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Titluri in Financial Times:
ING to split as part of deal with Brussels
How ING will be forced to go back to basics
ING to be broken up in wake of bail-out
Brussels verdict sets precedent for rivals
Brussels backs Rock restructuring

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Separarea ING ca parte a intelegerii cu Bruxelles
Cum va fi fortat ING sa se intoarca la inceputuri
ING va fi divizat ca urmare a ajutorului primit de la guvern
Verdictul dat de Bruxelles creeaza un precedent pentru concurenti
Bruxelles sustine restructurarea Rock

***
ING, grupul financiar de origine olandeza, sub presiunea Comisiei Europene, si-a anuntat decizia
de a vinde diviziile de asigurari si management al investitiilor pentru a se concentra in
exclusivitate pe serviciile bancare.
Grupul anuntase deja ca va renunta la modelul bancassurance prin separarea managementului
diviziei bancare de cel al diviziei de asigurari. Insa anuntul facut luni depaseste toate asteptarile
si include, de asemenea, cerinta ca ING sa vanda ING Direct din SUA.
Desi nici Comisia, nici ING nu au confirmat masura in care Bruxelles a dictat planurile radicale de
restructurare, analistii nu au nici un dubiu asupra faptului ca grupul a primit o lunga lista de cereri
la comisarul pe probleme de concurenta al Comisiei Europene, Neelie Kroes.
Chris Hitchings, analist la Keefe Bruyette & Woods, a apreciat ca: “Motivul pentru care are loc
aceasta vanzare este ca li s-a impus de catre Kroes. Ei nu isi doresc acest lucru.”
Divizia de asigurari a ING se situeaza pe locul sase in topul celor mai mari asiguratori din lume,
avand o valoare estimata de 12-15 miliarde euro.
Un alt analist a comentat ca actiunea luata in cazul ING nu lasa o impresie pozitiva. Bruxelles
doreste sa ia masuri impotriva companiilor “prea mari pentru a cadea” prin reducerea acestor
banci la o dimensiune controlabila.
Separarea fortata a diviziilor ING va intensifica in SUA dezbaterile referitoare la viitorul
conglomeratelor financiare.

ING to split as part of deal with Brussels
By Michael Steen in Amsterdam
Published: October 26 2009 07:45 | Last updated: October 26 2009 09:56

ING, the Dutch financial services group, announced on Monday that it would sell its insurance
and investment management businesses to focus solely on banking in a move prompted by
intense pressure from the European Commission over state aid.
The group had already signaled that it was abandoning a bancassurance model by saying it
planned to split the management of banking and insurance at board level. But Monday’s
announcement goes substantially further than expected and also includes a requirement that ING
sell ING Direct USA, its US direct bank.
It is the toughest intervention yet by European Union competition authorities, which waved
through state aid to financial groups during the crisis but made clear these would be subject to
scrutiny if they later appeared too generous.
ING also plans to raise €7.5bn in equity to cover the early repayment of half of the €10bn capital
injection it received from the Dutch state a year ago and fund about €1.3bn in extra payments for
state guarantees on risky assets in order to pay what the EU deems a fair price.
Analysts at Keefe, Bruyette & Woods commented that the EU was playing “hard ball” with a
settlement that looked less favourable for ING than they had hoped, and repayment terms for EU
state aid that were less generous than expected.
ING said it would sell its insurance and investment management operations ”over time” through
initial public offerings and sales. It must dispose of ING Direct USA by 2013 under its agreement
with the European Commission.
The restructuring will leave ING with a balance sheet about 30 per cent smaller than before it
turned to the state for support last year.
The requirement to sell ING Direct USA is a blow to ING, which had built up the biggest global
network of such direct online and telephone retail banks. However, it was ING Direct USA’s
decision to invest in “alt-A” mortgage-backed securities that led the group to seek state aid.
ING said it remained “committed” to the ING Direct business model in other countries.

How ING will be forced to go back to basics
By Michael Steen in Amsterdam
Published: October 26 2009 19:35 | Last updated: October 26 2009 19:35

The imposition of tough restructuring demands on ING by the European Commission will force
the Dutch financial group to go a little more “back to basics” than it perhaps intended and brings
to an end the era of large Benelux bancassurers.
Created in 1991 by the merger of the Nationale Nederlanden insurance group and NMB
Postbank, ING always maintained a roughly equal weighting between its insurance and banking
activities.
That merger will be reversed, splitting in two what had become the biggest listed Dutch financial
group following the break-up of ABN Amro two years ago.
Jan Hommen, ING’s chief executive, said on Monday: “It’s the right decision because we have
two very interesting companies.”
“We are one of the few left with an exposure to both banking and insurance”.
He avoided comment on whether the sale of the whole insurance division was imposed by
regulators in Brussels.
He said, the bancassurance model had served ING well in the past but had failed to provide the
diversification of risk it was meant to during the financial crisis. “The crisis has shown that this is a
model you have to be quite careful with.”
In fact, Mr Hommen foreshadowed the break-up in April when he announced that banking and
insurance would be managed separately, as part of his “back to basics” programme.
The insurance arm, which includes Nationale Nederlanden’s domestic business, US life
assurance business and operations in central and eastern Europe, Asia and Latin America, ranks
number six globally in terms of revenues and has a profile similar to Aegon, its Dutch rival.
Paul Beijsens, analyst at Theodoor Gilissen, the Amsterdam brokerage, said a rough valuation for
the insurance business gave a sale price of €12bn-€15bn ($18bn-$22bn).
Another key part of the restructuring – and one that ING came closer to acknowledging was
authored in Brussels – is the disposal of ING Direct USA, one of the online banking operations
that the Dutch group has built up in 10 countries.
The US bank ranked as the 17th largest by deposits at the end of the second quarter, with
$74.8bn in customer deposits. It is the 18th largest US bank by assets, with $90.1bn.
It is seen as an attractive asset but selling it could be complicated by its business model, which
involves attracting customers with high rates for their deposits who then generally give ING little
business on the asset side.

It was the need to match deposits with mortgages, which ING could not itself write quickly
enough, that led the US business to invest in risky mortgage-backed securities.
ING’s €27.7bn portfolio of those assets weakened investor confidence in the bank during the
crisis, forcing it to seek a €10bn capital injection from the state and later state guarantees on 80
per cent of the portfolio. ING Direct’s business model in Europe does not escape either after
Brussels prohibited it from offering top-three price offerings.
Once the dust settles at the end of 2013, what is left will be a “predominantly European bank with
options in other parts of the world,” Mr Hommen said. Whether it will also serve as an epitaph for
bancassurance is still disputed.
..................................
Break-up debate to intensify
ING’s forced break-up will intensify the debate in the US over the future of large financial
conglomerates, write Francesco Guerrera and Julie MacIntosh.
The issue has been contentious since 1999 when, under fierce lobbying from the financial
industry, Washington enacted legislation that ended the Depression-era separation of investment
and commercial banking and enabled banks and insurers to merge.
But the crisis, which hit diversified companies like Citigroup and Bank of America hard, has
provided critics of “financial supermarkets” with new ammunition.
Their argument is that companies that gather deposits from ordinary citizens should not be
allowed to engage in risky businesses such as proprietary trading, derivatives trading and other
activities that could destroy their institutions.
Wall Street bankers reply that the crisis did not show that the financial conglomerate model is
riskier than having separate institutions to deal with depositors and investors.
In their view, the collapse of “monoline” investment banks such as Bear Stearns and Lehman
Brothers proved that risk can be just as high in specialised firms.
The US government has, at times, showed a willingness to take tough action on the institutions
that had been worst hit by the crisis by forcing the break-up of AIG, the stricken insurer, and
persuading Citi to sell a risky commodities trading unit.
But the Obama administration has shown little appetite for a break-up of the likes of Citi and
BofA, or even a healthy financial conglomerate such as JPMorgan Chase.
One person close to the matter said the government was instead considering ways to supervise
financial groups more closely and build a more effective “resolution authority” that would allow it
to manage a large bank failure.
President Barack Obama is expected to provide further details on his administration’s efforts in
that area as early as this week.

ING to be broken up in wake of bail-out
By Michael Steen in Amsterdam
Published: October 26 2009 07:45 | Last updated: October 26 2009 21:11

ING, one of Europe’s biggest financial groups, unveiled a radical break-up forced on it by the
European Commission that will have the financial services group sell off its insurance and
investment management business.
The dismantling of ING is one of the toughest interventions yet by Europe’s competition
authorities, which waved through state aid to financial groups during the crisis but made clear
these would be subject to scrutiny if they later appeared too generous.
It is expected that the forced divestments will have repercussions for state-aided banks in Europe
and the US as well as in the UK.
ING must offload its insurance business, worth an estimated €12bn-€15bn, and focus solely on
banking to meet the commission’s demands, a decision that goes substantially further than
expected. The break-up also includes a requirement that ING sell ING Direct USA, its US banking
arm.
ING will be left with a balance sheet about 45 per cent smaller than before it turned to the state
last year, roughly equivalent to that of Commerzbank, the German lender. Commerzbank in May
agreed to cut its balance sheet by 45 per cent to comply with Brussels’ demands. In the UK,
Lloyds Banking Group and Royal Bank of Scotland are likely to face similar demands to
shrink.
ING also announced plans to raise €7.5bn in equity to cover the early repayment of half the
€10bn capital injection it received, plus premium, and to fund about €1.3bn in extra payments for
state guarantees on risky assets.
Although both the Commission and ING declined to be drawn on the extent to which Brussels
dictated the radical restructuring plans, there was little doubt among analysts that the company
had faced a long list of demands from Neelie Kroes, the European Union competition
commissioner.
Chris Hitchings, analyst at Keefe Bruyette & Woods, said: “The reason they’re selling the whole
lot is because Kroes told them to. They don’t want to.”
ING, which embarked on a “back to basics” restructuring programme earlier this year, had drawn
up plans to manage insurance and banking separately – in a retreat from the classic
bancassurance model – but it had been choosing individual assets to sell rather than tearing up
its business model.
The restructuring is to be completed by 2013. Jan Hommen, chief executive, said an initial public
offering for the insurance business as a whole would be “quite interesting”, but other options
included IPOs of smaller parts of the business.
The requirement to sell ING Direct USA is a blow to ING, which had built up the biggest global
network of such direct online and telephone retail banks. However, it was the unit’s move to
invest in “alt-A” mortgage-backed securities that led the group to seek state aid.

Shares in ING fell 18 per cent to €9.56.

Brussels verdict sets precedent for rivals
By Stanley Pignal in Brussels and Sharlene Goff in London
Published: October 26 2009 19:34 | Last updated: October 26 2009 19:34

Executives at ING could have been forgiven for thinking of the financial crisis as a distant,
unpleasant episode it had weathered 12 months ago before a return to business as usual once
conditions improved.
But the European Commission had not forgotten that the Dutch bancassurance group had
benefited from a large injection of government funds, and Brussels’ hand was very much behind
Monday’s announcement of the break-up of ING.
Neelie Kroes, the competition commissioner serving her last few months in office, has insisted
throughout the financial crisis that state aid should not give those banks that received it an unfair
advantage.
It is a message that will resonate in the boardrooms of other banks that benefited from similar
state support, notably Royal Bank of Scotland, Lloyds Banking Group and Northern Rock, in
the UK; and Dexia and KBC, the Belgian banks.
Under EU competition rules, those companies that receive state aid have six months to submit a
restructuring plan detailing how they will reduce their activity to limit market distortions caused by
taxpayers’ support.
All parties agree that ING, headed by Jam Hommen, had not initially made much of this duty, in
spite of a €10bn injection in October 2008 from the Dutch state to bolster its balance sheet, and
subsequently enjoying generous guarantees on €22bn of risky mortgage-backed securities.
After long and sometimes heated negotiations with Brussels, the post-crisis ING will look very
different to the group before it took the state bail-out.
No more insurance or asset management business, no US presence for its flagship ING Direct
brand, and a balance sheet shrunk by no less than 45 per cent by the end 2013.
It is not the first time Brussels has imposed draconian remedies on banks in receipt of state aid.
In May, Commerzbank, Germany’s second-largest lender, agreed to a rescue plan that would
shrink its balance sheet by 45 per cent after disposals. WestLB, one of Germany’s most powerful
state-owned banks, had to shrink its business by half.
“It is a tricky balance for the Commission, between ensuring long-term viability for the banks and
at the same time making sure there is some sacrifice for the good of the competition,” says
Jacques Derenne, a Brussels-based competition partner at Lovells, the law firm.
The verdict on ING could set a precedent for the UK government-backed banks in particular,
which are waiting to hear what penalties they will have to pay. “It is clearly pretty penal,” says one
banking analyst. “I was surprised how substantial it was.”

The ramifications could be felt most severely by RBS and Lloyds. Both banks have filed
restructuring plans to the Commission and are in final negotiations about the disposals they will
have to make.
While the Commission is assessing banks on a case by case basis, one message is coming
through loud and clear: it is determined to shrink radically the balance sheets of banks that have
benefited from state support.
RBS is expecting to have to shrink dramatically its share of the small business banking market in
the UK, where it holds a dominant share of up to 30 per cent, and wind down £260bn of non-core
assets. But it may have to go further.
“The action on ING certainly doesn’t set a positive note,” said another analyst. “Brussels wants to
address the ‘too big to fail’ issue and cut these banks down to a manageable size.”
For Lloyds the extent of the Commission’s demands hangs on the success of its ambitious bid to
escape the UK government’s asset protection scheme. The bank is likely to hear within days
whether it would win crucial support from the Treasury for a £25bn fundraising that would enable
it to avoid the scheme.
But even if Lloyds manages without further assistance it will not escape unscathed. The
Commission is expected to force significant disposals to compensate for the aid already received,
including parts of its current accounts business and insurance arm.
Banks may also have to make other concessions, such as faster repayment of government
money and commitments not to offer market-leading products.
The Commission is also set to approve the restructuring of Northern Rock this week that will lead
to the bank being split in two. It could also impose some restrictions on Northern Rock’s ability to
write new business.

Brussels backs Rock restructuring
By Sharlene Goff, Retail Banking Correspondent
Published: October 28 2009 11:46 | Last updated: October 28 2009 14:20

The European Commission has waved through a radical restructuring of Northern Rock that will
lead to the nationalised bank being split into two and the “good” parts of the business sold off.
The Commission said on Wednesday that the plan to break up the bank was compatible with
EU rules on state aid.In It was “satisfied” that the package of measures proposed by Northern
Rock would restore the long-term viability of the “good” bank and allow orderly liquidatio of the
“bad” bank, without unduly distorting competition.
Under the restructuring measures, Northern Rock’s market share will be less than half of its precrisis level.
The restructuring will lead to the bulk of Northern Rock’s retail deposits and low-risk mortgage
loans being separated into a good bank and sold off. Its other mortgage assets, including those
held in its Granite securitisation programme, will be placed into a separate asset company – or
“bad” bank – that will remain under government control.
The government hopes to complete the split by the end of the year, paving the way for a sale of
the good parts of the bank.
A priority for the government is that the sale stimulates competition in the UK banking market.
Buyers could include Virgin and Tesco, which on Wednesday unveiled plans to create 1,000 jobs
with the opening of a customer services centre in Newcastle – Northern Rock’s home town.
Neelie Kroes, EU competition commissioner, said the failure of Northern Rock would have had
major detrimental effects on the UK mortgage market and the overall financial stability of the UK
economy.
“Important structural changes, including the split of the bank into two entities and a significant
reduction of its market presence will allow the bank to become viable in the long-term and limit
distortions of competition,” she said.
The Commission is looking closely at a number of banks that received government help at the
height of the financial crisis to assess whether they have been handed an unfair competitive
advantage.
Earlier this week it announced that ING, the Dutch bank, would have to sell off large parts of its
core business and shrink its balance sheet by about 45 per cent.
The Commission is also looking into the state aid received by Lloyds Banking Group and Royal
Bank of Scotland , with decisions on these expected in the next few weeks.
It is expected that Lloyds will have to reduce its dominant share of UK current accounts, while
RBS will have to scale back its presence in the small business banking market by selling off
hundreds of its branches in England and Wales.

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