19 November 2009

ING: restructuring plan approved by the Commission - divestments, temporary ban on capital reductions or acquisitions

The Netherlands committed to temporarily ban ING from acquiring other firms and from exercising price leadership. Furthermore, ING will need formal Commission approval for repaying hybrid and subordinated debt capital instruments.

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.

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."

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. 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.

Press release

Commission decisions on KBC, ING and Lloyds – frequently asked questions

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