ING Group has strengthened its capital base with a €10 billion injection by the Netherlands’ government.
The bank said today it would issue €10 billion of core Tier-1 securities so that its Tier1 ratio is improved to 8 percent and its debt to equity ratio is reduced to 10 percent. It also said there would be no more shareholder dividends for the rest of the year. The government injection does not dilute shareholders’ interest, though.
“We feel that at this time it is prudent to raise our core capital to reinforce our strong competitive position in this changing landscape,” said Michel Tilmant, chief executive. “Our capital position was in line with previously targeted levels and regulatory requirements. However, market conditions have changed dramatically in recent weeks and have led to an internationally recognised belief that going forward, in this market environment, capital requirements for financial institutions should be higher,” he added in a statement.
ING Group will use the proceeds of the transaction to increase shareholders’ equity in the bank by €5 billion and to strengthen the balance sheet of ING Insurance by €2 billion. The remaining €3 billion will be used to reduce the debt, equity ratio at ING Group from 15 percent to 10 percent.
Subsidiary ING Real Estate owns one of the world’s largest real estate investment managers, with around €72 billion of assets. It is currently raising its first opportunity fund.