October 20, 2008
Important Letter About ING's Financial Strength
On Sunday, October 19th, ING Groep N.V. announced that it had reached an agreement with the Dutch government to proactively strengthen ING's capital position. I want to give you a little more insight into this development and why the ING leadership team firmly believes that this decision is right for ING.
About the transaction
ING Groep N.V. will receive a EUR 10 billion (US $13.4 billion) capital infusion from the Dutch government. This is not a bailout. ING proactively reached out to the Dutch government to fortify its capital position. This capital infusion, which will be non-dilutive to shareholders, provides a secure buffer for ING during this uncertain economic environment - an environment that remains unpredictable.
It is important to understand that ING made this decision from a position of strength, and determined that it was in the best interest of all of its constituents - customers, shareholders, distribution partners, and employees - to participate in the financial program established by the Dutch government.
The Dutch government established the financial program to bolster and preserve the strength and health of the Dutch financial system with an emphasis on the strongest and healthiest companies. The Dutch government will receive non-voting securities in ING in exchange for the capital. This amount will bolster the ING Bank core Tier-1 ratio from 6.5% at September 30 to around 8% (the regulatory requirement is 4%), strengthen the ING Insurance1 balance sheet, and reduce ING debt-to-capital ratio from an already acceptable position of 15% to 10%.
What has changed in the past several weeks
We have been in a challenging market environment for some time, but market conditions have deteriorated significantly over the past several weeks. Deteriorating market conditions have led many governments and Central Banks throughout the world to establish financial programs that make capital available to financial services companies. Prior to this capital infusion, ING's capital position was in-line with ING Group's previously targeted levels and regulatory requirements; however, given the unprecedented market conditions, ING believed it prudent to act proactively to fortify its capital position.
Unlike the government "bailouts" in the U.S., UK and elsewhere, the Dutch government is offering these capital funds to preserve the strength and health of the Dutch financial system, only available to the strongest and healthiest companies in the region.
ING's financial health
Again, ING made this decision from a position of strength. We have weathered the financial turmoil well. Our capital position and liquidity positions are sound. However, during these exceptionally difficult times, it makes sense to have a larger "financial buffer" than a company would need in normal circumstances.
What others have to say
ING isn't the only one expressing confidence in our financial strength. At the press conference yesterday, the Dutch Minister of Finance called ING an "extraordinarily healthy institution." He and other Dutch government officials also made very strong, positive comments about ING's strength, stability and management capabilities in Sunday's press conference. In addition, over the past two weeks, rating agencies S&P and Fitch affirmed their ratings for ING Groep N.V.
Since joining ING in 2004, I have believed in the strength, resilience and brand of this company as well as our ability and commitment to serve you and your clients well. With ING's proactive strengthening of its capital position, I am now an even stronger believer in our ability to help you grow your business.
Our strategy remains clear and unchanged as does our commitment to be a leader in this marketplace. If you have further questions, please take a look at our ratings, the news release and web cast press conference featuring Dutch government and ING officials at www.ing.com. Of course, you can always reach out to me or your ING representative anytime.
Butch Britton
President, Life Business Group
ING U.S. Financial Services
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