The Dutch government is taking a stake in Dutch financial giant ING in exchange for a massive liquidity injection in one of Europe's major bank bailouts.
The Dutch government will shoot much more than 100 euros into the ING Group
Bank and insurance company ING Group is to receive 10 billion euros ($13.4 billion) in government support, it was announced Sunday, Oct. 19.
Speaking at a press conference, Dutch Finance Minister Wouter Bos, Dutch central bank president Nout Wellink and ING Chairman Michel Tilmant said that in exchange the government will receive securities worth 10 billion euros.
The price of the securities was fixed to be the same as that of ING stock on Friday at closing time, at 7.33 euros. On top of receiving the securities -- expected to generate some 8.5 percent interest per year -- the government will appoint two members in ING's managing board.
ING emphasized that the securities are not part of ING's so-called core capital. Consequently, current ING share capital will not be watered down due to the government support.
State appointees given veto rights
The two government board members will have veto rights concerning all fundamental decisions and investments involving more than 25 percent of ING's equity.
ING Group is the second bank to receive Dutch government support. On Oct. 4, the Dutch government nationalized Fortis Netherlands, which also comprises Dutch ABN Amro bank.
However, in its statement to the press, the Dutch central bank (DNB) emphasized that the situation of ING should not be compared to that of former Belgian-Dutch bank and insurance giant Fortis.
ING is a "healthy, robust and well managed company," DNB said, adding that ING belongs to one of "the world's strongest banks."
Sunday's decision was expected after ING shares lost some 27 percent of their value at the Dutch stock exchange.
The dramatic drop was a response to the bank's announcement on Friday it had written off 500 million euros in the third quarter of 2008 from risky loans, following investments in the US worth some 1.6 billion euros.
The International Netherlands Group (ING) is a 1992 merger of several Dutch banks and insurance companies. Its original parent company was established in 1743.
ING is active in banking, insurance and asset management and has more than 75 million customers worldwide.
In late 2007, ING had some 338 billion euros in saving deposits, making it the second largest retail bank worldwide, after Japanese Mitsubishi UFJ Financial Group.
British Prime Minister David Cameron has won Polish and Danish support for EU reforms that will prevent a "Brexit." He is touring European countries before setting a date for a UK referendum on EU membership.
Deputy national chairman of the Federation of German Detectives (BDK), Sebastian Fiedler, says closer police cooperation at the European level is needed for greater success in arresting terror suspects.
Starting with the WikiLeaks "Afghanistan War Story" in the summer of 2010, matters moved apace concerning founder Julian Assange. Here's a summary of key dates during what the UN claims is his "unlawful detention."
Picasso was a man of many talents, who always returned to the same place whenever his life took a new direction: the window. A new exhibition in Hamburg examines the artist's intimate relationship with this theme.