ING receives EUR 10 billion from Dutch government

The Dutch government has bolstered ING’s capital position with a EUR10-billion (Cdn$15.9-billion) injection into the parent company.
ING will issue non-voting, core Tier-1 securities to the Dutch state for a total consideration of EUR10 billion, according to an ING release. The state will rank exactly the same as common shareholders.
ING Bank’s core Tier-1 capital ratio will be brought to around 8% due to the transaction. Bank holding companies are generally expected to have a Tier 1 capital ratio of at least 6%.
In addition, the move is expected to strengthen the insurance balance sheet and reduce the group’s debt/equity ratio to around 10%.
“Our capital position was in line with previously targeted levels and regulatory requirements,” ING CEO Michel Tilmant said in the release. “However, market conditions have changed dramatically in recent weeks and have led to an internationally recognized belief that going forward, in this market environment, capital requirements for financial institutions should be higher.
“We feel that at this time it is prudent to raise our core capital to reinforce our strong competitive position in this changing landscape.”
ING says the transaction will not dilute existing shareholders. ING may buy back some or all of the securities at any time at 150% of the issue price.