed company”, DNB said, adding that ING belongs to one of “the world’s strongest banks”.
Sunday’s decision was expected after ING shares lost some 27 percent of their value at the Dutch stock exchange.
The dramatic drop was a response to the bank’s announcement Friday it had written off 500 million euros in the third quarter of 2008 from risky loans, following investments in the US worth some 1.6 billion euros.
The International Netherlands Group (ING) is a 1992 merger of several Dutch banks and insurance companies. Its original parent company was established in 1743.
ING is active in banking, insurance and asset management and has more than 75 million customers worldwide.
In late 2007, ING had some 338 billion euros in saving deposits, making it the second largest retail bank worldwide, after Japanese Mitsubishi UFJ Financial Group.