e424b5
CALCULATION
OF REGISTRATION FEE
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Amount to be
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class
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Registered
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Offering Price per
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Aggregate Offering Price
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Registration
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of Securities to be Registered
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(1)
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Security
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(1)
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Fee
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Rights, entitling the holder to purchase bearer depositary
receipts in respect of ordinary shares
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773,680,488
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USD 0
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USD 0
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USD 0
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Bearer depositary
receipts(3)
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663,154,704
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USD
6.42(2)
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USD
4,257,453,199(2)
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USD 237,566
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(1)
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This prospectus supplement relates to offers and sales of the
rights and bearer depositary receipts (including in the form of
American depositary shares (ADSs)) in the United
States, including any sales of rights and bearer depositary
receipts issued outside the United States. The rights and bearer
depositary receipts are not being registered for the purpose of
sales outside the United States.
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(2)
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Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457. Such estimate is
based on the subscription price of EUR 4.24 per bearer
depositary receipt and an exchange rate of USD 1.5134 per EUR.
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(3)
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A separate registration statement on Form F-6 (Registration No.
333-145767) has been filed with respect to the ADSs evidenced by
American depositary receipts. Each ADS represents one bearer
depositary receipt issued by Stichting ING Aandelen
representing one ordinary share with a nominal value of 0.24
euro (EUR 0.24).
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PROSPECTUS
SUPPLEMENT |
Filed
pursuant to Rule 424(b)(5) |
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(To
Prospectus dated October 27, 2009) |
Registration Statement No. 333-155937 |
NOT FOR
DISTRIBUTION OUTSIDE THE UNITED STATES
ING GROEP
N.V.
Offering
of 1,768,412,544 Ordinary Shares represented by Bearer
Depositary Receipts, including
American depositary shares representing such Bearer Depositary
Receipts
Subscription
Price in the Rights Offering: EUR 4.24 per Bearer Depositary
Receipt and equivalent amount in US$ per American depositary
share
This prospectus supplement relates to an offering of
1,768,412,544 bearer depositary receipts (the New
BDRs) of Stichting ING Aandelen (the
Trust) representing 1,768,412,544 ordinary
shares (the New Ordinary Shares) of ING Groep
N.V., which New BDRs may be represented by American depositary
shares (ADSs). We refer to the New BDRs,
together with the New Ordinary Shares, as the New
Shares and to the existing ordinary shares of ING
Groep N.V. (the Existing Ordinary Shares) and
the existing bearer depositary receipts of the Trust (the
Existing BDRs) as the Existing
Shares. We refer to the new ADSs as the New
ADSs and to the existing ADSs each representing one
Existing BDR as the Existing ADSs. The
offering (the Offering) comprises:
(1) the rights offering (Rights
Offering) in which the holders of Existing Ordinary
Shares (other than the Trust) and Existing BDRs will receive
tradable rights (Tradable Rights) and the
holders of Existing ADSs will receive non-transferable rights
(ADS Rights and, together with the Tradable
Rights, the Rights) to subscribe for New BDRs
and New ADSs, respectively, at the BDR Subscription Price or ADS
Subscription Price, respectively, and (2) the global
offering (Global Offering), in which New BDRs
for which Tradable Rights have not been validly exercised during
the Tradable Rights Exercise Period (the Rump
Shares) may be sold at the Global Offering Price (as
defined below) or in open market transactions. In this
prospectus supplement, ING shares refers to
bearer depositary receipts issued by the Trust representing
ordinary shares of ING Groep N.V. and any ADSs in respect of
such bearer depositary receipts.
The ADS
Rights
If you own Existing ADSs, you will receive one non-transferable
right for each Existing ADS you owned on November 27, 2009.
7 ADS Rights allow you to acquire 6 New ADSs against payment of
the ADS Subscription Price (the ADS Subscription
Price). If you decide to acquire New ADSs, you must
deposit US$7.06, or the ADS deposit amount, per New ADS
subscribed, which represents 110% of the estimated ADS
Subscription Price of US$6.42 per New ADS, to account for
possible exchange rate fluctuations and any currency conversion
expenses. The estimated ADS Subscription Price is the US dollar
equivalent of the BDR Subscription Price (as defined below) of
EUR 4.24 per New BDR using an exchange rate of US dollar 1.5134
per EUR (as published by Bloomberg at close of business (New
York time) on November 25, 2009). The ADS Rights Agent (as
defined below) will refund any excess amount of the ADS deposit
amount over the ADS Subscription Price to you, and you must pay
any shortfall to the ADS Rights Agent prior to the New ADSs
being issued to you. The ADS Rights will expire at
5:00 p.m. (New York time) on December 11, 2009. If you
decide not to acquire any New ADSs and therefore not to exercise
your ADS Rights, you may surrender your ADS Rights by no later
than 5:00 p.m. (New York time) on December 11, 2009
for cancellation, pay the ADS Rights Agent a fee of US$0.05 per
ADS Right and (1) receive delivery of the underlying
Tradable Rights so as to enable you to attempt to sell or
exercise them yourself or (2) instruct the ADS Rights Agent
by no later than 5:00 p.m. (New York time) on
December 11, 2009 to sell the Tradable Rights underlying
the ADS Rights for you on Euronext Amsterdam or Euronext
Brussels. If you do not exercise or exchange your ADS Rights, or
sell or exercise the Tradable Rights underlying the ADS Rights,
you will be deemed to have delivered your ADS Rights to the ADS
Rights Agent for cancellation and the ADS Rights Agent will use
reasonable efforts to sell the Tradable Rights underlying the
ADS Rights for you on or after December 14, 2009 for a fee
of US$0.05 per ADS Right cancelled. New BDRs underlying New ADSs
in respect of ADS Rights that have not been exercised, exchanged
or subsequently sold by the ADS Rights Agent may be sold in the
Global Offering.
The
Tradable Rights
If you own Existing BDRs or Existing Ordinary Shares, you will
receive one Tradable Right for every Existing BDR or Existing
Ordinary Share you owned on November 27, 2009. 7 Tradable
Rights allow you to acquire 6 New BDRs against payment of the
BDR Subscription Price. The BDR Subscription Price for holders
of Existing BDRs or Existing Ordinary Shares is EUR 4.24 per New
BDR (the BDR Subscription Price). The
Tradable Rights will expire at 3:00 p.m. (Amsterdam time)
on December 15, 2009. If you decide not to acquire any New
BDRs and therefore do not exercise your Tradable Rights, New
BDRs in respect of Tradable Rights that have not been exercised
may be sold in the Global Offering.
The Existing BDRs are listed on Euronext Amsterdam by NYSE
Euronext (Euronext Amsterdam) under the
symbol INGA, and on Euronext Brussels by NYSE
Euronext (Euronext Brussels) under the symbol
INGB, and the Existing ADSs are listed on the New
York Stock Exchange (NYSE) under the symbol
ING. Beginning on November 30, 2009, the
Existing BDRs are expected to trade on Euronext Amsterdam and
Euronext Brussels ex subscription right, at which
time the Tradable Rights are expected to start trading on
Euronext Amsterdam and Euronext Brussels. The ADS Rights will
not be listed on or traded on the NYSE or any other exchange,
and are not transferable. Applications have been or will be made
for listing of the New BDRs on Euronext Amsterdam and Euronext
Brussels and for listing of the New ADSs on the NYSE, which are
expected to be granted on or before December 21, 2009.
Trading of the New BDRs is expected to commence on or about
December 21, 2009 and trading of the New ADSs is expected
to commence on or about December 21, 2009.
Application has been made for the Tradable Rights and the New
BDRs to be accepted for clearance through Nederlands Centraal
Instituut voor Giraal Effectenverkeer B.V.
(Euroclear Netherlands), Clearstream
Banking S.A. Luxembourg (Clearstream) and
Euroclear Banking S.A./N.V., as operator of the Euroclear system
(Euroclear). The New BDRs for which Tradable
Rights have been exercised are expected to be delivered through
the facilities of Euroclear Netherlands on or about
December 21, 2009. Application has been made for the New
ADSs to be accepted for clearance through The Depository
Trust Company (DTC). The New ADSs for
which ADS Rights have been exercised are expected to be
delivered through the facilities of DTC on or about December 23,
2009.
For a discussion of the risks that you should consider before
purchasing the securities, see Risk Factors
beginning on
page S-11
of this prospectus supplement.
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Underwriting
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Proceeds to ING
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Price to Public
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Discount
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Groep N.V.
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Per bearer depositary receipt
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EUR 4.24
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(1)
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EUR 0.13
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EUR 4.11
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Per Right
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(2)
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(2)
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(2)
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Total
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EUR 4.24
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EUR 0.13
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EUR 4.11
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(1)(2)
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(1) For BDRs represented by ADSs, payable in US dollars in
an amount estimated to be US$7.06 per New ADS subscribed. The
figure represents (i) the estimated ADS subscription price
per New ADS calculated as the US dollar equivalent of the euro
subscription price per New BDR using an exchange rate of US
dollar 1.5134 per EUR (as published by Bloomberg at close of
business (New York City time) on November 25, 2009), plus
(ii) an additional amount of US$0.64 (representing 10% of
the estimated ADS subscription price) for purposes of increasing
the likelihood that the ADS Rights Agent will have sufficient
funds to pay the final ADS Subscription Price. The final ADS
Subscription Price per New ADS will be the ADS Rights
Agents cost of the BDR Subscription Price of EUR 4.24 in
US dollars on or about December 15, 2009.
(2) We expect to receive no proceeds from the initial
offering and allotment of the Rights.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or determined that this prospectus supplement and the
accompanying prospectus are truthful or complete. Any
representation to the contrary is a criminal offense.
Joint Global Coordinators and Joint Bookrunners
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Goldman, Sachs & Co.
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ING
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J.P. Morgan
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Co-Bookrunners
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Credit Suisse
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Deutsche Bank Securities
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HSBC
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Morgan Stanley
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Joint Lead Managers
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Citi
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ABN AMRO
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UBS Investment Bank
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Co-Lead Managers
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Banca IMI
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BNP PARIBAS
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COMMERZBANK
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Fortis Bank Nederland
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Lloyds TSB Corporate Markets
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Rabo Securities
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Banco Santander
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Société Générale Corporate & Investment
Banking
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UniCredit Capital Markets Inc.
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Subscription, Listing and Paying Agent
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ING
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The date of this prospectus
supplement is November 27, 2009
TABLE OF
CONTENTS
Prospectus
Supplement
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Page
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S-1
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S-13
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S-33
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S-34
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S-35
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S-36
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S-47
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S-48
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S-62
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S-66
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S-71
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S-75
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S-75
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Prospectus
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Page
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Prospectus Summary
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1
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Available Information
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2
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Forward-Looking Statements
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3
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About this Prospectus
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4
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Use of Proceeds
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4
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Description of Debt Securities We May Offer
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4
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Considerations Relating to Our Debt Securities
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26
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Description of Ordinary Shares We May Offer
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30
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Description of the Trust and the Bearer Depositary Receipts
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32
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Description of American Depositary Shares We May Offer
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34
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Description of Rights to Purchase Bearer Depositary Receipts
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40
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Legal Ownership and Book-Entry Issuance
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40
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Taxation
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44
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Benefit Plan Investor Considerations
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65
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Plan of Distribution
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66
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Validity of the Securities
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68
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Experts
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68
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Notices
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69
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You should rely only on the information contained or
incorporated by reference in this prospectus supplement and the
accompanying prospectus. We have not, and the underwriters have
not, authorized any other person to provide you with different
information. If anyone provides you with different or
inconsistent information, you should not rely on it. We are not,
and the underwriters are not, making an offer to sell these
securities in any jurisdiction where the offer or sale is not
permitted. You should assume that the information appearing in
this prospectus supplement and the accompanying prospectus, as
well as information we previously filed with the Securities and
Exchange Commission, which we sometimes refer to as the SEC, and
incorporated by reference, is accurate as of the date on the
front cover of this prospectus supplement only. Our business,
financial condition, results of operations and prospects may
have changed since that date.
This prospectus supplement does not constitute an offer to sell,
or a solicitation of an offer to buy, any of the securities
offered hereby by any person in any jurisdiction in which it is
unlawful for such person to make such an offering or
solicitation. The offer or sale of the ADS Rights, Tradable
Rights, New ADSs, New BDRs or New Ordinary Shares may be
restricted by law in certain jurisdictions, and you should
inform yourself about, and observe, any such restrictions.
S-ii
SUMMARY
The following summary highlights information contained
elsewhere in this prospectus supplement and the accompanying
prospectus. Any decision to invest in any New Shares, New ADSs
or trade in Tradable Rights should be based on a consideration
of this prospectus supplement as a whole, including the
documents incorporated by reference and the risks of investing
in the New Shares, New ADSs or trading in the Tradable Rights as
set out in the Risk Factors below. This summary is
not complete and does not contain all the information that you
should consider in connection with any decision relating to the
New Shares, New ADSs or the Rights. You should read the entire
accompanying prospectus and this prospectus supplement,
including the financial statements and related notes
incorporated by reference herein, before making an investment
decision.
In this prospectus supplement and unless otherwise stated or the
context otherwise dictates, references to ING Groep
N.V., ING Groep, the
Company and ING Group
refer to ING Groep N.V. and references to
ING, the Group,
we and us refer to ING
Groep N.V. and its consolidated subsidiaries. ING Groep
N.V.s primary insurance and banking subsidiaries are ING
Verzekeringen N.V. (together with its consolidated subsidiaries,
ING Insurance) and ING Bank N.V. (together
with its consolidated subsidiaries, ING
Bank), respectively. References to Executive
Board, Supervisory Board and
General Meeting refer to the Executive Board,
Supervisory Board and a General Meeting of Shareholders of ING
Groep N.V. respectively.
Overview
of ING
ING is a global financial institution of Dutch origin offering
banking, investments, life insurance and retirement services. As
of September 30, 2009, we served more than 85 million
private, corporate and institutional customers in Europe, North
and Latin America, Asia and Australia. We draw on our experience
and expertise, our commitment to excellent service and our
global scale to meet the needs of a broad customer base,
comprising individuals, families, small businesses, large
corporations, institutions and governments. ING Groep N.V. was
incorporated as a Naamloze Vennootschap (public limited
liability company) under the laws of the Netherlands on
January 21, 1991.
On October 26, 2009, ING announced that it plans to divest
all of its insurance operations, including its investment
management business by the end of 2013. This represents the next
step in the Back to Basics program announced in April 2009 under
which ING had already begun the process of restructuring its
banking and insurance businesses (together with the investment
management business) so that they are operated separately under
the ING umbrella. The envisaged divestment forms part of
INGs restructuring plan (Restructuring
Plan) for which ING finalized negotiations with the
European Commission (EC) in October 2009 and
which was formally approved by the EC on November 18, 2009.
Under the Restructuring Plan, ING has also agreed to divest ING
Direct US, which operates the Groups direct banking
business in the United States, by the end of 2013, and to divest
certain portions of its Dutch retail banking business. ING will
consider a range of options to carry out these divestments
including through initial public offerings, sales, spin-offs or
combinations thereof. For more information about the
Restructuring Plan, see Recent Developments
Business Recent Developments Insurance
and other Divestments, EC Agreement.
Following the completion of the Restructuring Plan, ING Bank
will be a mid-sized European retail and commercial bank,
anchored in the Benelux, with strong ING Direct and Central
Europe franchises, and will pursue attractive growth prospects
outside Europe.
Background
To and Reasons For The Offering
In October 2008, the Dutch State purchased
EUR 10 billion Core Tier-1 Securities (Core
Tier-1 Securities) of ING as part of its measures to
protect the Dutch financial sector during the global financial
crisis. See Recent Developments
Business Transactions with the Dutch State.
The original terms of the Core Tier-1 Securities allowed ING to
repurchase some or all of the one billion Core Tier-1 Securities
at any time at a price of EUR 15 per Core Tier-1 Security
plus accrued interest to the date of repurchase. In connection
with the Restructuring Plan, ING and the Dutch State have agreed
that up to EUR 5 billion of the
EUR 10 billion Core Tier-1 Securities may be
repurchased at any time until January 31, 2010 at the
original issue price of EUR 10 per Core Tier-1 Security,
plus a repurchase
S-1
premium ranging from EUR 346 million to
EUR 705 million and accrued interest. ING plans to use
the proceeds from the Offering primarily to fund the repurchase
of such EUR 5 billion in issue amount of the Core
Tier-1 Securities. For more information about the proposed
repurchase of the Core Tier-1 Securities, see Recent
Developments Business Recent
Developments Repurchase of a Portion of the Core
Tier-1 Securities Held by the Dutch State.
On March 31, 2009, ING Group and the Dutch State completed
the Illiquid Assets
Back-Up
Facility covering the Alt-A Residential Mortgage-Backed
securities portfolios of both ING Direct US and Insurance
Americas with a par value of approximately
EUR 30 billion. Under the Illiquid Assets
Back-Up
Facility (the Illiquid Assets
Back-Up
Facility), ING transferred 80% of the economic
ownership of its Alt-A portfolio to the Dutch State. In order to
obtain the approval of the EC for the Restructuring Plan, ING
committed to make a series of additional payments to the Dutch
State, corresponding to adjustments to the net fees payable
under the Illiquid Assets
Back-Up
Facility. These additional payments will amount to a net present
value of EUR 1.3 billion, which will be reflected in a
one-off pre-tax charge in the fourth quarter of 2009. For more
information about these additional payments, see Recent
Developments Business Recent
Developments Agreement on Additional Payments to the
Dutch State, Corresponding to Adjustments to the Illiquid Assets
Back-Up
Facility. For more information about the Restructuring
Plan, see Recent Developments
Business Recent Developments Insurance
and other Divestments, EC Agreement. ING plans to use the
remaining proceeds of the Offering, after repayment of the Core
Tier-1 Securities, to strengthen its capital position, including
to offset the EUR 1.3 billion charge and to allocate
the remaining proceeds partially to coupon payments due in
December 2009 on its outstanding hybrid securities, as required
by the EC in order not to be required to defer coupons on hybrid
securities.
S-2
Summary
of the Offering
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Issuer: |
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ING Groep N.V., a public company with limited liability
(Naamloze Vennootschap) incorporated under the laws of
the Netherlands, with its corporate seat in Amsterdam, the
Netherlands. |
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Offering: |
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The Offering relates to a total of 1,768,412,544 New BDRs
representing an equal number of New Ordinary Shares, which New
BDRs may be represented by New ADSs, and consists of the Rights
Offering and the Global Offering, as described below. The New
Ordinary Shares will be fully fungible and rank pari passu
with each other and with the Existing Ordinary Shares of the
Company. The New BDRs will be fully fungible and rank pari
passu with each other and with the Existing BDRs. The New
ADSs will be fully fungible and rank pari passu with each
other and with the Existing ADSs. As such, the New BDRs and New
ADSs will be entitled to any distributions for which the
applicable record date is after the Closing Date (as defined
below). |
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Goldman Sachs International, ING Bank N.V. and J.P. Morgan
Securities Ltd. are the Joint Global Coordinators and Joint
Bookrunners of the Offering. |
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ING Bank N.V. is acting as principal subscription agent. |
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An underwriting syndicate led by Goldman Sachs International and
J.P. Morgan Securities Ltd. (the
Representatives and, together with the other
members of such underwriting syndicate, the
Underwriters), based on an underwriting
agreement dated as of October 25, 2009, as supplemented by
a pricing agreement dated November 26, 2009 (together, the
Underwriting Agreement), has agreed to
underwrite the Offering subject to the satisfaction of customary
terms and conditions. |
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Number of Existing Ordinary Shares outstanding at the date of
this prospectus supplement: |
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2,063,147,969 |
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Number of ordinary shares outstanding after issue of New
Shares and New ADSs: |
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3,831,560,513 |
ADS
Rights
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Offering of ADS Rights : |
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Subject to the terms and conditions set out in this prospectus
supplement and accompanying prospectus, holders of Existing ADSs
after close of business on November 27, 2009 (the
ADS Record Date) will be granted one
non-transferable ADS Right per Existing ADS held. 7 ADS Rights
will grant the holder thereof the right to subscribe for 6 New
ADSs at the ADS Subscription Price. |
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ING has arranged for its ADS depositary, JPMorgan Chase Bank,
N.A. (the Depositary), which is acting as ADS
Rights Agent (the ADS Rights Agent), to send
each registered holder of ADSs on the ADS Record Date an ADS
subscription form showing its entitlement to subscribe for New
ADSs. Each beneficial owner of Existing ADSs |
S-3
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should consult with the financial intermediary through which it
holds its Existing ADSs as to its entitlement to subscribe for
New ADSs. |
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ADS Subscription Price: |
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Holders of Existing ADSs will be required to deposit the
preliminary US dollar equivalent of the BDR Subscription Price,
plus a margin of 10%, with any excess to be refunded following
final calculation of the US dollar equivalent of the BDR
Subscription Price. The actual ADS Subscription Price per New
ADS will be the ADS Rights Agents cost of the BDR
Subscription Price of EUR 4.24 in US dollars on or about
December 15, 2009. On November 25, 2009, the closing
price of Existing ADSs was US$12.28 per ADS on the NYSE. |
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The preliminary ADS subscription price is the US dollar
equivalent of the BDR Subscription Price, using an exchange rate
of US dollar 1.5134 per EUR (as published by Bloomberg at close
of business (New York City time) on November 25, 2009). A
subscriber of the New ADSs must deposit US$7.06, or the ADS
deposit amount, per New ADS subscribed, which represents 110% of
the estimated ADS subscription price, upon the exercise of each
ADS Right. The purpose of this additional amount over and above
the estimated ADS subscription price is to increase the
likelihood that the ADS Rights Agent will have sufficient funds
to pay the final ADS Subscription Price in the event of a
possible appreciation of the Euro against the US dollar between
the date hereof and the end of the ADS Rights Exercise Period,
and to pay any currency conversion expenses. |
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If the actual US dollar price (equal to the BDR Subscription
Price denominated in Euro converted into US dollars on or about
December 15, 2009) plus any currency conversion
expenses, governmental charges or taxes and the issuance fee of
US$0.05 per New ADS issued, is less than the ADS deposit amount,
the ADS Rights Agent will refund such excess to the subscribing
ADS Rights holder without interest. However, if the actual US
dollar price plus any currency conversion expenses, governmental
charges or taxes and the issuance fee of US$0.05 per New ADS
issued, exceeds the ADS deposit amount, the ADS Rights Agent
will not deliver the New ADSs to such subscribing ADS Rights
holder until it has received payment of the deficiency from the
subscriber. The ADS Rights Agent may sell a portion of the New
ADSs that is sufficient to pay any shortfall that is not paid by
January 8, 2010, and the ADS Rights Agent may allocate the
proceeds of such sales for the account of the relevant holder
upon an averaged or other practicable basis without regard to
any distinctions among such holders because of exchange
restrictions, or otherwise, in an amount sufficient to cover
such deficiency (including interest and expenses). In that
event, the ADS Rights Agent will then send promptly any
remaining New ADSs to such holder together with a check in the
amount of excess proceeds, if any, from such sale provided. |
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ADS Rights Exercise Period: |
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Subject to the terms set out in this prospectus supplement,
holders of ADS Rights wishing to subscribe for New ADSs must
exercise their ADS Rights during the period from
November 30, 2009 through 5:00 p.m. (New York time) on
December 11, 2009 (the ADS Rights Exercise
Period). ADS Rights may be exercised only in integral
multiples of the subscription ratio. Holders of ADS Rights
are |
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advised to seek and follow instructions from their custodian
bank or broker, or in the case of registered holders of ADS
Rights, the US Information Agent or Depositary, as applicable,
in relation to the proper and timely exercise or exchange of
their ADS Rights, or the sale or exercise of Tradable Rights
underlying the ADS Rights, as described under the The
Offering ADS Rights Exercise of ADS
Rights, The Offering ADS
Rights Exercise of ADS Rights
Exchange of ADS Rights for Tradable Rights and
The Offering ADS Rights
Sales of Tradable Rights by the ADS Rights Agent. The
Depositary will attempt to sell Tradable Rights underlying ADS
Rights not validly exercised, exchanged or sold during the ADS
Rights Exercise Period, including Tradable Rights underlying ADS
Rights in excess of the nearest integral multiple of the
subscription ratio, as described under The
Offering ADS Rights Sales of Tradable
Rights by the ADS Rights Agent. If such sales are not
completed, the ADS Rights will continue to be reflected in the
securities account of each holder of unexercised ADS Rights
solely for the purpose of the payment of the Excess Amount (as
defined below), if any, in respect of the Tradable Rights
underlying such ADS Rights. See The Offering ADS
Rights General Excess Amount
below. The exercise of ADS Rights is irrevocable and may not be
withdrawn, cancelled or modified, except as otherwise described
in the section The Offering Withdrawal of the
Offering. |
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Transfer of ADS Rights: |
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ADS Rights are not transferable and may not be exercised by, or
sold or assigned to, third parties. However, (1) the
Depositary may sell Tradable Rights underlying ADS Rights on
behalf of the ADS Rights holders as described under The
Offering ADS Rights Sales of Tradable
Rights by the ADS Rights Agent; or (2) an ADS Rights
holder may exchange its ADS Rights for delivery of the
underlying Tradable Rights as described under The
Offering ADS Rights Exchange of ADS
Rights for Tradable Rights. |
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The ADS Rights will not be admitted to trading on the NYSE or
any other exchange. |
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Exercise of ADSs: |
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Each holder or beneficial owner of ADS Rights may exercise all
or only part of its ADS Rights. Subscriptions must be
received by the ADS Rights Agent prior to 5:00 p.m. (New
York City time) on December 11, 2009. |
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Each beneficial owner of ADS Rights who wishes to exercise its
ADS Rights should consult with the financial intermediary
through which it holds its ADSs and ADS Rights as to the manner,
timing and form of exercise documentation, method of payment of
the ADS deposit amount and other related matters required to
effect such exercise. The financial intermediary with whom the
subscription is made may require any person exercising rights to
pay or block the ADS deposit amount for the New ADSs being
subscribed for in a deposit account as a condition to accepting
the relevant subscription. Holders of ADS Rights are urged to
consult their financial intermediary without delay in case your
financial intermediary is unable to act immediately. |
S-5
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Please see The Offering ADR Rights
Exercise of ADS Rights for further details on how to
exercise ADS Rights. |
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Sales of Tradable Rights by the ADS Rights Agent: |
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The Tradable Rights underlying ADS Rights may be sold by the ADS
Rights Agent in one of two ways: |
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ADS Rights holders may deliver ADS Rights for
cancellation along with a fee of $0.05 per ADS Right so
cancelled and direct the Depositary by no later than
5:00 p.m. (New York City time) on December 11, 2009 to
attempt to sell all or a portion of the Tradable Rights
underlying the ADS Rights on behalf of such holder. The
Depositary will, assuming an instruction to sell is received
prior to 5:00 p.m. on December 11, 2009, use
reasonable efforts to sell Tradable Rights underlying ADS Rights
on Euronext Amsterdam or Euronext Brussels beginning on the
trading day following the day on which the instruction to sell
is received. The ADS Rights Agent will distribute the net
proceeds from any such sale, after deduction of any currency
conversion expenses, to the holders of ADS Rights entitled
thereto by whom it has been directed to make such sales on an
averaged or other practicable basis. The instruction to sell ADS
Rights may be given through the DTC system or by completing and
returning an ADS subscription form.
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Assuming ADS Rights have not been exercised,
exchanged or otherwise sold as described under The
Offering ADS Rights Exercise of ADS
Rights, The Offering ADS Rights
Exchange of ADS Rights for Tradable Rights and
The Offering ADS Rights Sales of
Tradable Rights by the ADS Rights Agent, the holder will
be deemed to have delivered his ADS Rights to the ADS Rights
Agent for cancellation and the ADS Rights Agent will use
reasonable efforts to sell the Tradable Rights underlying the
ADS Rights for such holder on or after December 14, 2009.
Sales will be made either on Euronext Amsterdam or Euronext
Brussels beginning on the trading day following the end of the
ADS Rights Exercise Period until 5:00 p.m. (New York City
time) on December 14, 2009. The ADS Rights Agent will
distribute the net proceeds, after accounting for the
Depositarys fees of US$0.05 per ADS Right cancelled and
any currency conversion expenses, to the relevant holders of ADS
Rights entitled thereto.
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Exchange of ADS Rights for Tradable Rights: |
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If an ADS Rights holder wishes to surrender any ADS Rights and
receive the underlying Tradable Rights, such holder must
instruct the ADS Rights Agent to cancel its ADS Rights before
5:00 p.m. (New York City time) on December 11,
2009. After receiving payment from the requesting ADS Rights
holder of the Depositarys fees of US$0.05 per ADS Right in
respect of which such instruction was given, expenses, and any
applicable taxes, the ADS Rights Agent will deliver the
underlying Tradable Rights to an account in the Euroclear
Netherlands, Clearstream or Euroclear systems specified by such
holder. |
S-6
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Trading of ADS Rights: |
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The ADS Rights are not transferable and will not be admitted to
trading on the NYSE or any other exchange. |
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Beginning on November 30, 2009, the Existing ADSs are
expected to be traded on the NYSE ex subscription
right. |
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US Information Agent: |
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Georgeson |
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ADS Rights Agent and Depositary: |
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JPMorgan Chase Bank, N.A. |
Tradable
Rights
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Offering of Tradable Rights: |
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Subject to the terms and conditions set out in this prospectus
supplement, holders of Existing Shares (other than the Trust)
after close of business on November 27, 2009 (the
BDR Record Date) will be allotted one
Tradable Right per Existing Share held. 7 Tradable Rights will
grant the holder thereof the right to subscribe for 6 New BDRs
at the BDR Subscription Price. |
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BDR Subscription Price: |
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The BDR Subscription Price will be EUR 4.24 per New BDR, which
compares to a closing price of EUR 8.92 per ING share on
Euronext Amsterdam and on Euronext Brussels on November 26,
2009. |
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Tradable Rights Exercise Period: |
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Subject to the terms set out in this prospectus supplement,
holders of Tradable Rights wishing to subscribe for New BDRs
must exercise their Tradable Rights during the period from
November 30, 2009 through 3:00 p.m. (Amsterdam time)
December 15, 2009 (the Tradable Rights Exercise
Period). Tradable Rights may be exercised only in
integral multiples of the subscription ratio. Holders of
Tradable Rights are advised to seek and follow instructions from
their custodian bank or broker in relation to the proper and
timely exercise or sale of their Tradable Rights. See The
Offering Tradable Rights Offering
Exercise of Tradable Rights. Tradable Rights not validly
exercised during the Tradable Rights Exercise Period, including
Tradable Rights in excess of the nearest integral multiple of
the subscription ratio, will continue to be reflected in the
securities account of each holder of unexercised Tradable Rights
solely for the purpose of the payment of the Excess Amount (as
defined below), if any. See The Offering
General Excess Amount below. The
exercise of Tradable Rights is irrevocable and may not be
withdrawn, cancelled or modified, except as otherwise described
in this prospectus supplement and in the section The
Offering Withdrawal of the Offering. |
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ING Bank N.V. is acting as principal subscription agent. |
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Trading and Sale of Tradable Rights: |
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The Tradable Rights are expected to be traded on Euronext
Amsterdam and Euronext Brussels, from November 30, 2009
through 1:15 p.m. (Amsterdam time) on December 15,
2009. No arrangement has been made for the Tradable Rights to be
tradable on any other market, including the NYSE. |
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Beginning on November 30, 2009, the Existing BDRs are
expected to be traded on Euronext Amsterdam and Euronext
Brussels ex subscription right, at which time the
Tradable Rights will start trading on Euronext Amsterdam and
Euronext Brussels. |
S-7
General
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Pre-emptive Rights: |
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The statutory pre-emptive rights (wettelijke
voorkeursrechten) in respect of the Offering have been
excluded for the purpose of the Offering. See The
Offering General Pre-emptive
Rights. |
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Voting Rights: |
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The New Ordinary Shares will carry the same voting rights as the
Existing Ordinary Shares. The New BDRs will carry the same
entitlement to a voting proxy as the Existing BDRs. The New ADSs
will carry the same entitlement as the Existing ADSs to instruct
the Depositary as to the exercise of a voting proxy associated
with the ADSs. |
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Treatment of New BDRs for which Tradable Rights have not
been validly exercised: |
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New BDRs for which Tradable Rights (including any Tradable
Rights received by holders of ADS Rights upon exchange of their
ADS Rights) have not been validly exercised prior to the end of
the Tradable Rights Exercise Period (the Rump
Shares) may be sold by the Joint Global Coordinators
and Joint Bookrunners in their sole discretion in the Global
Offering and/or in open market transactions, subject to
applicable selling and transfer restrictions. |
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Tradable Rights (including any Tradable Rights received by
holders of ADS Rights upon exchange of their ADS Rights) not
validly exercised during the Tradable Rights Exercise Period,
including Tradable Rights in excess of the nearest integral
multiple of the subscription ratio, will expire and become null
and void without compensation, except for the payment of the
Excess Amount, if any. |
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Existing Shares Held in Treasury: |
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As of October 31, 2009, the Company directly or indirectly
held a total of 35,041,271 Existing Shares. Such shares are
held, inter alia, to hedge awards granted under employee equity
compensation plans, including employee options. Additionally,
ING shares are used for market making and hedging purposes.
Existing Shares held in treasury will be allocated Tradable
Rights in the Rights Offering. The Company will sell the
Tradable Rights allocated to such shares. |
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Global Offering Price: |
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In the case of a Global Offering, the Global Offering price (the
Global Offering Price) is expected to be
determined following an institutional bookbuilding procedure
commencing on or about December 16, 2009 and is expected to
be published on or about December 16, 2009. The Global
Offering Price, if any, will be denominated in Euro. |
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In any event, including in the case of a Global Offering, the
issue price for the New BDRs (including the form of New ADSs)
and New Ordinary Shares will be the BDR Subscription Price and
as described under The Offering Excess
Amount, the Company will not be entitled to receive any
part of the Excess Amount (as defined below), if any. |
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Excess Amount: |
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Upon the completion of the Global Offering, if the aggregate
proceeds for the Rump Shares offered and sold in the Global
Offering, after deduction of selling expenses (including any
value added tax) exceed the aggregate BDR Subscription Price for
such Rump Shares (such |
S-8
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amount, the Excess Amount), this Excess
Amount will be paid in the following manner: |
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Each holder of a Tradable Right (including any Tradable Rights
received by holders of ADS Rights upon exchange of their ADS
Rights) that is not exercised at the end of the Tradable Rights
Exercise Period will be entitled to receive a part of the Excess
Amount in cash proportional to the number of unexercised
Tradable Rights reflected in such holders securities
account, but only if that amount exceeds 0.01 per
unexercised Tradable Right. In respect of Tradable Rights
underlying ADS Rights that have not been exchanged for such
Tradable Rights, and such Tradable Rights have not been
exercised, the Depositary will convert these proceeds to US
dollars and remit the proceeds pro rata to the holders of
such ADS Rights. Payments will be made following the withholding
of any applicable taxes. |
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The Excess Amount, if any, will only be available if the Rump
Shares are placed within two business days of the end of the
Tradable Rights Exercise Period. |
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If it has been announced that an Excess Amount is available for
payment to holders of unexercised Tradable Rights (including any
Tradable Rights received by holders of ADS Rights upon exchange
of their ADS Rights) and you have not received payment thereof
within a reasonable time following the closing of the Global
Offering, you should contact the financial intermediary through
which you hold unexercised and unsold ADS Rights or unexercised
Tradable Rights. |
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We cannot guarantee that the Global Offering will be
successfully completed. Should the Global Offering take place,
neither we, the Underwriters, the Subscription Agent, the ADS
Rights Agent nor any person procuring subscriptions for Rump
Shares will be responsible for any lack of Excess Amount arising
from any placement of the Rump Shares in the Global Offering. |
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The Company will not be entitled to receive any part of the
Excess Amount. |
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Joint Global Coordinators and Joint Bookrunners: |
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Goldman Sachs International, ING Bank N.V. and J.P. Morgan
Securities Ltd. |
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Representatives: |
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Goldman Sachs International and J.P. Morgan Securities Ltd. |
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Co-Bookrunners: |
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Credit Suisse Securities (Europe) Limited, Deutsche Bank AG,
HSBC Bank Plc and Morgan Stanley & Co. International
plc. |
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Joint Lead Managers: |
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Citigroup Global Markets Limited, ABN AMRO Bank N.V. and UBS
Limited. |
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Co-Lead Managers: |
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Banca IMI S.p.A., BNP PARIBAS, COMMERZBANK Aktiengesellschaft,
Fortis Bank (Nederland) N.V., Lloyds TSB Bank Plc,
Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., Banco
Santander, S.A., Société Générale, and
UniCredit Group (Bayerische Hypo- und Vereinsbank AG). |
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Underwriters |
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The Representatives, Co-Bookrunners, Joint Lead Managers and
Co-Lead Managers are collectively referred to as the
Underwriters. |
S-9
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Lock-Up: |
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The Company has agreed with the Underwriters that, except for
the issue of ING shares in the Offering, for a period ending
90 days after the Closing Date, it will not, subject to
certain exceptions, directly or indirectly issue, sell, offer or
otherwise dispose of any ING shares or other securities
convertible or exchangeable into ING shares or representing
rights to subscribe for ING shares or enter into a transaction
with similar economic effect. See The Offering
Lock-Up
for further information, including the exceptions to the
lock-up. |
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Subscription, Listing and Paying Agent: |
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ING Bank N.V. |
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Stock Exchange Admission: |
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All of the Existing BDRs are listed on Euronext Amsterdam and
Euronext Brussels, and the ADSs are listed on the NYSE. |
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Applications have been or will be made for listing the New BDRs
on Euronext Amsterdam and Euronext Brussels, and for listing the
New ADSs on the NYSE. The Tradable Rights are expected to be
traded on Euronext Amsterdam and Euronext Brussels from
November 30, 2009 through 1:15 p.m. (Amsterdam time)
on December 15, 2009. The transfer of Tradable Rights will
take place through the book-entry systems of Euroclear and
Clearstream. The ADS Rights are not transferable and will not be
admitted to trading on the NYSE or any other exchange. |
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The listings of the New BDRs and the New ADSs are expected to
become effective on or before December 21, 2009. The first
trading day for the New BDRs and the New ADSs is scheduled to be
on December 21, 2009. |
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Use of Proceeds: |
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ING intends to use the proceeds of the Offering primarily to
fund the repurchase of EUR 5 billion in issue amount of the
Core Tier-1 Securities held by the Dutch State plus accrued
interest and the repurchase premium. The repurchase premium
payable in respect of the repurchased Core Tier-1 Securities
will range from EUR 346 million to EUR 705 million,
based on the market price of the ING shares at the time of the
repurchase. Accrued interest at a rate of 8.5% on the
repurchased Core Tier-1 Securities is estimated to be
approximately EUR 260 million (assuming a repayment on
December 21, 2009 (the Closing Date)).
Accordingly, the amount necessary to repurchase the EUR
5 billion issue amount is expected to be between EUR
5,605 million and EUR 5,963 million. See Recent
Developments Business Recent
Developments Repurchase of a Portion of the Core
Tier-1 Securities Held by the Dutch State. |
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ING intends to use the remaining proceeds of the Offering to
strengthen its capital position, including to offset the EUR
1.3 billion one-off pre-tax charge that will be taken in
the fourth quarter of 2009 as a result of the additional
payments to the Dutch State in the form of fee adjustments to
the Illiquid Assets
Back-Up
Facility as described under Recent
Developments Business Recent
Developments Transactions with the Dutch
State, and to allocate the remaining proceeds partially to
coupon payments due in December 2009 on its outstanding hybrid
securities, as required by |
S-10
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the EC in order not to be required to defer coupons on hybrid
securities. |
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Conditions to the Offering: |
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The Offering is being underwritten by the Underwriters based on
the Underwriting Agreement from which the Underwriters can
withdraw under certain circumstances. If any or all of the
conditions of the Offering are not met or waived by the
Representatives on behalf of the Underwriters prior to payment
for and delivery of the Rump Shares or if certain circumstances
occur prior to payment for and delivery of the Rump Shares, the
Representatives, on behalf of the Underwriters may, at their
discretion, terminate the Global Offering and their obligation
to subscribe for any Rump Shares, whereupon the Offering will be
cancelled and the Company will not receive the proceeds expected
to be generated by the Offering. See The
Offering Withdrawal of the Offering. |
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If the Offering is withdrawn, both the exercised and unexercised
Rights will be forfeited without compensation to their holders
and subscription for and allotments of New BDRs and New ADSs
that have been made will be disregarded. Any subscription
payments received by ING Groep N.V., the Subscription Agent, the
Paying Agent, the ADS Rights Agent or the Underwriters will be
returned without interest. Any such forfeiture of Rights will be
without prejudice to the validity of any settled trades in the
Rights. There will be no refund of any Tradable Rights purchased
in the market. All trades in Tradable Rights, New Shares and New
ADSs are at sole risk of the parties concerned. The
Underwriters, the Company, the Subscription Agent, the Listing
Agent, the ADS Rights Agent, the Paying Agent and Euronext
Amsterdam N.V. do not accept any responsibility or liability
with respect to any person as a result of the withdrawal of the
Offering or (the related) annulment of any transactions in
Tradable Rights or New Shares on Euronext Amsterdam, Euronext
Brussels, or in New ADSs on the NYSE. See Risk
Factors Risks Related to the Offering If
the Offering does not take place, our credit ratings and funding
costs could be adversely affected, and the price of ING shares
could drop sharply. In either case, the Rights could become
worthless. |
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Allotment: |
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Allotment of the New BDRs is expected to take place on
December 16, 2009, and the delivery by the Depositary of
New ADSs in respect of such New BDRs is expected to take place
on December 23, 2009. |
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Delivery, Payment and Certification: |
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Delivery of the New BDRs against payment of the BDR Subscription
Price or the Global Offering Price, as the case may be, and
payment for the New ADSs at the ADS Subscription Price, is
expected to take place on the Closing Date, or on such other
date as the Joint Global Coordinators and Joint Bookrunners may
determine. Delivery of the New ADSs is expected to take place on
or about December 23, 2009. Delivery against payment will
take place through the clearing systems of Euroclear and, with
respect to ADSs, through DTC or by direct registration on an
uncertificated basis the relevant holder is registered directly
with the Depositary. |
S-11
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International Securities Identification Numbers (ISIN): |
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Existing BDRs: NL0000303600 (Euronext Amsterdam and
Euronext Brussels)
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Existing ADSs: US4568371037 (NYSE)
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Tradable Rights: NL0009307941 (Euronext Amsterdam and
Euronext Brussels)
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CUSIPs: |
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Existing BDRs: N4578E413 (Euronext Amsterdam and
Euronext Brussels)
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Existing ADSs: 456837103 (NYSE)
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SEDOL: |
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Existing BDRs: 7154182 (Euronext Amsterdam and
Euronext Brussels)
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Existing ADSs: 2452643 (NYSE)
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Common Code: |
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Existing BDRs: 013208344 (Euronext Amsterdam and
Euronext Brussels)
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Existing ADSs: 010377292 (NYSE)
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Tradable Rights: 047074070 (Euronext Amsterdam and
Euronext Brussels)
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Ticker Symbols: |
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Existing BDRs: INGA (Euronext Amsterdam and
Euronext Brussels)
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Existing ADSs: ING (NYSE)
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Tradable Rights: INGRI (Euronext Amsterdam
and Euronext Brussels)
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For further information concerning the Offering, see The
Offering elsewhere in this prospectus supplement.
For discussion of the risks that you should consider in
connection with the Offering, see Risk Factors
elsewhere in this prospectus supplement and in the accompanying
prospectus.
S-12
RISK
FACTORS
Potential investors should carefully consider the specific
risk factors outlined below in addition to the other information
contained in or incorporated by reference into this prospectus
supplement before making a decision to acquire the ADS Rights,
Tradable Rights, the New Shares or New ADSs. Any of these risks
could have a material adverse effect on the business activities,
financial condition, results of operations and prospects of ING.
The market price of ING shares or Tradable Rights could decline
due to any of these risks, and investors could lose all or part
of their investments. Additional risks of which the Company is
not presently aware could also affect the business operations of
ING and have a material adverse effect on INGs business
activities, financial condition, results of operations and
prospects. In addition, the business of a multinational,
broad-based financial services firm such as ING is inherently
exposed to risks that only become apparent with the benefit of
hindsight. The sequence in which the risk factors are presented
below is not indicative of their likelihood of occurrence or the
potential magnitude of their financial consequences.
Risks
Related to the Financial Services Industry
Because
we are an integrated financial services company conducting
business on a global basis, our revenues and earnings are
affected by the volatility and strength of the economic,
business and capital markets environments specific to the
geographic regions in which we conduct business. The ongoing
turbulence and volatility of such factors have adversely
affected, and may continue to adversely affect, the
profitability of our insurance, banking and asset management
business.
Factors such as interest rates, securities prices, credit
(including liquidity) spreads, exchange rates, consumer
spending, business investment, real estate and private equity
valuations, government spending, inflation, the volatility and
strength of the capital markets, and terrorism all impact the
business and economic environment and, ultimately, the amount
and profitability of business we conduct in a specific
geographic region. For example, in an economic downturn, such as
the one that has affected world economies since mid-2007,
characterized by higher unemployment, lower family income, lower
corporate earnings, higher corporate and private debt defaults,
lower business investment and consumer spending, the demand for
banking and insurance products is adversely affected and our
reserves and provisions are likely to increase, resulting in
lower earnings. Securities prices, real estate valuations and
private equity valuations may be adversely impacted, and any
such losses would be realized through profit and loss and
shareholders equity. Some insurance products contain
minimum return or accumulation guarantees. If returns do not
meet or exceed the guarantee levels we may need to set up
additional reserves to fund these future guaranteed benefits. In
addition, we may experience an elevated incidence of claims and
lapses or surrenders of policies. Our policyholders may choose
to defer paying insurance premiums or stop paying insurance
premiums altogether. Similarly, a downturn in the equity markets
causes a reduction in commission income we earn from managing
portfolios for third parties, income generated from our own
proprietary portfolios, asset-based fee income on certain
insurance products, and our capital base. We also offer a number
of insurance and financial products that expose us to risks
associated with fluctuations in interest rates, securities
prices, corporate and private default rates, the value of real
estate assets, exchange rates and credit spreads. See also
Risks Related to the Group Interest rate
volatility may adversely affect our profitability below.
In case one or more of the factors mentioned above adversely
affects the profitability of our business this might also
result, among others, in the following:
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the unlocking of deferred acquisition costs impacting earnings;
and/or
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reserve inadequacies which could ultimately be realized through
profit and loss and shareholders equity; and/or
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the write down of tax assets impacting net results; and/or
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impairment expenses related to goodwill and other intangible
assets, impacting net results.
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Management believes that if ongoing market volatility adversely
impacts the performance of the reporting units Retail
Banking Central Europe and Insurance
Americas United States, compared with what was
assumed in the year-end 2008 goodwill impairment test, the book
value (including goodwill) of these reporting units may
S-13
exceed the related fair values, which would result in
impairments. See Intangible Assets under
Paragraph 9 of Note 2.1.3 to our 2008 consolidated
financial statements.
In 2008 and 2009, shareholders equity and our net result
were significantly impacted by the turmoil and the extreme
volatility in the worldwide financial markets. Further negative
developments in financial markets
and/or
economies may have a material adverse impact on
shareholders equity and net result in future periods,
including as a result of the potential consequences listed
above. We are currently recalibrating our economic capital
models to reflect the extreme market conditions experienced over
recent quarters in order to align them more closely with
regulatory measures. This may have a material impact on our
economic capital for credit risk. See Risks Related to the
Group Ongoing turbulence and volatility in the
financial markets have adversely affected us, and may continue
to do so.
Adverse
capital and credit market conditions may impact our ability to
access liquidity and capital, as well as the cost of credit and
capital.
The capital and credit markets have been experiencing extreme
volatility and disruption for more than two years. In the second
half of 2008, the volatility and disruption reached
unprecedented levels. In some cases, market developments have
resulted in restrictions on the availability of liquidity and
credit capacity for certain issuers.
We need liquidity in our
day-to-day
business activities to pay our operating expenses, interest on
our debt and dividends on our capital stock; maintain our
securities lending activities; and replace certain maturing
liabilities. The principal sources of our liquidity are deposit
funds, insurance premiums, annuity considerations, cash flow
from our investment portfolio and assets, consisting mainly of
cash or assets that are readily convertible into cash. Sources
of liquidity in normal markets also include a variety of short-
and long-term instruments, including repurchase agreements,
commercial paper, medium-and long-term debt, junior subordinated
debt securities, capital securities and stockholders
equity.
In the event current resources do not satisfy our needs, we may
have to seek additional financing. The availability of
additional financing will depend on a variety of factors such as
market conditions, the general availability of credit, the
volume of trading activities, the overall availability of credit
to the financial services industry, our credit ratings and
credit capacity, as well as the possibility that customers or
lenders could develop a negative perception of our long- or
short-term financial prospects. Similarly, our access to funds
may be limited if regulatory authorities or rating agencies take
negative actions against us. If our internal sources of
liquidity prove to be insufficient, there is a risk that
external funding sources might not be available, or available at
unfavorable terms.
Disruptions, uncertainty or volatility in the capital and credit
markets may also limit our access to capital required to operate
our business. Such market conditions may limit our ability to
raise additional capital to support business growth, or to
counter-balance the consequences of losses or increased
regulatory capital requirements. This could force us to
(1) delay raising capital, (2) reduce, cancel or
postpone payment of dividends on our shares, (3) reduce,
cancel or postpone interest payments on other securities,
(4) issue capital of different types or under different
terms than we would otherwise, or (5) incur a higher cost
of capital than in a more stable market environment. This would
have the potential to decrease both our profitability and our
financial flexibility. Our results of operations, financial
condition, cash flows and regulatory capital position could be
materially adversely affected by disruptions in the financial
markets.
In the course of 2008 and 2009, governments around the world,
including the Dutch government, implemented unprecedented
measures to provide assistance to financial institutions, in
certain cases requiring (indirect) influence on or changes to
governance and remuneration practices. In certain cases
governments nationalized companies or parts thereof. The
measures adopted in the Netherlands include both liquidity
provision and capital reinforcement, and a Dutch Credit
Guarantee Scheme. The liquidity and capital reinforcement
measures expired on October 10, 2009, while the Credit
Guarantee Scheme of the Netherlands is scheduled to run through
December 31, 2009 (see Recent
Developments Business Transactions with
the Dutch State). To date, we have been able to benefit
from these measures, but our participation in these measures has
resulted in certain material restrictions on us, including those
agreed to with the EC as part of our Restructuring Plan. See
Risks Related to the Group Our agreements with
the Dutch State impose certain restrictions regarding the
issuance or repurchase of our shares and the compensation of
certain senior management positions, Risks Related
to the Group The implementation of
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the Restructuring Plan and the divestments anticipated in
connection with that plan will significantly alter the size and
structure of the Group and involve significant costs and
uncertainties that could materially impact the Group and
Recent Developments Business
Recent Developments Insurance and other Divestments,
EC Agreement. The Restructuring Plan as well as any
potential future transactions with the Dutch State or any other
government, if any, or actions by such government regarding ING
could adversely impact the position or rights of shareholders,
bondholders, customers or creditors and our results, operations,
solvency, liquidity and governance.
In addition, we have built our liquidity risk framework on the
premise that our liquidity is most efficiently and effectively
managed by a centralized Group function. However, we are subject
to the jurisdiction of a variety of banking and insurance
regulatory bodies, some of which have proposed regulatory
changes that, if implemented, would hinder our ability to manage
our liquidity in such a centralized manner. Furthermore,
regulatory liquidity requirements in certain jurisdictions in
which we operate are generally becoming more stringent,
undermining our efforts to maintain this centralized management
of our liquidity. These developments may cause trapped pools of
liquidity, resulting in inefficiencies in the cost of managing
our liquidity, and hinder our efforts to integrate our balance
sheet, which is an essential element of our Back to Basics
program and our Restructuring Plan.
The
default of a major market participant could disrupt the
markets.
Within the financial services industry the default of any one
institution could lead to defaults by other institutions. The
failure of a sufficiently large and influential institution
could disrupt securities markets or clearance and settlement
systems in our markets. This could cause market declines or
volatility. Such a failure could lead to a chain of defaults
that could adversely affect us and our contract counterparties.
Concerns about, or a default by, one institution could lead to
significant liquidity problems, losses or defaults by other
institutions, as was the case after the bankruptcy of Lehman
Brothers, because the commercial and financial soundness of many
financial institutions may be closely related as a result of
their credit, trading, clearing or other relationships. Even the
perceived lack of creditworthiness of, or questions about, a
counterparty may lead to market-wide liquidity problems and
losses or defaults by us or by other institutions. This risk is
sometimes referred to as systemic risk and may
adversely affect financial intermediaries, such as clearing
agencies, clearing houses, banks, securities firms and exchanges
with whom we interact on a daily basis. Systemic risk could have
a material adverse effect on our ability to raise new funding
and on its business, financial condition, results of operations,
liquidity and/ or prospects. In addition, such a failure could
impact future product sales as a potential result of reduced
confidence in the financial services industry.
The way AIG suffered in the aftermath of the bankruptcy of
Lehman Brothers in September 2008 is an example of this type of
risk. Management believes that despite increased attention
recently, systemic risk to the markets in which we operate
continues to exist, and dislocations caused by the
interdependency of financial market participants continues to be
a potential source of material adverse changes to our business,
results of operations and financial condition.
Because
our life and non-life insurance and reinsurance businesses are
subject to losses from unforeseeable and/or catastrophic events,
which are inherently unpredictable, our actual claims amount may
exceed our established reserves or we may experience an abrupt
interruption of activities, each of which could result in lower
net results and have an adverse effect on our results of
operations.
In our life and non-life insurance and reinsurance businesses,
we are subject to losses from natural and man-made catastrophic
events. Such events include, without limitation, weather and
other natural catastrophes such as hurricanes, floods,
earthquakes and epidemics, as well as events such as terrorist
attacks.
The frequency and severity of such events, and the losses
associated with them, are inherently unpredictable and cannot
always be adequately reserved for. Furthermore, we are subject
to actuarial and underwriting risks such as, for instance,
mortality, longevity, morbidity, and adverse home claims
development which result from the pricing and acceptance of
insurance contracts. In accordance with industry practices,
modeling of natural catastrophes is performed and risk
mitigation measures are made. In case claims occur, reserves are
established based on estimates using actuarial projection
techniques. The process of estimating is based on information
available at the time the
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reserves are originally established and includes updates when
more information becomes available. Although we continually
review the adequacy of the established claim reserves, there can
be no assurances that our actual claims experience will not
exceed our estimated claim reserves. If actual claim amounts
exceed the estimated claim reserves, our earnings may be reduced
and our net results may be adversely affected. In addition,
because unforeseeable
and/or
catastrophic events can lead to an abrupt interruption of
activities, our banking and insurance operations may be subject
to losses resulting from such disruptions. Losses can relate to
property, financial assets, trading positions, insurance and
pension benefits to employees and also to key personnel. If our
business continuity plans are not able to be put into action or
do not take such events into account, losses may further
increase.
We
operate in highly regulated industries. There could be an
adverse change or increase in the financial services laws and/or
regulations governing our business.
We are subject to detailed banking, insurance, asset management
and other financial services laws and government regulation in
each of the jurisdictions in which we conduct business.
Regulatory agencies have broad administrative power over many
aspects of the financial services business, which may include
liquidity, capital adequacy and permitted investments, ethical
issues, money laundering, privacy, record keeping, and marketing
and selling practices. Banking, insurance and other financial
services laws, regulations and policies currently governing us
and our subsidiaries may also change at any time in ways which
have an adverse effect on our business, and it is difficult to
predict the timing or form of any future regulatory or
enforcement initiatives in respect thereof. Also, bank
regulators and other supervisory authorities in the EU, the US
and elsewhere continue to scrutinize payment processing and
other transactions under regulations governing such matters as
money-laundering, prohibited transactions with countries subject
to sanctions, and bribery or other anti-corruption measures.
Regulation is becoming increasingly more extensive and complex
and regulators are focusing increased scrutiny on the industries
in which we operate, often requiring additional Company
resources. These regulations can serve to limit our activities,
including through our net capital, customer protection and
market conduct requirements, and restrictions on businesses in
which we can operate or invest. If we fail to address, or appear
to fail to address, appropriately any of these matters, our
reputation could be harmed and we could be subject to additional
legal risk, which could, in turn, increase the size and number
of claims and damages asserted against us or subject us to
enforcement actions, fines and penalties.
In light of current conditions in the global financial markets
and the global economy, regulators have increased their focus on
the regulation of the financial services industry. Most of the
principal markets where we conduct our business have adopted, or
are currently considering, major legislative
and/or
regulatory initiatives in response to the financial crisis. In
particular, governmental and regulatory authorities in the
Netherlands, the United Kingdom, the United States and elsewhere
are implementing measures to increase regulatory control in
their respective financial markets and financial services
sectors, including in the areas of prudential rules, capital
requirements, executive compensation and financial reporting,
among others. For example, the EC is conducting a full scale
review of solvency margins and provisions for insurance
companies known as Solvency II. Each member state of
the EEA, including the Netherlands, is required to implement
Solvency II by October 31, 2012. The EC is also
considering increasing the capital requirements for banks. In
addition, the International Accounting Standards Board
(IASB) is considering changes to several IFRS
standards, including significant changes to the standard on
financial instruments (IAS 39) and to the standard on
pensions (IAS 19). These changes could have a material impact on
our reported results and financial condition.
Governments in the Netherlands and abroad have also intervened
on an unprecedented scale, responding to stresses experienced in
the global financial markets. Some of the measures adopted
subject us and other institutions for which they were designed
to additional restrictions, oversight or costs. For restrictions
related to the Core Tier-1 Securities and the Illiquid Assets
Back-Up
Facility (together, the Dutch State
Transactions), see Our agreements
with the Dutch State impose certain restrictions regarding the
issuance or repurchase of our shares and the compensation of
certain senior management positions. As a result of having
received state aid through the Dutch State Transactions, we were
required to submit our Restructuring Plan to the EC in
connection with obtaining final approval for the Dutch State
Transactions. See Risks Related to the Group
The implementation of the Restructuring Plan and the divestments
anticipated in connection with that plan will significantly
alter the size and structure of the Group and involve
significant costs and uncertainties that could materially impact
the Group. We
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cannot predict whether or when future legislative or regulatory
actions may be taken, or what impact, if any, actions taken to
date or in the future could have on our business, results of
operations and financial condition.
Despite our efforts to maintain effective compliance procedures
and to comply with applicable laws and regulations, there are a
number of risks in areas where applicable regulations may be
unclear, subject to multiple interpretation or under development
or may conflict with one another, where regulators revise their
previous guidance or courts overturn previous rulings, or we
fail to meet applicable standards. Regulators and other
authorities have the power to bring administrative or judicial
proceedings against us, which could result, amongst other
things, in suspension or revocation of our licenses, cease and
desist orders, fines, civil penalties, criminal penalties or
other disciplinary action which could materially harm our
results of operations and financial condition.
Risks
Related to the Group
Ongoing
turbulence and volatility in the financial markets have
adversely affected us, and may continue to do so.
Our results of operations are materially impacted by conditions
in the global capital markets and the economy generally. The
stress experienced in the global capital markets that started in
the second half of 2007 continued and substantially increased
throughout 2008 and, although market conditions have improved,
volatility continued in 2009, particularly the early part of the
year. The crisis in the mortgage market in the United States,
triggered by a serious deterioration of credit quality, led to a
revaluation of credit risks. These conditions have resulted in
greater volatility, widening of credit spreads and overall
shortage of liquidity and tightening of financial markets
throughout the world. In addition, prices for many types of
asset-backed securities (ABS) and other
structured products have significantly deteriorated. These
concerns have since expanded to include a broad range of fixed
income securities, including those rated investment grade, the
international credit and interbank money markets generally, and
a wide range of financial institutions and markets, asset
classes, such as public and private equity, and real estate
sectors. As a result, the market for fixed income instruments
has experienced decreased liquidity, increased price volatility,
credit downgrade events, and increased probability of default.
Securities that are less liquid are more difficult to value and
may be hard to dispose of. International equity markets have
also been experiencing heightened volatility and turmoil, with
issuers, including ourselves, that have exposure to the real
estate, mortgage, private equity and credit markets particularly
affected. These events and market upheavals, including extreme
levels of volatility, have had and may continue to have an
adverse effect on our revenues and results of operations, in
part because we have a large investment portfolio and extensive
real estate activities around the world. In addition, the
confidence of customers in financial institutions is being
tested. Consumer confidence in financial institutions may, for
example, decrease due to our or our competitors failure to
communicate to customers the terms of, and the benefits to
customers of, complex or high-fee financial products. Reduced
confidence could have an adverse effect on our revenues and
results of operations, including through an increase of lapses
or surrenders of policies and withdrawal of deposits. Because a
significant percentage of our customer deposit base is
originated via Internet banking, a loss of customer confidence
may result in a rapid withdrawal of deposits over the Internet.
As a result of the ongoing and unprecedented volatility in the
global financial markets in 2007, 2008 and, to a lesser extent,
the first nine months of 2009, we have incurred substantial
negative revaluations on our investment portfolio, which have
impacted our earnings and shareholders equity.
Furthermore, we have incurred impairments and other losses,
which have impacted our profit and loss accounts. Although we
believe that reserves for insurance liabilities are generally
adequate at the Group and business line level, inadequacies in
certain product areas have developed.
Such impacts have arisen primarily as a result of valuation
issues arising in connection with our investments in real estate
(both in and outside the US) and private equity, exposures to US
mortgage-related structured investment products, including
sub-prime
and Alt-A Residential and Commercial Mortgage-Backed Securities
(RMBS and CMBS,
respectively), Collateralized Debt Obligations
(CDOs) and Collateralized Loan Obligations
(CLOs), monoline insurer guarantees,
Structured Investment Vehicles (SIVs) and
other investments. In many cases, the markets for such
investments and instruments have been and remain highly
illiquid, and issues relating to counterparty credit ratings and
other factors have exacerbated pricing and valuation
uncertainties. Valuation of such investments and instruments is
a complex process involving the consideration of market
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transactions, pricing models, management judgment and other
factors, and is also impacted by external factors such as
underlying mortgage default rates, interest rates, rating agency
actions and property valuations. While we continue to monitor
our exposures in this area, in light of the ongoing market
environment and the resulting uncertainties concerning
valuations, there can be no assurances that we will not
experience further negative impacts to our shareholders
equity or profit and loss accounts from such assets in future
periods.
The
implementation of the Restructuring Plan and the divestments
anticipated in connection with that plan will significantly
alter the size and structure of the Group and involve
significant costs and uncertainties that could materially impact
the Group.
As described under Recent Developments
Business Transactions with the Dutch State, in
November 2008 the Dutch State purchased the Core Tier-1
Securities, and in the first quarter of 2009 we and the Dutch
State entered into the Illiquid Assets
Back-Up
Facility (the Illiquid Assets
Back-Up
Facility) pursuant to which we transferred to the
Dutch State the economic risks and rewards of 80% of the
approximately EUR 30 billion par value Alt-A
residential mortgage-backed securities portfolios of ING Direct
US and Insurance Americas.
As a result of having received state aid through the Dutch State
Transactions, we were required to submit a restructuring plan
(the Restructuring Plan) to the EC in
connection with obtaining final approval for the Dutch State
Transactions under the EC state aid rules. On October 26,
2009, we announced our Restructuring Plan, pursuant to which we
are required to divest by the end of 2013 all of our insurance
business, including the investment management business, as well
as ING Direct US, which operates our direct banking business in
the United States, and certain portions of our retail banking
business in the Netherlands. The ECs approval of the
Restructuring Plan was issued on November 18, 2009. In
addition, in order to obtain approval of the Restructuring Plan,
we committed to make a series of additional payments to the
Dutch State, corresponding to adjustments to the net fees
payable under the Illiquid Assets
Back-Up
Facility. These payments will significantly increase the cost of
the Illiquid Assets
Back-Up
Facility to us and will result in a one-time, pre-tax charge of
EUR 1.3 billion to be recorded in the fourth quarter
of 2009 which will in turn adversely affect our results of
operations and financial condition. For more information about
our Restructuring Plan and the additional payments, see
Recent Developments Business
Recent Developments Insurance and other Divestments,
EC Agreement.
In connection with the Restructuring Plan, we have also agreed
to not be a price leader in certain EU markets with respect to
certain retail, private and direct banking products and to
refrain from acquisitions of financial institutions and of
businesses that would delay our repurchase of the Core Tier-1
Securities not purchased with the proceeds of the Offering.
Those limitations may last until November 18, 2012 and
could adversely affect our ability to maintain or grow market
share in key markets as well as our results of operations. See
Risks Related to the Group The limitations
agreed with the EC on our ability to compete and to make
acquisitions or call certain debt instruments could materially
impact the Group.
We have announced that we will consider making our required
divestments by means of initial public offerings, sales,
spin-offs, combinations of the foregoing or other means. There
can be no assurance that we will be able to implement the
Restructuring Plan successfully or complete the announced
divestments on favorable terms or at all, particularly in light
of both the plans 2013 deadline and expected challenging
market conditions in which other financial institutions may
place similar assets for sale during the same time period and
may seek to dispose of assets in the same manner. Any failure to
successfully implement the Restructuring Plan may result in EC
enforcement actions and may have a material adverse impact on
the assets, profitability, capital adequacy and business
operations of the Group. Moreover, in connection with the
implementation of the Restructuring Plan, including any proposed
divestments, we or potential buyers may need to obtain various
approvals, including of shareholders, works councils and
regulatory and competition authorities, and we and potential
buyers may face difficulties in obtaining these approvals in a
timely manner or at all. In addition, the implementation of the
Restructuring Plan may strain relations with our employees, and
specific proposals in connection with the implementation may be
opposed by labor unions or works councils. Furthermore,
following the announcement of the Restructuring Plan, several of
our subsidiaries have been downgraded or put on credit watch by
rating agencies. See Risks Related to the
Group Ratings are important to our business for a
number of reasons. Among these are the issuance of debt, the
sale of certain products and the risk weighting of bank and
insurance assets. Downgrades could have an adverse impact on our
operations and net results.
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Other factors that may impede our ability to implement the
Restructuring Plan successfully include an inability of
prospective purchasers to obtain funding due to the
deterioration of the credit markets, insufficient access to
equity capital markets, a general unwillingness of prospective
purchasers to commit capital in the current market environment,
antitrust concerns, any adverse changes in market interest rates
or other borrowing costs and any declines in the value of the
assets to be divested. Although equity capital markets have
improved over the past few months, it may also be difficult to
divest all or part of our insurance or investment management
business through one or more initial public offerings. There can
also be no assurance that we could obtain favorable pricing for
a sale of all or part of our insurance or investment management
business in the public markets or succeed in turning the
relevant subsidiaries into viable standalone businesses. A
divestment may also release less regulatory capital than we
would otherwise expect. Any failure to complete the divestments
on favorable terms, whether by sale, through an initial public
offering, a spin-off or otherwise, could have a material adverse
impact on our assets, profitability, capital adequacy and
business operations. If we are unable to complete the announced
divestments in a timely manner, we would be required to find
alternative ways to reduce our leverage, and we could be subject
to enforcement actions or proceedings by the EC. In particular,
if we do not succeed in completing divestitures contemplated by
the Restructuring Plan within the timelines set out therein, the
EC may request the Dutch State to appoint a divestiture trustee
with a mandate to complete the relevant divestiture with no
minimum price.
In addition, it is possible that a third party will challenge
the EC decision to approve the Restructuring Plan in the
European Courts. ING does not believe that any such challenge
would be likely to succeed, but if it were to succeed the EC
would need to reconsider its decision which may have an adverse
impact on our results of operations and financial condition.
The implementation of the divestments announced in connection
with the Restructuring Plan, including the separation of the
insurance and investment management operations from the banking
operations, will also give rise to additional costs related to
the legal and financial assessment of potential transactions.
The implementation may also result in increased operating and
administrative costs. The process of completing the steps
contemplated by the Restructuring Plan may be disruptive to our
business and the businesses we are trying to sell and may cause
an interruption or reduction of our business and the businesses
to be sold as a result of, among other factors, the loss of key
employees or customers and the diversion of managements
attention from our
day-to-day
business as a result of the need to manage the divestment
process as well as any disruptions or difficulties that arise
during the course of the divestment process. We may face other
difficulties in implementing the Restructuring Plan and
completing the planned divestments. For instance, the
divestments, individually or in the aggregate, may trigger
provisions in various contractual obligations, including debt
instruments, which could require us to modify, restructure or
refinance the related obligations. We may not be able to effect
any such restructuring or refinancing on similar terms as the
current contractual obligations or at all. In addition, the
announced divestments could be the subject of challenges or
litigation, and a court could delay any of the divestment
transactions or prohibit them from occurring on their proposed
terms, or from occurring at all, which could adversely affect
our ability to use the funds of the divestments to repurchase
the Core Tier-1 Securities, reduce or eliminate our double
leverage and strengthen our capital ratios as anticipated and
eliminate the constraints on competition imposed by the EC.
The
limitations agreed with the EC on our ability to compete and to
make acquisitions or call certain debt instruments could
materially impact the Group.
As part of our Restructuring Plan, we have undertaken with the
EC to accept certain limitations on our ability to compete in
certain retail, private and direct banking markets in the
European Union and on our ability to acquire financial
institutions and businesses that would delay our repurchase of
the Core Tier-1 Securities held by the Dutch State. These
restrictions apply until the earlier of:
(1) November 18, 2012, and (2) the date upon
which we repurchase all remaining Core Tier-1 Securities held by
the Dutch State. We have also agreed to limitations on our
ability to call Tier-2 capital and Tier-1 hybrid debt
instruments. See Recent Developments
Business Recent Developments Insurance
and other Divestments, EC Agreement. If the EC does not
approve the calling of Tier-2 capital and Tier-1 hybrid debt
instruments in the future, this may have adverse consequences
for us, result in additional payments on these instruments and
limit our ability to seek refinancing on more favorable terms.
The limitations described above will impose significant
restrictions on our banking business operations and on our
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ability to take advantage of market conditions and growth
opportunities. Such restrictions could adversely affect our
ability to maintain or grow market share in key markets, as well
as our results of operations.
Upon
the implementation of the Restructuring Plan, we will be less
diversified and may experience competitive and other
disadvantages.
Following completion of the planned divestments under the
Restructuring Plan, we expect to become a significantly smaller,
regional financial institution focused on retail, direct and
commercial banking in the Benelux region and certain other parts
of Europe, as well as selected markets outside Europe. See
Recent Developments Business Group
Strategy. Although we will remain focused on banking
operations, we may become a smaller bank than that represented
by our current banking operations. In the highly competitive
Benelux market and the other markets in which we operate, our
competitors may be larger, more diversified and better
capitalized and have greater geographical reach than us, which
could have a material adverse effect on our ability to compete,
as well as on our profitability. The divested businesses may
also compete with the retained businesses, on their own or as
part of the purchasers enlarged businesses. In addition,
the restrictions on our ability to be a price leader and make
acquisitions and on our compensation policies could further
hinder our capacity to compete with competitors not burdened
with such restrictions, which could have a material adverse
effect on our results of operations. There can be no assurance
that the implementation of the Restructuring Plan will not have
a material adverse effect on the market share, business and
growth opportunities and results of operations for our remaining
core banking businesses.
Our
Back to Basics program and our Restructuring Plan may not yield
intended reductions in costs, risk and leverage.
In April 2009, we announced our Back to Basics program to reduce
our costs, risk and leverage. In addition to restructuring our
banking and insurance businesses so that they are operated
separately under the ING umbrella, the Back to Basics program
includes cost-reduction measures, as well as plans for
divestments. On October 26, 2009, we announced that we had
reached an agreement with the EC on our Restructuring Plan,
pursuant to which we announced further divestments. See
Recent Developments Business
Recent Developments Insurance and Other Divestments,
EC Agreement. Projected cost savings and impact on our
risk profile and capital associated with these initiatives are
subject to a variety of risks, including:
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contemplated costs to effect these initiatives may exceed
estimates;
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divestments planned in connection with the Restructuring Plan
may not yield the level of net proceeds expected, as described
under Risks Related to the Group The
implementation of the Restructuring Plan and the divestments
anticipated in connection with that plan will significantly
alter the size and structure of the Group and involve
significant costs and uncertainties that could materially impact
the Group;
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initiatives we are contemplating may require consultation with
various regulators as well as employees and labor
representatives, and such consultations may influence the
timing, costs and extent of expected savings;
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the loss of skilled employees in connection with the
initiatives; and
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projected savings contemplated under the Back to Basics program
may fall short of targets.
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While we have begun and expect to continue to implement these
strategies, there can be no assurance that we will be able to do
so successfully or that we will realize the projected benefits
of these and other restructuring and cost saving initiatives. If
we are unable to realize these anticipated cost reductions, our
business may be adversely affected. Moreover, our continued
implementation of restructuring and cost saving initiatives may
have a material adverse effect on our business, financial
condition, results of operations and cash flows.
Because
we operate in highly competitive markets, including our home
market, we may not be able to increase or maintain our market
share, which may have an adverse effect on our results of
operations.
There is substantial competition in the Netherlands and the
other countries in which we do business for the types of
insurance, commercial banking, investment banking, asset
management and other products and services we
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provide. Customer loyalty and retention can be influenced by a
number of factors, including relative service levels, the prices
and attributes of products and services, and actions taken by
competitors. If we are not able to match or compete with the
products and services offered by our competitors, it could
adversely impact our ability to maintain or further increase our
market share, which would adversely affect our results of
operations. Such competition is most pronounced in our more
mature markets of the Netherlands, Belgium, the Rest of Western
Europe, the United States, Canada and Australia. In recent
years, however, competition in emerging markets, such as Latin
America, Asia and Central and Eastern Europe, has also increased
as large insurance and banking industry participants from more
developed countries have sought to establish themselves in
markets which are perceived to offer higher growth potential,
and as local institutions have become more sophisticated and
competitive and have sought alliances, mergers or strategic
relationships with our competitors. The Netherlands and the
United States are our largest markets for both our banking and
insurance operations. Our main competitors in the banking sector
in the Netherlands are ABN AMRO Bank/Fortis and Rabobank. Our
main competitors in the insurance sector in the Netherlands are
Achmea, ASR and Aegon. Our main competitors in the United States
are insurance companies such as Lincoln National, Hartford,
Aegon Americas, AXA, Met Life, Prudential, Nationwide and
Principal Financial. Increasing competition in these or any of
our other markets may significantly impact our results if we are
unable to match the products and services offered by our
competitors. Over time, certain sectors of the financial
services industry have become more concentrated, as institutions
involved in a broad range of financial services have been
acquired by or merged into other firms or have declared
bankruptcy. In 2008 and 2009, this trend accelerated
considerably, as several major financial institutions
consolidated, were forced to merge or received substantial
government assistance, and this trend may continue in light of
the ECs scrutiny of state aid transactions. These
developments could result in our competitors gaining greater
access to capital and liquidity, expanding their ranges of
products and services, or gaining geographic diversity. We may
experience pricing pressures as a result of these factors in the
event that some of our competitors seek to increase market share
by reducing prices. In addition, under the Restructuring Plan we
have agreed to certain restrictions imposed by the EC, including
with respect to our price leadership in EU banking markets and
our ability to make acquisitions of financial institutions and
other businesses. See Recent Developments
Business Recent Developments Insurance
and other Divestments, EC Agreement and
The limitations agreed with the EC on our
ability to compete and to make acquisitions or call certain debt
instruments could materially impact the Group.
Our
agreements with the Dutch State impose certain restrictions
regarding the issuance or repurchase of our shares and the
compensation of certain senior management
positions.
For so long as the Dutch State holds at least 25% of the Core
Tier-1 Securities, issued by us on November 12, 2008, for
so long as the Illiquid Assets
Back-Up
Facility is in place, or for so long as any of the government
guaranteed senior unsecured bonds issued by ING Bank N.V. on
January 30, 2009, February 20, 2009 and March 12,
2009 under the Credit Guarantee Scheme of the Netherlands (the
Government Guaranteed Bonds) are outstanding,
we are prohibited from issuing or repurchasing any of our own
shares (other than as part of regular hedging operations and the
issuance of shares according to employment schemes) without the
consent of the Dutch States nominees on the Supervisory
Board (see below). In addition, under the terms of the Core
Tier-1 Securities and Illiquid Assets
Back-Up
Facility, we have agreed to institute certain restrictions on
the compensation of the members of the Executive Board and
senior management, including incentives or performance-based
compensation. These restrictions could hinder or prevent us from
attracting or retaining the most qualified management with the
talent and experience to manage our business effectively. In
connection with these transactions, the Dutch State was granted
the right to nominate two candidates for appointment to the
Supervisory Board. The Dutch States nominees have veto
rights over certain material transactions. For more information
on our transactions with the Dutch State, see Recent
Developments Business Transactions with
the Dutch State below. Our agreements with the Dutch State
have also led to certain restrictions imposed by the EC as part
of the Restructuring Plan, including with respect to our price
leadership in EU banking markets and our ability to make
acquisitions of financial institutions and other businesses. See
Risks Related to the Group The limitations
agreed with the EC on our ability to compete and to make
acquisitions or call certain debt instruments could materially
impact the Group.
S-21
Because
we do business with many counterparties, the inability of these
counterparties to meet their financial obligations could have a
material adverse effect on our results of
operations.
General
Third-parties that owe us money, securities or other assets may
not pay or perform under their obligations. These parties
include the issuers whose securities we hold, borrowers under
loans originated, customers, trading counterparties,
counterparties under swaps, credit default and other derivative
contracts, clearing agents, exchanges, clearing house and other
financial intermediaries. Defaults by one or more of these
parties on their obligations to us due to bankruptcy, lack of
liquidity, downturns in the economy or real estate values,
operational failure, etc., or even rumors about potential
defaults by one or more of these parties or regarding the
financial services industry generally, could lead to losses for
us, and defaults by other institutions. In light of the
significant constraints on liquidity and high cost of funds in
the interbank lending market, which arose in 2008 and early
2009, particularly following the collapse of Lehman Brothers in
September 2008, and given the high level of interdependence
between financial institutions, we are and will continue to be
subject to the risk of deterioration of the commercial and
financial soundness, or perceived soundness, of other financial
services institutions. This is particularly relevant to our
franchise as an important and large counterparty in equity,
fixed-income and foreign exchange markets, including related
derivatives, which exposes it to concentration risk.
We routinely execute a high volume of transactions with
counterparties in the financial services industry, including
brokers and dealers, commercial banks, investment banks, mutual
and hedge funds, insurance companies and other institutional
clients, resulting in large daily settlement amounts and
significant credit exposure. As a result, we face concentration
risk with respect to specific counterparties and customers. We
are exposed to increased counterparty risk as a result of recent
financial institution failures and weakness and will continue to
be exposed to the risk of loss if counterparty financial
institutions fail or are otherwise unable to meet their
obligations. A default by, or even concerns about the
creditworthiness of, one or more financial services institutions
could therefore lead to further significant systemic liquidity
problems, or losses or defaults by other financial institutions.
With respect to secured transactions, our credit risk may be
exacerbated when the collateral held by us cannot be realized,
or is liquidated at prices not sufficient to recover the full
amount of the loan or derivative exposure due us. We also have
exposure to a number of financial institutions in the form of
unsecured debt instruments, derivative transactions and equity
investments. For example, we hold certain hybrid regulatory
capital instruments issued by financial institutions which
permit the issuer to defer coupon payments on the occurrence of
certain events or at their option. The EC has indicated that, in
certain circumstances, it may require these financial
institutions to defer payment. If this were to happen, we expect
that such instruments may experience ratings downgrades
and/or a
drop in value and we may have to treat them as impaired, which
could result in significant losses. There is no assurance that
losses on, or impairments to the carrying value of, these assets
would not materially and adversely affect our business or
results of operations.
In addition, we are subject to the risk that our rights against
third parties may not be enforceable in all circumstances. The
deterioration or perceived deterioration in the credit quality
of third parties whose securities or obligations we hold could
result in losses and/ or adversely affect our ability to
rehypothecate or otherwise use those securities or obligations
for liquidity purposes. A significant downgrade in the credit
ratings of our counterparties could also have a negative impact
on our income and risk weighting, leading to increased capital
requirements. While in many cases we are permitted to require
additional collateral from counterparties that experience
financial difficulty, disputes may arise as to the amount of
collateral we are entitled to receive and the value of pledged
assets. Our credit risk may also be exacerbated when the
collateral we hold cannot be realized or is liquidated at prices
not sufficient to recover the full amount of the loan or
derivative exposure that is due to us, which is most likely to
occur during periods of illiquidity and depressed asset
valuations, such as those currently experienced. The termination
of contracts and the foreclosure on collateral may subject us to
claims for the improper exercise of its rights. Bankruptcies,
downgrades and disputes with counterparties as to the valuation
of collateral tend to increase in times of market stress and
illiquidity.
Any of these developments or losses could materially and
adversely affect our business, financial condition, results of
operations, liquidity and/ or prospects.
S-22
Reinsurers
Our insurance operations have bought protection for risks that
exceed certain risk tolerance levels set for both our life and
non-life businesses. This protection is bought through
reinsurance arrangements in order to reduce possible losses.
Because in most cases we must pay the policyholders first, and
then collect from the reinsurer, we are subject to credit risk
with respect to each reinsurer for all such amounts. As a
percentage of our (potential) reinsurance receivables as of
June 30, 2009, the greatest exposure after collateral to an
individual reinsurer was approximately 33%, approximately 37%
related to four other reinsurers and the remainder of the
reinsurance receivables balance related to various other
reinsurers. The inability or unwillingness of any one of these
reinsurers to meet its financial obligations to us, or the
insolvency of our reinsurers, could have a material adverse
effect on our net results and our financial results.
Current
market conditions have increased the risk of loans being
impaired. We are exposed to declining property values on the
collateral supporting residential and commercial real estate
lending.
We are exposed to the risk that our borrowers may not repay
their loans according to their contractual terms and that the
collateral securing the payment of these loans may be
insufficient. We may continue to see adverse changes in the
credit quality of our borrowers and counterparties, for example
as a result of their inability to refinance their indebtedness,
with increasing delinquencies, defaults and insolvencies across
a range of sectors. This trend has led and may lead to further
impairment charges on loans and other assets, higher costs and
additions to loan loss provisions. The volume of impaired loans
may continue if unfavorable economic conditions persist.
Furthermore, a significant increase in the size of our provision
for loan losses could have a material adverse effect on our
financial position and results of operations. Due to worsening
economic conditions in the past two years, we have experienced
an increase of impaired loans.
The fall of commercial and residential real estate prices and
lack of market liquidity during the past two years has had an
adverse effect on the value of the collateral we hold. Economic
and other factors could lead to further contraction in the
residential mortgage and commercial lending market and to
further decreases in residential and commercial property prices
which could generate substantial increases in impairment losses.
Interest
rate volatility may adversely affect our
profitability.
Changes in prevailing interest rates may negatively affect our
business including the level of net interest revenue we earn,
and for our banking business the levels of deposits and the
demand for loans. In a period of changing interest rates,
interest expense may increase at different rates than the
interest earned on assets. Accordingly, changes in interest
rates could decrease net interest revenue. Changes in the
interest rates may negatively affect the value of our assets and
our ability to realize gains or avoid losses from the sale of
those assets, all of which also ultimately affect earnings. In
addition, an increase in interest rates may decrease the demand
for loans.
In addition, during periods of declining interest rates, life
insurance and annuity products may be relatively more attractive
to consumers, resulting in increased premium payments on
products with flexible premium features, and a higher percentage
of insurance policies remaining in force from
year-to-year,
creating asset liability duration mismatches. A decrease in
interest rates may also require an addition to provisions for
guarantees included in life policies, as the guarantees become
more valuable to policy holders. During a low interest rate
period, our investment earnings may be lower because the
interest earnings on our fixed income investments will likely
have declined in parallel with market interest rates, which
would also cause unrealized losses on our assets recorded at
fair value under IFRS-EU. Declining interest rates may also
affect the results of our reserve adequacy testing which may in
turn result in reserve strengthening. Reserves for variable
annuity guarantees have been inadequate since December 31,
2008. Lower interest rates would result in further inadequacies
at the US level, though reserves remain adequate at the Group
level. In addition, mortgages and fixed maturity securities in
our investment portfolios will be more likely to be prepaid or
redeemed as borrowers seek to borrow at lower interest rates.
Consequently, we may be required to reinvest the proceeds in
securities bearing lower interest rates. Accordingly, during
periods of declining interest rates, our profitability may
suffer as the result of a decrease in the spread between
interest rates charged to policyholders and returns on our
investment portfolios.
S-23
Conversely, in periods of rapidly increasing interest rates,
policy loans, and withdrawals and surrenders of life insurance
policies and fixed annuity contracts may increase as
policyholders choose to forego insurance protection and seek
higher investment returns. Obtaining cash to satisfy these
obligations may require us to liquidate fixed maturity
investments at a time when market prices for those assets are
depressed because of increases in interest rates. This may
result in realized investment losses. Regardless of whether we
realize an investment loss, these cash payments would result in
a decrease in total invested assets, and may decrease our net
income. Premature withdrawals may also cause us to accelerate
amortization of deferred policy acquisition costs, which would
also reduce our net income.
We may
incur losses due to failures of banks falling under the scope of
state compensation schemes.
In the Netherlands and other jurisdictions deposit guarantee
schemes and similar funds (Compensation
Schemes) have been implemented from which compensation
may become payable to customers of financial services firms in
the event the financial service firm is unable to pay, or
unlikely to pay, claims against it. In many jurisdictions in
which we operate, these Compensation Schemes are funded,
directly or indirectly, by financial services firms which
operate
and/or are
licensed in the relevant jurisdiction. As a result of the
increased number of bank failures, in particular since the fall
of 2008, we expect that levies in the industry will continue to
rise as a result of the Compensation Schemes. In particular, we
are a participant in the Dutch Deposit Guarantee Scheme, which
guarantees an amount of EUR 100,000 per person per bank
(regardless of the number of accounts held). The costs involved
with making compensation payments under the Dutch Deposit
Guarantee Scheme are allocated among the participating banks by
the Dutch Central Bank, De Nederlandsche Bank N.V. (the
DNB), based on an allocation key related to
their market shares with respect to the deposits protected by
the Dutch Deposit Guarantee Schemes. Given our size we may incur
significant compensation payments to be made under the Dutch
Deposit Guarantee Scheme, which we may be unable to recover from
the bankrupt estate. The ultimate costs to the industry of
payments which may become due under the Compensation Schemes,
remains uncertain although they may be significant and these and
the associated costs to us may have a material adverse effect on
our results of operations and financial condition. As a result
of the recent failure of DSB Bank N.V. in the Netherlands, we
expect to take a provision which may be significant, as a result
of liabilities under the Dutch Deposit Guarantee Scheme in the
fourth quarter of 2009.
We may
be unable to manage our risks successfully through
derivatives.
We employ various economic hedging strategies with the objective
of mitigating the market risks that are inherent in our business
and operations. These risks include currency fluctuations,
changes in the fair value of our investments, the impact of
interest rate, equity markets and credit spread changes and
changes in mortality and longevity. We seek to control these
risks by, among other things, entering into a number of
derivative instruments, such as swaps, options, futures and
forward contracts including from time to time macro hedges for
parts of our business.
Developing an effective strategy for dealing with these risks is
complex, and no strategy can completely insulate us from risks
associated with those fluctuations. Our hedging strategies also
rely on assumptions and projections regarding our assets,
general market factors and the credit worthiness of our
counterparties that may prove to be incorrect or prove to be
inadequate. Accordingly, our hedging activities may not have the
desired beneficial impact on our results of operations or
financial condition. Poorly designed strategies or improperly
executed transactions could actually increase our risks and
losses. If we terminate a hedging arrangement, we may also be
required to pay additional costs, such as transaction fees or
breakage costs. There have been periods in the past, and it is
likely that there will be periods in the future, during which we
have incurred or may incur losses on transactions, perhaps
significant, after taking into account our hedging strategies.
Further, the nature and timing of our hedging transactions could
actually increase our risk and losses. In addition, hedging
strategies involve transaction costs and other costs. Our
hedging strategies and the derivatives that we use and may use
may not adequately mitigate or offset the risk of interest rate
volatility, and our hedging transactions may result in losses.
S-24
Because
we use assumptions about factors to determine the insurance
provisions, deferred acquisition costs (DAC) and
value of business added (VOBA), the use of different
assumptions about these factors may have an adverse impact on
our results of operations.
The establishment of insurance provisions, including the impact
of minimum guarantees which are contained within certain
variable annuity products, the adequacy test performed on the
provisions for life policies and the establishment of DAC and
VOBA are inherently uncertain processes involving assumptions
about factors such as court decisions, changes in laws, social,
economic and demographic trends, inflation, investment returns,
policyholder behavior (e.g., lapses, persistency, etc.) and
other factors, and, in the life insurance business, assumptions
concerning mortality, longevity and morbidity trends.
The use of different assumptions about these factors could have
a material effect on insurance provisions and underwriting
expense. Changes in assumptions may lead to changes in the
insurance provisions over time. Furthermore, some of these
assumptions can be volatile.
Because
we use assumptions to model client behavior for the purpose of
our market risk calculations, the difference between the
realization and the assumptions may have an adverse impact on
the risk figures and future results.
We use assumptions in order to model client behavior for the
risk calculations in our banking and insurance books.
Assumptions are used to determine insurance liabilities, the
price sensitivity of savings and current accounts and to
estimate the embedded optional risk in the mortgage and
investment portfolios. The realization or use of different
assumptions to determine the client behavior could have material
adverse effect on the calculated risk figures and ultimately
future results.
Our
risk management policies and guidelines may prove inadequate for
the risks we face.
The methods we use to manage, estimate and measure risk are
partly based on historic market behavior. The methods may,
therefore, prove to be inadequate for predicting future risk
exposure, which may be significantly greater than what is
suggested by historic experience. For instance, these methods
did not predict the losses seen in the stressed conditions in
recent periods, and may also not adequately allow prediction of
circumstances arising due to the government interventions and
stimulus packages, which increase the difficulty of evaluating
risks. Other methods for risk management are based on evaluation
of information regarding markets, customers or other information
that is publicly known or otherwise available to us. Such
information may not always be correct, updated or correctly
evaluated.
We may
incur further liabilities in respect of our defined benefit
retirement plans if the value of plan assets is not sufficient
to cover potential obligations.
ING Group companies operate various defined benefit retirement
plans covering a significant number of our employees. The
liability recognized in our consolidated balance sheet in
respect of our defined benefit plans is the present value of the
defined benefit obligations at the balance sheet date, less the
fair value of each plans assets, together with adjustments
for unrecognized actuarial gains and losses and unrecognized
past service costs. We determine our defined benefit plan
obligations based on internal and external actuarial models and
calculations using the projected unit credit method. Inherent in
these actuarial models are assumptions including discount rates,
rates of increase in future salary and benefit levels, mortality
rates, trend rates in health care costs, consumer price index,
and the expected return on plan assets. These assumptions are
based on available market data and the historical performance of
plan assets, and are updated annually. Nevertheless, the
actuarial assumptions may differ significantly from actual
results due to changes in market conditions, economic and
mortality trends and other assumptions. Any changes in these
assumptions could have a significant impact on our present and
future liabilities to and costs associated with our defined
benefit retirement plans.
We are
subject to a variety of regulatory risks as a result of our
operations in less developed markets.
In the less developed markets in which we operate, judiciary and
dispute resolution systems may be less developed. As a result in
case of a breach of contract we may have difficulties in making
and enforcing claims against
S-25
contractual counterparties and, if claims are made against us,
we might encounter difficulties in mounting a defense against
such allegations. If we become party to legal proceedings in a
market with an insufficiently developed judiciary system, it
could have an adverse effect on our operations and net result.
In addition, as a result of our operations in less developed
markets, we are subject to risks of possible nationalization,
expropriation, price controls, exchange controls and other
restrictive government actions, as well as the outbreak of
hostilities, in these markets. In addition, the current economic
environment in certain of the less developed countries in which
we operate may increase the likelihood for regulatory
initiatives to protect homeowners from foreclosures. Any such
regulatory initiative could have an adverse impact on our
ability to protect our economic interest in the event of
defaults on residential mortgages.
Because
we are a financial services company and we are continually
developing new financial products, we might be faced with claims
that could have an adverse effect on our operations and net
result if clients expectations are not met.
When new financial products are brought to the market,
communication and marketing aims to present a balanced view of
the product (however there is a focus on potential advantages
for the customers). Whilst we engage in a due diligence process
when we develop products, if the products do not generate the
expected profit, or result in a loss, or otherwise do not meet
expectations, customers may file claims against us. Such claims
could have an adverse effect on our operations and net result.
Ratings
are important to our business for a number of reasons. Among
these are the issuance of debt, the sale of certain products and
the risk weighting of bank and insurance assets. Downgrades
could have an adverse impact on our operations and net
results.
We have credit ratings from Standard & Poors
Ratings Service (Standard &
Poors), a division of the McGraw Hill Companies,
Moodys Investor Service (Moodys)
and Fitch Ratings. Each of the rating agencies reviews its
ratings and rating methodologies on a recurring basis and may
decide on a downgrade at any time. In the event of a downgrade
the cost of issuing debt will increase, having an adverse effect
on net results. Certain institutional investors may also be
obliged to withdraw their deposits from ING following a
downgrade, which could have an adverse effect on our liquidity.
In addition, in the event of certain downgrades the Underwriters
may be able to withdraw from the Underwriting Agreement (as
defined below) entered into in connection with the Offering. See
Underwriting and Risks Related to the
Offering If the Offering does not take place, our
credit ratings and funding costs could be adversely affected,
and the price of ING shares could drop sharply. In either case,
the Rights could become worthless. Following the
announcement of the Restructuring Plan, several of our
subsidiaries have been downgraded or put on credit watch by
rating agencies.
Claims paying ability, at the Group or subsidiary level, and
financial strength ratings are factors in establishing the
competitive position of insurers. A rating downgrade could
elevate lapses or surrenders of policies requiring cash
payments, which might force us to sell assets at a price that
may result in realized investment losses. Among others, total
invested assets decreases and deferred acquisition costs might
need to be accelerated, adversely impacting earnings. A
downgrade may adversely impact relationships with distributors
of our products and services and customers, which may affect new
sales and our competitive position.
Furthermore, ING Banks assets are risk weighted.
Downgrades of these assets could result in a higher risk
weighting which may result in higher capital requirements. This
may impact net earnings and the return on capital, and may have
an adverse impact on our competitive position.
Capital requirements for INGs insurance businesses in a
number of jurisdictions, such as the US and the EU, are based on
a risk-based capital model. A downgrade of assets in these
markets could result in a higher risk weighting which may lead
to higher capital requirements.
Our
business may be negatively affected by a sustained increase in
inflation.
A sustained increase in the inflation rate in our principal
markets would have multiple impacts on us and may negatively
affect our business, solvency position and results of
operations. For example, a sustained increase in the
S-26
inflation rate may result in an increase in market interest
rates which may (1) decrease the value of certain fixed
income securities we hold in our investment portfolios resulting
in reduced levels of unrealized capital gains available to us
which could negatively impact our solvency position and net
income, (2) result in increased surrenders of certain
life & savings products, particularly, those with
fixed rates below market rates, and (3) require us, as an
issuer of securities, to pay higher interest rates on debt
securities we issue in the financial markets from time to time
to finance our operations which would increase our interest
expenses and reduce our results of operations. A significant and
sustained increase in inflation has historically also been
associated with decreased prices for equity securities and
sluggish performance of equity markets generally. A sustained
decline in equity markets may (1) result in impairment
charges to equity securities that we hold in our investment
portfolios and reduced levels of unrealized capital gains
available to us which would reduce our net income and negatively
impact our solvency position, (2) negatively impact
performance, future sales and surrenders of our unit-linked
products where underlying investments are often allocated to
equity funds, and (3) negatively impact the ability of our
asset management subsidiaries to retain and attract assets under
management, as well as the value of assets they do manage, which
may negatively impact their results of operations. In addition,
in the context of certain property & casualty risks
underwritten by our insurance subsidiaries (particularly
long-tail risks), a sustained increase in inflation
with a resulting increase in market interest rates may result in
(1) claims inflation (i.e., an increase in the amount
ultimately paid to settle claims several years after the policy
coverage period or event giving rise to the claim), coupled with
(2) an underestimation of corresponding claims reserves at
the time of establishment due to a failure to fully anticipate
increased inflation and its effect on the amounts ultimately
payable to policyholders, and, consequently, (3) actual
claims payments significantly exceeding associated insurance
reserves which would negatively impact our results of
operations. In addition, a failure to accurately anticipate
higher inflation and factor it into our product pricing
assumptions may result in a systemic mispricing of our products
resulting in underwriting losses which would negatively impact
our results of operations.
Operational
risks are inherent in our business.
Our businesses depend on the ability to process a large number
of transactions efficiently and accurately. Losses can result
from inadequate personnel, IT failures, inadequate or failed
internal control processes and systems, regulatory breaches,
human errors, employee misconduct including fraud, or from
external events that interrupt normal business operations. We
depend on the secure processing, storage and transmission of
confidential and other information in our computer systems and
networks. The equipment and software used in our computer
systems and networks may be at or near the end of their useful
lives or may not be capable of processing, storing or
transmitting information as expected. Certain of our computer
systems and networks may also have insufficient recovery
capabilities in the event of a malfunction or loss of data. In
addition, such systems and networks may be vulnerable to
unauthorized access, computer viruses or other malicious code
and other external attacks or internal breaches that could have
a security impact and jeopardize our confidential information or
that of our clients or our counterparts. These events can
potentially result in financial loss, harm to our reputation and
hinder our operational effectiveness. We also face the risk that
the design of our controls and procedures prove to be inadequate
or are circumvented. We have suffered losses from operational
risk in the past and there can be no assurance that we will not
suffer material losses from operational risk in the future.
Furthermore, while recent widespread outbreaks of communicable
diseases, such as the outbreak of the H1N1 influenza virus, also
known as swine flu, experienced world-wide in 2009,
have not adversely affected us thus far, a worsening of this
outbreak, or the occurrence of another outbreak of a different
communicable disease, may impact the health of our employees,
increasing absenteeism, or may cause a significant increase in
the utilization of health benefits offered to our employees,
either or both of which could adversely impact our business.
Reinsurance
may not be available, affordable or adequate to protect us
against losses. We may also decide to reduce, eliminate or
decline primary insurance or reinsurance coverage.
As part of our overall risk and capacity management strategy we
purchase reinsurance for certain risks underwritten by our
various insurance business segments. Market conditions beyond
our control determine the availability and cost of the
reinsurance protection we purchase. Accordingly, we may be
forced to incur additional expenses for reinsurance or may not
be able to obtain sufficient reinsurance on acceptable terms,
which could adversely affect our ability to write future
business.
S-27
In addition, we determine the appropriate level of primary
insurance and reinsurance coverage based on a number of factors
and from time to time decide to reduce, eliminate or decline
coverage based on our assessment of the costs and benefits
involved. In such cases, the uninsured risk remains with us.
Our
business may be negatively affected by adverse publicity,
regulatory actions or litigation with respect to us, other
well-known companies or the financial services industry in
general.
Adverse publicity and damage to our reputation arising from our
failure or perceived failure to comply with legal and regulatory
requirements, financial reporting irregularities involving other
large and well known companies, increasing regulatory and law
enforcement scrutiny of know your customer
anti-money laundering, prohibited transactions with countries
subject to sanctions, and bribery or other anti-corruption
measures and anti-terrorist-financing procedures and their
effectiveness, regulatory investigations of the mutual fund,
banking and insurance industries, and litigation that arises
from the failure or perceived failure by us to comply with
legal, regulatory and compliance requirements, could result in
adverse publicity and reputation harm, lead to increased
regulatory supervision, affect our ability to attract and retain
customers, maintain access to the capital markets, result in
cease and desist orders, suits, enforcement actions, fines and
civil and criminal penalties, other disciplinary action or have
other material adverse effects on us in ways that are not
predictable.
Because
we are a Dutch company and because the Stichting ING Aandelen
holds more than 99.9% of our ordinary shares, the rights of our
shareholders may differ from the rights of shareholders in other
jurisdictions or companies that do not use a similar trust
structure, which could affect your rights as a
shareholder.
While holders of our bearer depositary receipts are entitled to
attend and speak at our General Meeting of Shareholders
(General Meeting), voting rights are not
attached to the bearer depositary receipts. The Trust holds more
than 99.9% of our ordinary shares, and exercises the voting
rights attached to the ordinary shares (for which bearer
depositary receipts have been issued). Holders of bearer
depositary receipts who attend in person or by
proxy the General Meeting must obtain voting rights
by proxy from the Trust. Holders of bearer depositary receipts
and holders of the ADSs (American depositary shares)
representing the bearer depositary receipts who do not attend
the General Meeting may give binding voting instructions to the
Trust. The Trust is entitled to vote on any ordinary shares
underlying the bearer depositary receipts for which the Trust
has not granted voting proxies, or voting instructions have not
been given to the Trust. In exercising its voting discretion,
the Trust is required to make use of the voting rights attached
to the ordinary shares in the interest of the holders of bearer
depositary receipts, while taking into account:
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our interests,
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the interests of our affiliates, and
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the interests of our other stakeholders
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so as to ensure that all the interests are given as much
consideration and protection as possible. The Trust may, but has
no obligation to, consult with the holders of bearer depositary
receipts in exercising its voting rights in respect of any
ordinary shares for which it is entitled to vote. These
arrangements differ from practices in other jurisdictions, and
accordingly may affect the rights of the holders of bearer
depositary receipts and their power to affect INGs
business and operations.
The
share price of ING shares has been, and may continue to be,
volatile which may impact the value of ING shares you
hold.
The share price of our bearer depositary receipts has been
volatile in the past, in particular over the past year. During
and after the Offering, the share price and trading volume of
our bearer depositary receipts may continue to be subject to
significant fluctuations due, in part, to changes in our actual
or forecast operating results and the inability to fulfill the
profit expectations of securities analysts, as well as to the
high volatility in the securities markets
S-28
generally and more particularly in shares of financial
institutions. Other factors, besides our financial results, that
may impact our share price include, but are not limited to:
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market expectations of the performance and capital adequacy of
financial institutions in general;
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investor perception of the success and impact of our strategies;
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a downgrade or review of our credit ratings;
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the implementation and outcome of our Restructuring Plan;
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potential litigation or regulatory action involving ING or
sectors we have exposure to through our insurance and banking
activities;
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announcements concerning financial problems or any
investigations into the accounting practices of other financial
institutions; and
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general market circumstances.
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We did
not pay a final dividend in 2008 or an interim dividend in 2009.
There can be no assurance that we will pay dividends on our
ordinary shares in the future.
Although we had declared and paid dividends each year since our
formation in 1991, we did not pay a final dividend for 2008 or
an interim dividend for 2009. This year, we decided not to pay
an interim dividend on ordinary shares and have announced that
it is difficult to foresee whether we will be in a position to
pay a final dividend for 2009. The declaration of interim
dividends is subject to the discretion of the Executive Board,
whose decision to that effect is subject to the approval of the
Supervisory Board of the Company. Moreover, the declaration and
payment of dividends and the amount thereof is dependent upon
our results of operations, financial condition, cash
requirements, future prospects and other factors deemed relevant
by the Executive Board, which makes a recommendation to the
General Meeting regarding payment of dividends after allocation
of our result to reserves and payment of dividends on cumulative
preference shares. If we pay a dividend on our ordinary shares
we will be required to pay a coupon on our Core Tier-1
Securities, including, in respect of any dividend over 2009, any
Core Tier-1 Securities that we may repurchase with the proceeds
of the Offering, at a multiple of the dividend paid per share.
There can be no assurance that we will declare and pay any
dividends in the future.
Our
ability to use beneficial US tax attributes may become subject
to limitations.
Our US subsidiaries currently have net operating losses, net
capital losses, and built-in losses that may on a
carryforward-basis be used to offset future US taxable income.
The use of these tax attributes could be limited, however, if
our US subsidiaries were to undergo an ownership
change and Sections 382 and 383 of the US Internal
Revenue Code were to apply. In general, Sections 382 and
383 limit the use of loss carryforwards of a corporation that
undergoes an ownership change and there would be an
ownership change of our US subsidiaries if there were an
increase in the aggregate ownership of certain shareholders by
more than 50 percentage points over a three-year period
(for which purpose the Core Tier-1 Securities may be treated as
stock).
We believe that the issuance of the Core Tier-1 Securities to
the Dutch State on November 12, 2008 did not result in an
ownership change and that it is more likely than not that an
ownership change will not result from the Rights Offering, the
Global Offering, and the concurrent repurchase of Core Tier-1
Securities held by the Dutch State. However, the determination
of whether an ownership change occurs is complex and subject to
uncertainties, and we could in the future take additional
actions that could result in an ownership change. An ownership
change could have an adverse effect on our US subsidiaries
future US tax liabilities and could have a material adverse
effect on our financial condition and results of operations. The
exact impact on our financial condition and results of
operations would not be ascertainable until an ownership change
actually occurs. Using the best, currently available estimates
and interpretations, the estimated range of the potential
adverse impact on equity is between EUR 0.66 billion
to EUR 1.44 billion.
S-29
Risks
related to the Offering
A
shareholders failure to validly exercise his or her ADS
Rights by the end of the ADS Rights Exercise Period or Tradable
Rights by the end of Tradable Rights Exercise Period, as
applicable, will result in such Rights being no longer
exercisable, and any shareholder failing to exercise all of his
or her Rights, however held, will suffer dilution of his or her
percentage ownership of ING shares.
If a shareholder does not validly exercise his or her ADS Rights
by the end of the ADS Rights Exercise Period, or does not
validly exercise his or her Tradable Rights (including any
Tradable Rights received upon exchange of ADS Rights) by the end
of the Tradable Rights Exercise Period, as applicable, such
Rights, including rights in excess of the nearest integral
multiple of the subscription ratio, will no longer be
exercisable.
To the extent that any holder of ING shares does not validly
exercise his or her Rights, however held, to subscribe for the
New ADSs or New BDRs, as applicable, his or her proportionate
ownership in the Company will be reduced, and the percentage of
the Companys share capital represented by the shares such
holder of ING shares held prior to the Offering will, after the
Offering, also be reduced accordingly.
If none of the existing holders of ING shares who were granted
Rights exercise those Rights, the existing shareholders
ownership will be diluted by approximately 46.2% as a result of
Rump Shares sold in the context of the Global Offering. Even if
you elect to sell your Rights, or if you decide to hold your
Rights through the end of the ADS Rights Exercise Period or
Tradable Rights Exercise Period, as applicable, entitling you to
receive any Excess Amount (to the extent any Tradable Rights
underlying the ADS Rights have not been sold by the ADS Rights
Agent after the end of the ADS Rights Exercise Period), the
consideration you receive, if any, may not be sufficient to
fully compensate you for the dilution of your percentage
ownership of ING shares that may be caused as a result of the
Offering.
Holders
of ING shares may experience immediate and substantial dilution
in the value of the New Shares or New ADSs in the event of
future capital raisings.
We are raising capital through the Offering and may raise
capital in the future through public or private debt or equity
financings by issuing additional ordinary shares or other
classes of shares, debt or equity securities convertible into
ordinary shares, or rights to acquire these securities. If we
raise a significant amount of capital by these or other means,
it could dilute the percentage ownership of shareholders.
Moreover, the issuance and sale of the New Shares and New ADSs
could have a material adverse effect on the trading price of the
ING shares and could increase the volatility in the market price
of the ING shares.
The
Core Tier-1 Securities issued to the Dutch State may be
converted into ordinary shares or bearer depositary receipts and
dilute existing shareholders.
In November 2008, we issued EUR 10 billion Core Tier-1
Securities to the Dutch State. We intend to fund the repurchase
of EUR 5 billion of these securities with a portion of
the proceeds of the Offering. See Reasons for the Offering
and Use of Proceeds Use of Proceeds. The terms
of the Core Tier-1 Securities permit us, on or after
November 12, 2011, to convert any or all of the Core Tier-1
Securities into ordinary shares or bearer depositary receipts on
a
one-for-one
basis. Any such conversion would dilute existing shareholders.
If we exercise our conversion right, the Dutch State may opt to
require us to redeem the Core Tier-1 Securities on the
conversion date.
If the
Offering does not take place, our credit ratings and funding
costs could be adversely affected, and the price of ING shares
could drop sharply. In either case, the Rights could become
worthless.
The Offering is underwritten by the Underwriters based on an
Underwriting Agreement from which the Underwriters can withdraw
under certain circumstances. See The Offering
Withdrawal of the Offering and Underwriting.
If the Underwriting Agreement is terminated, the Offering will
be cancelled. We will not receive the net proceeds expected to
be generated by the Offering and we would expect to be unable to
take advantage of the opportunity to repurchase the
EUR 5 billion issue amount of Core Tier-1 Securities
on the terms recently agreed with the Dutch State. Even if the
Offering does not take place, we would still need to comply with
the terms of the Restructuring Plan and we would incur the
EUR 1.3 billion pre tax charge in the fourth quarter
of
S-30
2009 described under Reasons for the Offering and Use of
Proceeds. We may also be required by the EC to defer
coupon payments on hybrid Tier-1 securities, which would limit
our access to this type of capital. The impact on our credit
rating and on our funding costs of any failure to receive the
net proceeds of this Offering is uncertain, but would most
likely be negative. Any of these developments would likely have
an adverse effect on our results of operations and financial
condition and on the price of the ING shares.
In addition, if the Offering is cancelled, the Rights will
expire without compensation and become worthless. Any
subscription payments received by us will be returned without
interest. Investors who have acquired any Rights on the
secondary market will then bear a corresponding loss, because
trading in Rights cannot be reversed if the Offering is
terminated.
None of the Company, the Subscription Agent, the Listing Agent,
the ADS Rights Agent, and the Paying Agent, the Joint Global
Coordinators and Joint Bookrunners or the Underwriters accept
any responsibility or liability to any person as a result of the
withdrawal of the Offering or (the related) annulment of any
transactions in Rights. Neither Euronext Amsterdam nor Euronext
Brussels accepts any responsibility or liability to any person
as a result of the withdrawal of the Offering or (the related)
annulment of any transactions in Rights on Euronext Amsterdam or
Euronext Brussels.
Moreover, the value of the Rights materially depends on the
price of ING shares. A considerable drop in the price of ING
shares can therefore adversely affect the value of the Rights
and render them worthless. In such an event, investors who have
acquired any Rights in the secondary market will bear a
corresponding loss.
There
is no certainty that trading in the Tradable Rights will
develop, and the Tradable Rights may be subject to more intense
price fluctuations than ING shares.
We intend the Tradable Rights to be traded on Euronext Amsterdam
and Euronext Brussels during the period from November 30,
2009 (inclusive) until 1:15 p.m. (Amsterdam time) on
December 15, 2009 (inclusive). There is no plan to apply
for admission of the Tradable Rights to trading on any other
stock exchange, including the NYSE. In addition, there is no
plan to apply for admission of the ADS Rights to trading on the
NYSE or any other stock exchange. It cannot be guaranteed that
active trading in the Tradable Rights will develop on either
Euronext Amsterdam or Euronext Brussels during this period or
that significant liquidity will be available during the period
of trading in Tradable Rights. The stock exchange price of the
Tradable Rights depends on a variety of factors, including the
performance of our share price, but may also be subject to more
intense price fluctuations than ING shares. The ADS Rights will
not be transferable and will not be admitted to trading on the
NYSE or any other exchange. See The ADS Rights
will not be admitted to trading on any exchange and will not be
transferable.
The
ADS Rights will not be admitted to trading on any exchange and
will not be transferable.
The ADS Rights will not be admitted to trading on the NYSE or
any other exchange and will not be transferable. Unless you
surrender your ADS Rights for delivery of underlying Tradable
Rights or instruct the ADS Rights Agent to sell Tradable Rights
underlying your ADS Rights for you, you will be unable to sell
your ADS Rights. We cannot assure you that the ADS Right Agent
will have adequate time to arrange purchasers for ADS Rights.
We
cannot assure you that the listing and admission to trading of
the New ADSs on the NYSE, or the issuance of the New ADSs, will
occur when ING expects.
Until the New ADSs are admitted to trading on the NYSE, you will
not be issued any New ADSs for which you subscribed. See
The Offering for further information on the expected
dates of these events. We cannot assure you that the listing and
admission to trading of the ordinary shares underlying the New
ADSs will take place when anticipated.
We
cannot assure you that the listing of the New BDRs on Euronext
Amsterdam or Euronext Brussels, or the issuance of the New BDRs,
will occur when ING expects.
Until the New BDRs are admitted to trading on Euronext Amsterdam
and Euronext Brussels, you will not be issued any New BDRs for
which you subscribed. See The Offering for further
information on the expected dates of these
S-31
events. We cannot assure you that the listing and admission to
trading of the ordinary shares underlying the New BDRs will take
place when anticipated.
The
exercise of ADS Rights is subject to exchange rate
risk.
If the US dollar weakens against the Euro, holders of Existing
ADSs subscribing for New ADSs will be required to pay more than
the estimated ADS Subscription Price of US$6.42 per New ADS.
The estimated ADS Subscription Price is US$6.42 per New ADS
subscribed. The estimated ADS Subscription Price is the US
dollar equivalent of the BDR Subscription Price, using an
exchange rate of US dollar 1.5134 per EUR (as
published by Bloomberg at close of business (New York time) on
November 25, 2009). A subscriber of the New ADSs must
deposit US$7.06 per New ADS subscribed, which represents 110% of
the estimated ADS Subscription Price, upon exercise of each ADS
Right. The purpose of this additional amount over and above the
estimated ADS Subscription Price is to increase the likelihood
that the ADS Rights Agent will have sufficient funds to pay the
final ADS Subscription Price in the event of a possible
appreciation of the Euro against the US dollar between the date
hereof and the end of the ADS Rights Exercise Period, and
currency conversion expenses. If the actual US dollar price
(which will be the ADS Rights Agents cost of the BDR
Subscription Price in US dollars on or about December 15,
2009, is less than the ADS deposit amount, the ADS Rights Agent
will refund such excess US dollar ADS Subscription Price to the
subscribing ADS Rights holder without interest. However, if
there is a deficiency as a result of such conversion, the ADS
Rights Agent will not deliver the New ADSs to such subscribing
ADS Rights holder until it has received payment of the
deficiency. The ADS Rights Agent may sell a portion of your New
ADSs to cover the deficiency if not paid by a specified date.
Certain
holders of ING shares may not be able to participate in future
equity offerings with subscription rights.
We may undertake future equity offerings with subscription
rights. Holders of ING shares in certain jurisdictions, however,
may not be entitled to exercise such rights unless the rights
and the related shares are registered or qualified for sale
under the relevant legislation or regulatory framework. Holders
of ING shares in these jurisdictions may suffer dilution of
their shareholding should they not be permitted to participate
in future equity offerings with subscription rights.
It may
be difficult for investors outside the Netherlands to serve
process on or enforce foreign judgments against us in connection
with the Offering.
We are incorporated in the Netherlands. As a result it may be
difficult for investors outside the Netherlands to serve process
on or enforce foreign judgments against us in connection with
the Offering.
S-32
AVAILABLE
INFORMATION
We file annual reports on
Form 20-F
with, and furnish other reports and information on
Form 6-K
to, the Securities and Exchange Commission, or the SEC. You may
also read and copy any document we file or furnish at the
SECs public reference room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for more information about the public reference rooms. Our
filings with the SEC are also available through the SECs
Internet site at
http://www.sec.gov
and through the New York Stock Exchange, Inc., 11 Wall Street,
New York, New York 10005, on which our ADSs are listed.
We have filed a registration statement on
Form F-3
under the Securities Act of 1933, as amended, with the SEC
covering the securities. For further information on the
securities of ING Groep N.V., you should review our registration
statement and its exhibits. This prospectus supplement and
accompanying prospectus is a part of the registration statement
and summarizes material provisions of the contracts and other
documents to which we refer you. Since this prospectus
supplement and accompanying prospectus may not contain all the
information that you may find important, you should review the
full text of these documents. We have included copies of these
documents as exhibits to our registration statement.
The SEC allows us to incorporate by reference the
information we file with them, which means:
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incorporated documents are considered part of this prospectus
supplement and accompanying prospectus ;
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we can disclose important information to you by referring you to
those documents; and
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information that we file with the SEC in the future and
incorporate by reference herein will automatically update and
supersede information in this prospectus supplement and
accompanying prospectus and information previously incorporated
by reference herein.
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We incorporate by reference the following documents or
information which we filed with the SEC (other than, in each
case, documents or information deemed to have been furnished and
not filed in accordance with SEC rules):
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our Annual Report on
Form 20-F
for the year ended December 31, 2008, filed on
March 19, 2009;
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current reports on
Form 6-K
filed on September 10, 2009 (related to our six-month
results), on September 29, 2009, on October 7, 2009,
on October 15, 2009, on October 19, 2009, on
October 26, 2009, on October 27, 2009 (relating to
certain changes in management), on November 13, 2009
(related to our nine-month results) and on November 27,
2009 (related to our nine-month results) and November 27,
2009 (related to certain recent developments);
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our registration statement on
Form 8-A
filed on May 20, 1997, describing the ordinary shares,
bearer depositary receipts and ADSs, including any further
amendments or reports filed for the purpose of updating those
descriptions; and
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any filings made by us with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
well as any
Form 6-K
furnished to the SEC to the extent such
Form 6-K
expressly states that we incorporate such form by reference, on
or after the date of this prospectus and before the termination
of any offering of securities hereunder.
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You may request, orally or in writing, a copy of any filings
referred to above, excluding exhibits, other than those
specifically incorporated by reference into the documents you
request, at no cost, by contacting us at the following address:
ING Groep N.V., Attention: Investor Relations, Amstelveenseweg
500, 1081 KL Amsterdam, P.O. Box 810, 1000 AV
Amsterdam, The Netherlands, telephone:
011-31-20-541-54-11.
S-33
CAUTIONARY
STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS
Certain of the statements contained in this prospectus
supplement and in information we may incorporate by reference as
described under Available Information that are not
historical facts, including, without limitation, certain
statements made in the sections hereof entitled Recent
Developments Business, are statements of
future expectations and other forward-looking statements that
are based on managements current views and assumptions and
involve known and unknown risks and uncertainties that could
cause actual results, performance or events to differ materially
from those expressed or implied in such statements. Actual
results, performance or events may differ materially from those
in such statements due to, without limitation,
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changes in general economic conditions, in particular economic
conditions in INGs core markets,
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changes in performance of financial markets, including
developing markets,
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the implementation of INGs restructuring plan to separate
banking and insurance operations,
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changes in the availability of, and costs associated with,
sources of liquidity such as interbank funding, as well as
conditions in the credit markets generally, including changes in
borrower and counterparty creditworthiness,
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the frequency and severity of insured loss events,
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changes affecting mortality and morbidity levels and trends,
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changes affecting persistency levels,
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changes affecting interest rate levels,
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changes affecting currency exchange rates,
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changes in general competitive factors,
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changes in laws and regulations,
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changes in the policies of governments
and/or
regulatory authorities,
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conclusions with regard to purchase accounting assumptions and
methodologies,
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changes in ownership that could affect the future availability
to us of net operating loss, net capital loss and built-in loss
carryforwards, and
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INGs ability to achieve projected operational synergies.
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ING is under no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information or for any other reason. See Risk
Factors.
S-34
CAPITALIZATION
The following table shows the actual capitalization of the ING
Group as at September 30, 2009 and its capitalization as of
September 30, 2009 as adjusted for the receipt and use of
the net proceeds of the Offering, as described under
Reasons for the Offering and Use of Proceeds
Use of Proceeds.
The information in the following table is derived from the
unaudited consolidated financial statements of ING Groep N.V. as
of September 30, 2009 prepared in accordance with IFRS-EU
and included in this prospectus supplement. This table should be
read together with such unaudited consolidated interim financial
information and the notes thereto. The adjusted figures in the
table below have been prepared for illustrative purposes only
assuming that the Rights Offering is fully subscribed at the BDR
Subscription Price, and do not necessarily give a true picture
of the Groups financial condition following the Offering.
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As of September 30, 2009
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As adjusted for the Offering
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unaudited
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EUR millions
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US$
millions(1)
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EUR millions
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US$
millions(1)
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Capitalization
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Liabilities
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1,150,333
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1,740,914
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1,150,333
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1,740,914
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Short-term
debt(2)
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644,447
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975,306
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644,447
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975,306
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Subordinated
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Guaranteed
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Secured
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Long-term
debt(2)
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Subordinated
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10,018
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15,161
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10,018
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15,161
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Guaranteed
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14,346
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21,711
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14,346
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21,711
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Secured
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8,504
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12,870
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8,504
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12,870
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Other long-term debt
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72,848
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|
|
|
110,248
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|
|
|
72,848
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|
|
|
110,248
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Minority interests
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1,067
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1,615
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1,067
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1,615
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Shareholders equity
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Ordinary shares (nominal value EUR 0.24; authorized
4,500,000,000; issued
2,063,147,969)(3)(4)
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495
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749
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|
920
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1,392
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Other surplus reserves
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26,020
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|
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39,379
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32,502
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|
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49,189
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Total shareholders equity
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26,515
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40,128
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|
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33,422
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50,581
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Non-voting equity securities
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10,000
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15,134
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5,000
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7,567
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total capitalization
|
|
|
143,298
|
|
|
|
216,867
|
|
|
|
145,205
|
|
|
|
219,753
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
(1)
|
|
For your convenience, we have
translated euro amounts into US dollars at the rate of US dollar
1.5134 per EUR (as published by Bloomberg at close of business
New York time on November 25, 2009).
|
|
(2)
|
|
Short-term debt and long-term debt
include savings accounts, time deposits and other customer
credit balances, certificates of deposit, debentures and other
non-subordinated debt securities, securities sold subject to
repurchase agreements, non-subordinated interbank debt and other
borrowings.
|
|
(3)
|
|
We have also authorized
4,500,000,000 cumulative preference shares (nominal value EUR
0.24), of which there were none outstanding as of
September 30, 2009.
|
|
(4)
|
|
Reflects 3,831,560,513 ordinary
shares outstanding as a result of the Offering.
|
S-35
RECENT
DEVELOPMENTS
BUSINESS
History
and Overview
ING Groep N.V. was incorporated as a Naamloze Vennootschap
(public limited liability company) under the laws of the
Netherlands on January 21, 1991 to effect the merger
between Nationale-Nederlanden, which was the largest insurer in
the Netherlands, and NMB Postbank Group, which was one of the
largest banks in the Netherlands, by way of a public offering
for the shares of the latter companies. This public offering was
successfully completed on March 4, 1991. ING operates under
several commercial names, including ING Groep N.V.,
ING Groep, ING Group and
ING. ING has its statutory and its head office in
Amsterdam, the Netherlands. ING Groep N.V. is registered as
number 33231073 in the Company Registry and our Articles of
Association are available there. ING operates under Dutch law.
Our
profile
ING is a global financial institution of Dutch origin offering
banking, investments, life insurance and retirement services. As
of September 30, 2009, we served more than 85 million
private, corporate and institutional customers in Europe, North
and Latin America, Asia and Australia. We draw on our experience
and expertise, our commitment to excellent service and our
global scale to meet the needs of a broad customer base,
comprising individuals, families, small businesses, large
corporations, institutions and governments. On October 26,
2009, ING announced the Restructuring Plan. For more information
about the Restructuring Plan see Recent
Developments Insurance and other Divestments, EC
Agreement.
Following the completion of the Restructuring Plan, ING Bank
will be a mid-sized European retail and commercial bank,
anchored in the Benelux with strong ING Direct and Central
Europe franchises, and will pursue attractive growth prospects
outside Europe.
Our
stakeholders
ING conducts business on the basis of clearly defined business
principles. In all our activities, we carefully weigh the
interests of our various stakeholders: customers, employees,
communities and shareholders. ING strives to be a good corporate
citizen.
Our
corporate responsibility
ING wants to pursue profit on the basis of sound business ethics
and respect for its stakeholders. Corporate responsibility is
therefore a fundamental part of INGs strategy: ethical,
social and environmental factors play an integral role in our
business decisions.
Recent
Developments
Insurance
and other Divestments, EC Agreement
On October 26, 2009, ING announced that it plans to divest
all of its insurance operations, including its investment
management business by the end of 2013. This represents the next
step in the Back to Basics program announced in April 2009,
under which ING had already begun the process of restructuring
its banking and insurance businesses (together with the
investment management business) so that they are operated
separately under the ING umbrella. The envisaged divestment
forms part of INGs Restructuring Plan which was approved
by the EC on November 18, 2009. Negotiations with the EC on
the Restructuring Plan acted as a catalyst to accelerate the
strategic decision to completely separate INGs banking and
insurance operations. Under the Restructuring Plan, ING has also
agreed to divest ING Direct US, which operates the Groups
direct banking business in the United States, by the end of
2013, and to divest certain portions of its Dutch retail banking
business. ING will consider a range of options to carry out
these divestments including through initial public offerings,
sales, spin-offs or combinations thereof.
S-36
ING prepared the proposed Restructuring Plan in connection with
the ECs review under its state aid rules of the Dutch
States purchase of the Core Tier-1 Securities in November
2008 and creation of the Illiquid Assets
Back-Up
Facility in the first quarter of 2009. As a result of these
transactions, ING was required to submit a restructuring plan to
the EC. For more information about INGs transactions with
the Dutch State, see Transactions with the
Dutch State. The Restructuring Plan was developed in close
cooperation with the EC as one of the conditions for the EC
granting definitive authorization for the Dutch States
purchase of the Core Tier-1 Securities and creation of the
Illiquid Assets
Back-Up
Facility.
Until the completion of the divestments, ING intends to continue
to manage its insurance and investment management businesses as
though it will be the long-term owner, investing in growth
opportunities when they are attractive and can be supported by
the capital and management of the business. Similarly, ING
intends to continue its efforts to grow the US direct banking
business until its divestment. The divestment is expected to
take several years and is not anticipated before the end of
2013. ING also remains committed to the ING Direct franchise,
which ING expects to be an important contributor to INGs
growth going forward.
The divestment of certain of INGs Dutch retail banking
business will be achieved through the formation of a new company
to include the existing consumer lending portfolio of the Dutch
retail banking business and INGs Interadvies banking
division, including the Westland Utrecht banking business and
the mortgage operations of Nationale-Nederlanden. The newly
formed company is expected to have total assets of
EUR 37 billion, including approximately 200,000
mortgage contracts, 320,000 consumer lending accounts, 500,000
savings accounts and 76,000 securities contracts. ING expects
the new business to have a mortgage portfolio of approximately
EUR 33 billion, which would amount to an approximately
6% share of the Dutch retail mortgage market and approximately
25% of INGs Dutch retail mortgage business. This newly
formed company is expected to either be sold to a buyer that is
acceptable to the EC and ING or floated on the stock market.
In order to obtain the approval of the EC for the Restructuring
Plan, ING also committed to making a series of additional
payments to the Dutch State, corresponding to adjustments to the
net fees payable under the Illiquid Assets
Back-Up
Facility. These additional payments will amount to a net present
value of EUR 1.3 billion, which will be reflected in a
one-off pre-tax charge in the fourth quarter of 2009. For more
information about these additional payments, see
Agreement on Additional Payments to the Dutch
State, Corresponding to Adjustments to the Illiquid Assets
Back-Up
Facility.
In addition, under the Restructuring Plan, ING has agreed to
certain limitations on price leadership and to refrain from
acquisitions of financial institutions and of businesses that
would delay its repurchase of the Core Tier-1 Securities held by
the Dutch State. These restrictions apply until the earlier of:
(1) November 18, 2012 and (2) the date upon which ING
has fully repaid the Core Tier-1 Securities held by the Dutch
State (including the relevant accrued interest and exit premium
fees). The price leadership limitation requires ING to refrain
from offering more favorable prices on standardized ING products
than its three best-priced direct competitors with respect to
EU-markets in which ING has a market share of more than 5%. This
condition is limited to INGs standardized products on the
following product markets: (1) retail savings market,
(2) retail mortgage market, (3) private banking
insofar as it involves mortgage products or savings products,
and (4) deposits for SMEs. Moreover, ING Direct is required
to refrain from price-leadership with respect to standardized
ING products on the retail mortgage and retail savings markets
within the EU. The EC has agreed not to require ING to defer
coupon payments on its outstanding hybrid securities as a
condition to its approval of the Dutch State Transactions if ING
completes a rights offering with proceeds sufficient to
repurchase EUR 5 billion issue amount of Core Tier-1
Securities (including the relevant accrued interest and exit
premium fee). Furthermore, in connection with the Restructuring
Plan, ING agreed to propose the calling of Tier-2 capital and
Tier-1 hybrid debt instruments in the future on a case by case
basis subject in each case to a request for EC authorization,
for the period the restrictions described above apply.
In order to implement the Restructuring Plan, ING expects to
negotiate agreements between the retained banking businesses and
the banking and insurance businesses scheduled for divestment to
allocate costs for core Group corporate functions and other
services and infrastructure, as well as agreements to separate
the retained and divested businesses components of
collective bargaining agreements, pension plans and other
employee benefit plans.
The implementation of the Restructuring Plan will require
various approvals from insurance and bank regulators and
INGs works councils in the coming months and years. The
strategic decision to split and divest all insurance
S-37
and investment management operations was approved by the
extraordinary General Meeting on November 25, 2009. Further
approval of shareholders will be sought if so required under
Dutch law or our Articles of Association.
Composition
of ING upon Completion of the Restructuring Plan
On completion of the Restructuring Plan, the banking businesses
remaining following the divestments described above will result
in ING becoming a mid-sized European bank, based in the
Netherlands and Belgium, predominantly focused on the European
retail market, particularly the Netherlands, Belgium,
Luxembourg, Germany and Central and Eastern Europe, as well as
selected other areas, in particular in Asia where ING believes
strong growth opportunities are available. ING currently expects
the business to consist of: (1) Benelux Retail &
Commercial Banking, (2) Central and Eastern Europe
Retail & Commercial Banking, (2) Direct Banking
(outside the US), (3) Financial Markets, (4) European
Specialized Finance and (5) selected positions in Asian
markets.
ING is considering merging the Group and the top-level bank into
a bank holding company, pending approval from the DNB, with any
remaining insurance operations becoming subsidiaries of the bank
holding company. Following the creation of a bank holding
company, ING would no longer be able to benefit from double
leverage in the calculation of its capital ratios, and the
shareholders equity of the Group would form the capital
base for the new bank. In addition, upon a merger into a bank
holding company, ING expects to become subject to capital
regulations requiring it to deduct the capital of any remaining
insurance subsidiaries in full from the new banks
regulatory capital. Subject to modifications to remain in line
with similarly placed companies in the banking industry, ING
aims to maintain a Core Tier-1 capital ratio of approximately
7.5%. Measures to implement the Restructuring Plan, including
steps that ING has taken as part of the Back to Basics program,
are expected to result without taking any other
effects into account in a reduction by 2013 of
approximately EUR 600 billion in total assets from the
1,376 billion in total assets at September 30, 2008, or
approximately 45% of the Groups total assets at
30 September 2008. ING expects to achieve this reduction in
the balance sheet primarily through the divestments described
above. Including estimated organic growth of the retained
businesses, ING estimates that its total assets at the end of
2013 will be approximately 30% smaller than at September 30,
2008. ING expects to use any proceeds from the divestment of the
insurance operations to reduce or eliminate the net debt issued
at the Group level that is injected as capital and thereby
creates equity in ING Verzekeringen N.V. and ING Bank N.V.
(Core Debt), and to the extent of any
remaining proceeds repurchase from the Dutch State the Core
Tier-1 Securities that remain after the partial repurchase
described below under Repurchase of a Portion
of the Core Tier-1 Securities Held by the Dutch State and
following the repurchase, to use any remaining proceeds to
finance growth or to return to shareholders. As of
September 30, 2009, the new strategic direction under the
Back to Basics program has resulted in the completed divestment
of ING Canada, which released EUR 1.2 billion in
capital, a 16% decrease in assets of ING Bank compared with
September 30, 2008, a reduction of ING Bank asset leverages
ratio from 43.9 as of September 30, 2008 to 28.7 as of
September 30, 2009, a EUR 1.0 billion reduction of costs as
of and for the first nine months of 2009 (calculated on a
consistent basis with the first nine months of 2008) and
the elimination of 10,239 full-time equivalent positions
during the first nine months of 2009.
Repurchase
of a Portion of the Core Tier-1 Securities Held by the Dutch
State
ING announced on October 26, 2009 that it reached an
agreement with the Dutch State to alter the repayment terms of
the Core Tier-1 Securities issued in November 2008, in order to
facilitate early repayment. This early repayment option is valid
until the end of January 2010. ING intends to fund the
repurchase of the EUR 5 billion in issue amount of the
Core Tier-1 Securities in December 2009 with the proceeds of the
Offering. For a description of the terms of the Core Tier-1
Securities, see Transactions with the Dutch
State.
The original terms of the Core Tier-1 Securities allowed ING to
repurchase some or all of the one billion Core Tier-1 Securities
at any time at a price of EUR 15 per Core Tier-1 Security
plus accrued interest to the date of repurchase or convert the
Core Tier-1 Securities into ING shares on a
one-to-one
basis in 2011. ING and the Dutch State have agreed, however,
that up to EUR 5 billion of the
EUR 10 billion Core Tier-1 Securities may be
repurchased at any time until January 31, 2010 at the
original issue price of EUR 10 per Core Tier-1 Security,
plus a repurchase
S-38
premium and accrued interest. The repurchase premium will be at
least EUR 346 million and will increase if the average
of the daily volume-weighted average price of INGs
ordinary shares on the Bloomberg page INGA NA Equity VWAP
over the five trading days preceding the repurchase date is more
than EUR 11.20 per ordinary share. A maximum amount of
EUR 705 million, corresponding to a share price of
EUR 12.45 or higher, will be payable as a repurchase
premium. The repurchase premium for one-half of the Core Tier-1
Securities will therefore range from approximately 6.5% to
approximately 13% of the original issue price on an annualized
basis, compared to the 50% premium built into the original
repurchase price. Accrued interest at a rate of 8.5% to the
December 2009 repurchase date is estimated to be approximately
EUR 260 million. Under these terms, the Dutch State is
expected to receive a 15% to 21.5% annualized return on its
investment in the repurchased Core Tier-1 Securities. In
addition, if ING pays in 2010 a dividend on its ordinary shares
in respect of the 2009 financial year, then ING will be required
to pay to the Dutch State any difference between the 8.5%
interest paid upon repurchase and 110% of the dividend paid on
500 million ordinary shares. The Dutch State has indicated
that, if ING repurchases the first EUR 5 billion in issue amount
of the Core Tier-1 Securities before January 31, 2009, it is
open to discussing modification of the repayment terms for the
remaining EUR 5 billion in issue amount of the Core Tier-1
Securities. Any modification to the repayment terms would need
to comply with EC State aid rules.
ING intends to use the proceeds from the Offering primarily to
fund the repurchase of the EUR 5 billion in issue
amount of the Core Tier-1 Securities in December 2009, plus
accrued interest and any premium due at time of payment. ING
anticipates that it will finance the repurchase of the remaining
Core Tier-1 Securities from internal resources, including
retained earnings and supplemented by potential proceeds from
the divestment of the insurance operations described above. The
other terms of the Core Tier-1 Securities, including
restrictions on remuneration and corporate governance, will
remain unchanged. See Transactions with the Dutch
State.
Agreement
on Additional Payments to the Dutch State, Corresponding to
Adjustments to the Illiquid Assets
Back-Up
Facility
The Illiquid Assets
Back-Up
Facility transferred to the Dutch State the economic risks and
rewards of 80% of the approximately EUR 30 billion par
value Alt-A RMBS portfolios of ING Direct US and Insurance
Americas. Under the Illiquid Assets
Back-Up
Facility, the Dutch State agreed to pay to ING a funding fee and
a management fee, while ING agreed to pay to the Dutch State a
guarantee fee. For more information about the Illiquid Assets
Back-Up
Facility, see Transactions with the Dutch
State.
In order to obtain approval of the EC for the Restructuring
Plan, ING committed to make a series of additional payments to
the Dutch State, corresponding to adjustments to the net fees
payable under the Illiquid Assets
Back-Up
Facility. ING will make additional annual payments to the Dutch
State reflecting an increase of 82.6 basis points of the
annual guarantee fee paid by ING to the Dutch State. ING will
also make additional monthly payments to the Dutch State
reflecting a reduction of 50 basis points in the monthly
funding fee paid by the Dutch State to ING. These additional
payments will amount to a net present value of
EUR 1.3 billion, which will be reflected in a one-time
pre-tax charge in the fourth quarter of 2009. The additional
payments will be borne by ING entities other than the
Groups US subsidiaries. The other terms of the Illiquid
Assets
Back-Up
Facility, including restrictions on remuneration and corporate
governance, will remain unchanged. See Transactions
with the Dutch State.
Changes
to the Management Boards
In connection with INGs announcement that it plans to
separate its banking and insurance operations while integrating
its banking operations into one bank, on October 26, 2009
ING announced a number of changes to its Management Boards.
These changes are subject to approval by the DNB and, if
approved, will take effect on January 1, 2010.
The changes within the Management Board for Banking are as
follows: Eric Boyer de la Giroday, who is currently the Chief
Executive Officer of Commercial Banking, will also serve as
Vice-Chairman of the Management Board for Banking, with
responsibility for the
day-to-day
management of the banking business. As part of INGs
strategy to combine its retail and direct banking operations,
Eli Leenaars, who is currently a member of the Management Board
for Banking in his capacity as Chief Executive Officer of Retail
and Private Banking, will continue to serve on the Management
Board for Banking in the newly created position of Chief
Executive Officer of Retail Banking
S-39
Direct and International. Hans van der Noordaa, who is currently
Chief Executive Officer of Insurance Europe and Asia/Pacific and
a member of the Management Board for Insurance, will step down
from the Management Board for Insurance and join the Management
Board for Banking in the newly created position of Chief
Executive Officer of Retail Banking Benelux. Dick Harryvan will
retire as Chief Executive Officer of ING Direct and as a member
of the Management Board for Banking.
The changes within the Management Board for Insurance are as
follows: Tom McInerney, who is currently the Chairman and Chief
Executive Officer of Insurance Americas and a member of the
Management Board for Insurance, will serve as Chief Operating
Officer of Insurance, with responsibility for the
day-to-day
operation of the insurance and investment management businesses.
Matt Rider, who is currently Chief Financial Officer for
INGs global insurance operations, will join the Management
Board for Insurance as Chief Administrative Officer. Jacques de
Vaucleroy retired as Chief Executive Officer of Investment
Management and as a member of the Management Board for Insurance
with effect from October 26, 2009; however he will remain
as an advisor to the Management Board for Insurance until
January 1, 2010.
Transactions
with the Dutch State
In October 2008, the Dutch State announced measures to protect
the financial sector. ING benefited from such measures as
described below.
On November 12, 2008, ING Group issued one billion Core
Tier-1 Securities to the Dutch State against payment of
EUR 10 per Core Tier-1 Security, resulting in an increase
of ING Groups core tier-1 capital of
EUR 10 billion. The Core Tier-1 Securities do not form
part of ING Groups share capital; accordingly they do not
carry voting rights in the General Meeting. A coupon on the Core
Tier-1 Securities is payable at the higher of: (1) EUR 0.85
per security, payable annually in arrears (a first coupon of
EUR 0.425 per security paid on May 12, 2009); and
(2) 110% of the dividend paid on each ordinary share over
2009 (payable in 2010); 120% of the dividend paid on each
ordinary share over 2010 (payable in 2011); and (3) 125% of
the dividend paid on each ordinary share over 2011 onwards
(payable from 2012 onwards). Since ING had already paid an
interim dividend of EUR 0.74 in August 2008, ING recognized
a dividend payable of EUR 425 million to the Dutch
State as of December 31, 2008. This dividend was paid out
on May 12, 2009. ING Group has the right to repurchase all
or some of the Core Tier-1 Securities at EUR 15 per
security at any time together with the pro-rata coupon, if due,
accrued to such date. ING and the Dutch State have agreed,
however, that up to EUR 5 billion of the
EUR 10 billion Core Tier-1 Securities may be
repurchased at any time until January 31, 2010 at the
original issue price of EUR 10 per Core Tier-1 Security,
plus a repurchase premium and accrued interest. See
Business Recent Developments
Repurchase of a Portion of the Core Tier-1 Securities Held by
the Dutch State. The Dutch State also has the right to
convert all or some of the Core
Tier-1
Securities into ordinary shares on a
one-for-one
basis from three years after the issue date onwards, subject to
certain conditions. The financial entitlements of the Core
Tier-1 Securities are described in more detail under
Information Relating to ING Shares and Applicable Legal
Provisions Capital Structure, Shares
Core Tier-1 Securities below. In addition, in connection
with the issue of the Core Tier-1 Securities, it was agreed
between ING Group and the Dutch State that the Dutch State could
recommend candidates for appointment to the Supervisory Board in
such a way that upon appointment of all recommended candidates
by the General Meeting, the Supervisory Board would have two
State nominees among its members. The State nominees have
approval rights in respect of certain matters.
In addition, ING Group and the Dutch State reached an agreement
on the Illiquid Assets
Back-Up
Facility on January 26, 2009. The transaction closed on
March 31, 2009. The Illiquid Assets
Back-Up
Facility covers the Alt-A RMBS portfolios of both ING Direct US
and Insurance Americas, with a par value of approximately
EUR 30 billion. Under the Illiquid Assets
Back-Up
Facility, ING transferred 80% of the economic ownership of its
Alt-A portfolio to the Dutch State. As a result, an undivided
80% interest in the risk and rewards on the portfolio was
transferred to the Dutch State. ING retained 100% of the legal
ownership of its Alt-A portfolio. The transaction price was 90%
of the par value with respect to the 80% proportion of the
portfolio of which the Dutch State has become the economic
owner. The transaction price remains payable by the Dutch State
to ING and will be redeemed over the remaining life.
Furthermore, under the Illiquid Assets
Back-Up
Facility, ING pays a guarantee fee to the State and receives a
funding fee and a management fee. As a result of the
transaction, ING derecognized 80% of the Alt-A portfolio from
its balance sheet and recognized a receivable from the Dutch
State. In connection with entering into the Illiquid
S-40
Assets
Back-Up
Facility, ING committed, among other things, to support the
growth of the Dutch lending business for an amount of
EUR 25 billion on market conforming conditions. The
Dutch State also acquired certain consent rights with respect to
the sale or transfer of the 20% proportion of the Alt-A RMBS
portfolio that is retained by ING.
The overall sales proceeds from the Illiquid Assets
Back-Up
Facility amounted to EUR 22.4 billion. The amortized
cost (after prior impairments) at the date of the transaction
was also approximately EUR 22.4 billion. The
transaction (the difference between the sales proceeds and
amortized cost) resulted in a loss of EUR 109 million
after tax. The fair value under IFRS-EU at the date of the
transaction was EUR 15.2 billion. The difference
between the sales proceeds and the fair value under IFRS-EU is
an integral part of the transaction and therefore accounted for
as part of the result on the transaction. The transaction
resulted in a reduction of the negative revaluation
and therefore an increase of equity by approximately
EUR 5 billion (after tax).
The valuation method of the 20% Alt-A securities in the balance
sheet is not impacted by the Illiquid Asset
Back-Up
Facility. The methodology used to determine the fair value for
these assets in the balance sheet under IFRS-EU is disclosed in
the Financial Statements.
In order to obtain the approval of the EC for the Restructuring
Plan, ING committed to make a series of additional payments to
the Dutch State, corresponding to adjustments to the net fees
payable under the Illiquid Assets
Back-Up
Facility. For a description of these additional payments, see
Recent Developments Business
Recent Developments Agreement on
Additional Payments to the Dutch State, Corresponding to
Adjustments to the Illiquid Assets
Back-Up
Facility.
As part of the measures adopted to protect the financial sector,
the Dutch State implemented a EUR 200 billion
guarantee scheme for the issuance of medium term bank debt (the
Credit Guarantee Scheme). The program is
scheduled to run through December 31, 2009. The Credit
Guarantee Scheme targets (1) certificates of deposit or
commercial paper which carry (i) no interest (zero coupon),
or (ii) interest at a fixed interest rate; and
(2) medium term notes which by their terms are expressed to
be redeemed in one single payment (bullet) and which carry
(i) no interest (zero coupon), or (ii) interest at a
fixed interest rate or a floating interest rate, with maturities
ranging from three to 60 months. Fees depend on
creditworthiness of the banks involved and are based on
historical credit default swap spreads (or an approximation if
necessary), with an addition of 50 basis points. Maturities
of less than a year will have a fixed fee of 50 basis
points. The Credit Guarantee Scheme includes loans denominated
in euros, US Dollars and British Pounds, covers both
principal and interest and is executed by the Dutch State
Treasury Agency.
On January 30, 2009, ING Bank N.V. announced that it had
issued under the Credit Guarantee Scheme three-year
USD 6 billion government guaranteed senior unsecured
bonds. In February 2009, it issued a 5 year
EUR 4 billion fixed rate government-guaranteed senior
unsecured bond, and in March 2009 it issued a 5 year
USD 2 billion government guaranteed senior unsecured
bond (the Government Guaranteed Bonds or the
Bonds).
Recent
Acquisitions, Disposals and Combinations
In October 2008, ING announced that it had reached agreement to
sell its entire Taiwanese life insurance business, ING Life
Taiwan, to Fubon Financial Holding Co. Ltd. for approximately
EUR 447 million. At December 31, 2008 ING Life
Taiwan qualified as a disposal group held for sale. The sale was
completed on February 13, 2009. Consequently ING Life
Taiwan was deconsolidated in the first quarter 2009. ING was
paid in a fixed number of shares with the difference between the
fair value of those shares at the closing date and sale prices
being paid in subordinated debt securities of the acquirer. The
shares have a
lock-up
period of one year. ING Life Taiwan is included in the segment
Insurance Asia/Pacific. This transaction resulted in a loss of
EUR 292 million. The loss was recognized in 2008 in
Net gains/losses on disposal of group companies in
the profit and loss account.
On February 19, 2009, ING Group announced that it completed
the sale of its 70% stake in ING Canada, the largest provider of
property and casualty insurance products and services in Canada,
via a private placement and a concurrent bought deal
public offering for net proceeds of approximately
EUR 1,265 million (CAD 2,163 million). ING no
longer owns an interest in ING Canada. This transaction resulted
in a decrease in total assets of EUR 5,471 million and
a decrease of total liabilities of EUR 3,983 million.
S-41
On July 1, 2009, ING announced that the separate
organizations of Nationale-Nederlanden, RVS and ING Verzekeren
Retail (formerly Postbank Verzekeren) will be combined into one
customer-oriented organization under the Nationale-Nederlanden
brand, which will be reinforced. The decision is in line with
the Back to Basics strategy to simplify the
organization, reduce costs and improve customer focus. The new
insurance organization will have dedicated business units for
retail customers, small and medium-sized enterprises
(SMEs) and corporate clients. ING expects the
program to lead to a reduction of the workforce by approximately
800 positions over the coming three years. ING expects this
reduction to be mainly realized through natural attrition,
internal reallocation and by discontinuing temporary contracts.
The workforce measures will be made in accordance with
applicable regulations and will be discussed with the unions and
respective works councils. See Group
Strategy below.
ING announced on September 25, 2009 that it had reached an
agreement to sell its life insurance and wealth management
venture in Australia and New Zealand to ANZ, its joint venture
partner. Under the terms of the agreement, ING has agreed to
sell its 51% equity stakes in ING Australia and ING New Zealand
to ANZ, who now will become the sole owner of these businesses.
ING will receive EUR 1.1 billion in cash from ANZ. The
transaction is expected to generate a net profit for ING of
EUR 300 million. The cash proceeds and the estimated
net profit are expected to improve the debt/equity ratio of ING
Insurance by 345 basis points. The transaction is expected
to free up EUR 900 million of capital. ING remains
active in Australia with ING Direct, ING Investment Management,
Commercial Banking and ING Real Estate, which are not impacted
by this transaction. The deal is subject to regulatory approvals
and is expected to be booked and closed in the fourth quarter of
2009.
ING announced on October 7, 2009 that it had reached an
agreement to sell its Swiss Private Banking business to Julius
Baer Group Ltd. for a consideration of CHF 520 million (EUR
344 million) in cash. The transaction is expected to
generate an estimated net profit for ING of
EUR 150 million and is expected to free up
EUR 200 million of capital. The agreement of ING and
Julius Baer is subject to regulatory approval and is expected to
close in the first quarter of 2010.
On October 15, 2009, ING announced that it had reached an
agreement to sell its Asian Private Banking business to
Overseas-Chinese Banking Corporation Limited (OCBC
Bank) for a consideration of
USD 1,463 million (approximately
EUR 1 billion) in cash. The transaction is expected to
generate an estimated net profit for ING of approximately
EUR 300 million and is expected to free up
approximately EUR 370 million of capital. Completion
of the transaction between ING and OCBC Bank is subject to a
number of regulatory approvals and is expected to occur around
year end 2009.
ING announced on October 16, 2009 that it had reached an
agreement to transfer its US group reinsurance business, ING
Reinsurance U.S., to Reinsurance Group of America, Inc.
(RGA). The transaction is structured as a
reinsurance agreement between RGA and ING The transaction is
expected to release nearly EUR 100 million in capital
and improve the debt/equity ratio of ING Insurance by around
60 basis points. After the agreement, ING will continue to
retain a reinsurance portfolio in the US that has been in
run-off since 2002. The transaction is subject to regulatory
approvals and is expected to close in the first quarter of 2010.
On November 3, 2009, ING announced that it had reached an
agreement to sell three of its US independent retail
broker-dealer units, which comprise three-quarters of ING
Advisors Network, to Lightyear Capital LLC. Under this
agreement, ING will divest Financial Network Investment
Corporation, based in El Segundo, California,
Multi-Financial
Securities Corporation, based in Denver, Colorado, PrimeVest
Financial Services, Inc., based in St. Cloud, Minnesota,
and ING Brokers Network LLC, the holding company and back-office
shared services supporting those broker dealers, which
collectively do business as ING Advisors Network. The
transaction is subject to regulatory approvals and is expected
to close in the first quarter of 2010.
On November 10, 2009, ING announced that it had closed the
sale of its non-core Annuity and Mortgage businesses in Chile to
Corp Group Vida Chile, S.A. In 2008, the Annuity and Mortgage
businesses in Chile had generated combined pre-tax earnings of
approximately EUR 35 million.
S-42
Group
Strategy
Our long term goal is to be a leading European bank with strong
financial performance, superior customer satisfaction, leading
operating efficiency and a strong capital position. We will seek
to achieve these ambitions over time, as we pursue
implementation of the Restructuring Plan, including the
separation of our banking and insurance operations (including
investment management) and the divestment of the insurance
operations by way of initial public offerings, sales or other
means (e.g., spin-off). See Recent
Developments Insurance and other Divestments, EC
Agreement for a description of our Restructuring Plan and
related matters arising out of the ECs decisions of
November 18, 2009 with respect thereto. Over the next
several years, we intend to operate our insurance businesses in
a way to enhance their financial performance to create an
optimal base for either independent futures or divestitures.
Following the divestiture of the insurance operations and
completion of the other elements of the Restructuring Plan, we
have targeted a return on equity of
13-15% and a
long-term credit rating target of AA (or equivalent), in each
case assuming a core Tier 1 target ratio of approximately
7.5%, as discussed below.
There are four major components of our strategy to reach our
long-term goals:
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Grow earnings of the bank while delivering a superior customer
experience;
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Enhance earnings for the insurance businesses prior to their
divestiture;
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Execute the split from the Group of our insurance businesses
(including our investment management activities); and
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Eliminate the Groups double leverage and repay the
remaining Core Tier-1 Securities held by the Dutch State.
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We refer to this strategy as Ambition 2013.
This strategy represents a further development of our Back to
Basics transformation program announced in April 2009, in light
of the EU state aid and restructuring issues discussed above
under Recent Developments
Insurance and other Divestments, EC Agreement. The core
elements of our Back to Basics program are:
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Strengthen our financial position and navigate through the
crisis. We announced a plan to reduce costs, manage and reduce
risk and capital exposures and to reduce assets and preserve
equity through a de-leveraging of our balance sheet.
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Focus on fewer, more coherent and strong businesses. We
initiated a review of our portfolio of businesses with a view to
reducing the number of markets in which we operate and to
simplify the Group.
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Invest to reinforce franchises in the markets on which we focus.
We announced a drive for operational and commercial excellence
and to continue to adapt to customers needs.
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Build a stronger organization. We indicated our commitment to
enhancing operational and commercial performance with clear
accountability and with an outward-looking and responsive
approach to customer needs, together with simplifying
governance, further strengthening our finance and risk
functions, and reducing the complexity of the Group.
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We believe that we have made good progress towards achieving the
targets set in the first phase of our Back to Basics program:
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ING Banks balance sheet has been reduced by 16% between
30 September 2008 and September 30, 2009, and has
already surpassed the 2009 year-end target of a 10%
reduction.
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ING Banks leverage has been reduced from 43.9 as at
30 September 2008 to 28.7 as at September 30, 2009.
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As at September 30, 2009, EUR 1,049 million of
the total 2009 target cost reduction of
EUR 1.3 billion had already been achieved (excluding
impairments on real estate development projects).
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Headcount reduction is on track. Full-time employees
(FTEs) are down by 10,239, surpassing the
2009 target of 7,000.
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S-43
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Divestments already announced in 2009 are expected to yield
capital relief of approximately EUR 3 billion against
our overall target of approximately EUR 4 billion.
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The following describes the four major components of our
Ambition 2013 strategy:
Standalone
Bank Strategy
Following the restructuring, ING Bank will be a European retail
and commercial bank, anchored in the Benelux with strong ING
Direct and Central Europe franchises, and management believes,
attractive growth prospects outside Europe. We will seek to
deliver superior performance through operational and commercial
excellence, building on our market positions.
Our Ambition 2013 includes a financial goal for ING Bank to
achieve annualized revenue growth through 2013 of approximately
5% and to realize a target return on equity of
13-15% by
2013, assuming markets have normalized over such period, and
that required capital ratios applicable to ING Bank remain
consistent with current requirements. We believe this goal is
achievable taking into account related income from an estimated
annual balance sheet growth of 5% and improved margins expected
on savings and current accounts and increased cross selling. We
assume risk cost levels will return to an annualized
over-the-cycle
level of 40 to 45 basis points of our credit risk-weighted
assets. We believe additional cost-saving potentials beyond
those identified in connection with our Back to Basics program
should allow us to reduce our cost/income ratio to a 50% level,
after taking into account the costs of additional investments
and organic cost increases to support business growth.
The implementation of our Ambition 2013 program will vary by
region and product line, and includes the following broad
elements:
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Retail Banking: In the Netherlands and Belgium, we intend to
continue with our transformation programs to further streamline
and reduce costs in our branch networks, expand our direct
distribution capacities, and pursue further cross-selling of
different product lines to retail customers. In the rest of
Europe and Asia we plan to continue simplifying our product
lines and continue to be innovative in respect of distribution
based on our experience in direct banking.
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ING Direct: We intend to continue leveraging our competitive
advantage as one of the largest direct banking franchises
through superior service, convenience and cutting edge
distribution at competitive prices. We will seek to deepen
client relationships and offer a full basic product offering to
deliver superior returns and growth.
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Commercial Banking: In our commercial banking business, we will
seek to create cost advantages by leveraging local scale and
structurally reducing costs through IT and process improvement,
increasing cross-selling of different products to key clients,
and repricing or terminating relationships with unprofitable
clients. Our financial markets business will aim to build on its
track record and expertise in emerging markets fixed income
business, and we will seek to further decrease costs by
leveraging local scale in the Benelux.
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Divestitures
from ING Bank
We have announced that we will divest certain banking activities
as part of our Restructuring Plan agreed with the EC:
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Sale of ING Direct US: We regard ING Direct as
a strong franchise and believe that the US market offers
potential for growth. The divestment is expected to take several
years to complete and is not anticipated before the end of 2013.
Until ING Direct US is divested, our goal is to continue to grow
the value of the business and to offer a superior customer
experience. This agreement has no impact on the other countries
in which ING Direct operates. We remain committed to the ING
Direct franchise, as a strong contributor to our growth going
forward. The unique customer proposition, simple transparent
products and market-leading efficiency are at the heart of our
banking strategy.
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Carve-out from Dutch Retail banking of Interadvies and ING
Bank Consumer Credit Business: ING has agreed to
create a new company in the Dutch retail market out of part of
its current operations, by combining the Interadvies banking
division (including Westland Utrecht and the mortgage activities
of Nationale-Nederlanden) and the existing consumer lending
portfolio of ING Retail. This business, once separated, will be
divested. See Recent Developments
Composition of ING upon Completion of the Restructuring
Plan.
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S-44
Earnings
Enhancement Plan for Insurance
We are committed to improving the financial performance of our
various insurance businesses, in order to support the
divestiture strategy. These improvements take into account our
presence in a favorable combination of mature and growth
markets, customer and market trends, and our belief that we have
significant capacity to capture synergies and best practices
across our businesses. In each of our geographic markets and
product lines, we are examining further cost-savings and product
rationalization measures, including the integration of brands
and a new focus on specific clients and markets; emphasising the
core businesses and exiting unprofitable markets or product
lines; and optimizing the various distribution channels
available to us. Our cost measures will include the streamlining
and standardization of processes and systems, procurement
savings and increasing the effectiveness and efficiency of our
IT systems.
Strategy
by Region
Our strategy for improving the financial performance of our
insurance businesses will be implemented on a regional basis,
taking into account the particular strengths and opportunities
we see in each of our markets.
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The Netherlands: We plan to migrate to a
single brand strategy by combining our existing insurance brands
under a revitalized Nationale-Nederlanden (NN) brand. This
reorganisation will put an increased focus on clients and is
expected to streamline distribution and reduce expenses.
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United States: Operations are being refocused
on three core businesses: retirement services, rollover annuity
and individual life. In retirement services we have a top three
position based on assets and we expect to benefit from the
markets excellent demographics.
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Latin America: We plan to continue growth by
leveraging our strong presence in the life insurance and
pensions markets (mandatory and voluntary). We will focus on
operating efficiency, product diversification, and innovation to
maintain margins at above the industry average.
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Asia: In Asia we will focus on fewer, coherent
and strong businesses. To streamline our operations, we have put
on run-off the SPVA business in Japan and already sold our
insurance business in Australia and New Zealand during 2009.
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Central & Eastern Europe: We plan on
investing in our franchises to improve efficiency. The Vision
for Growth program started in the second quarter of 2008 aims at
establishing one integrated regional platform and reducing the
administrative cost per policy.
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Global Investment Management: We plan to
capitalize on the superior investment performance realized to
date in 2009 to build our asset base and attract new customers.
Further, we aim to realize synergies by running Investment
Management as a single, global business, rather than as three
separate regional operations.
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Cost
Leadership in Insurance
Our core processes and systems will be streamlined and
standardized across business units where possible. Lean process
redesign and implementation will be executed in full and our
procurement capabilities will be strengthened to capture cost
savings. Moreover, we plan to increase the effectiveness and
efficiency of our IT systems and we intend to build management
skills and capabilities to manage closed-book business.
Separation
Plan for the Insurance Assets of the Group
The Group has a number of attractive insurance franchises. We
are the leading insurance group in the Benelux region, have a
top three position in retirement services in the US based on
assets under management and a strong investment management arm.
We also have highly attractive businesses in the growth markets
of Central Europe, Latin America and Asia. In Central Europe,
ING is the market leader in the combined life and pensions
market and we are the second largest provider of retirement
services in Latin America. In Asia, we are the third largest
international life insurer.
S-45
We plan to divest our insurance operations by 2013. Given our
strong market positions, management feels confident in its
ability to sell these businesses at attractive valuations. We
have not determined final plans regarding the structure of these
divestitures, and will consider a range of options, including
initial public offerings of the business in whole or in part,
divestitures of the business in whole or in part, spin-offs or
combinations of these strategies. Considerations which we will
take into account include: valuation levels attainable, timing,
clarity of execution, and tax impacts. In light of our 2013
target for divestiture, we will also review changes in market
conditions in both public and private markets over the
implementation period. We remain highly focused on ensuring high
quality operational and financial performance in our insurance
businesses over the remaining period of our ownership, and will
accordingly focus strongly on employee retention and customer
satisfaction going forward.
Financial
Plan to Eliminate Double Leverage and Repay Outstanding Core
Tier-1 Securities
We plan to operate our banking business with a strong capital
base. Accordingly, we plan to use the proceeds from the
divestitures of our insurance businesses to repay various
borrowings and the remaining outstanding Core Tier-1 Securities
held by the Dutch State. We would plan to reduce the double
leverage at the holding company. We also intend to repay the
Core Tier-1 Securities held by the Dutch State which will remain
outstanding at EUR 5 billion after the initial
repayment contemplated through the use of proceeds, if any, from
the Offering. See Reasons for the Offering and Use of
Proceeds Use of Proceeds. ING management
believes that the combination of the proceeds of the various
insurance divestitures and retained earnings over the coming
years will more than cover amounts to be repaid between now and
2013. We would also anticipate returning to shareholders any
excess capital generated during such period and going forward,
subject to our capital needs including for growth of the
business and dividend policies at the time.
Corporate
Organization
ING Groep N.V. has a Supervisory Board and an Executive Board.
The Executive Board is responsible for the
day-to-day
management of the Group and its business lines (Insurance
Europe, Insurance Americas, Insurance Asia/Pacific, Commercial
Banking, Retail Banking and ING Direct), each of which is
discussed further below.
Further to INGs Back to Basics strategy
announced in April 2009, pursuant to which ING announced its
intention to operate its banking and insurance operations
separately under one Group umbrella, ING Bank and ING Insurance
now each have their own Management Boards consisting of the
Group CEO, CFO and CRO and positions for three other members.
For more information about the Supervisory, Executive and
Management Boards, see Item 6. Directors, Senior
Management and Employees of our Annual Report on
Form 20-F
for the fiscal year ended December 31, 2008 filed on
March 19, 2009 and Directors, Senior Management and
Employees below. ING announced on October 26, 2009
certain changes to its Management Boards. See also
Recent Developments Changes to the
Management Boards.
On October 26, 2009, ING announced the Restructuring Plan
pursuant to which it intends to divest significant portions of
its business. See Recent
Developments Insurance and other Divestments, EC
Agreement.
S-46
REASONS
FOR THE OFFERING AND USE OF PROCEEDS
In October 2008, the Dutch State purchased
EUR 10 billion Core Tier-1 Securities of ING as part
of its measures to protect the Dutch financial sector during the
global financial crisis. See Recent
Developments Business Transactions with
the Dutch State. The original terms of the one billion
Core Tier-1 Securities allowed ING to repurchase some or all of
the Core Tier-1 Securities at any time at a price of EUR 15
per Core Tier-1 Security plus accrued interest to the date of
repurchase. In connection with the Restructuring Plan, ING and
the Dutch State have agreed that up to EUR 5 billion
of the EUR 10 billion Core Tier-1 Securities may be
repurchased at any time until January 31, 2010 at the
original issue price of EUR 10 per Core Tier-1 Security,
plus a repurchase premium ranging from EUR 346 million
to EUR 705 million and accrued interest. ING plans to
use the proceeds from the Offering primarily to fund the
repurchase of the EUR 5 billion in issue amount of the
Core Tier-1 Securities. For more information about the proposed
repurchase of the Core Tier-1 Securities, see Recent
Developments Business Recent
Developments Repurchase of a Portion of the Core
Tier-1 Securities Held by the Dutch State.
On March 31, 2009, ING Groep N.V. and the Dutch State
completed the Illiquid Assets
Back-Up
Facility covering the Alt-A Residential Mortgage-Backed
securities portfolios of both ING Direct US and Insurance
Americas with a par value of approximately
EUR 30 billion. Under the Illiquid Assets
Back-Up
Facility, ING transferred 80% of the economic ownership of its
Alt-A portfolio to the Dutch State. In order to obtain the
approval of the EC for the Restructuring Plan, ING committed to
make a series of additional payments to the Dutch State,
corresponding to adjustments to the net fees payable under the
Illiquid Assets
Back-Up
Facility. These additional payments will amount to a net present
value of EUR 1.3 billion, which will be reflected in a
one-off pre-tax charge in the fourth quarter of 2009. For more
information about these additional payments, see Recent
Developments Business Recent
Developments Agreement on Additional Payments to the
Dutch State, Corresponding to Adjustments to the Illiquid Assets
Back-Up
Facility. For more information about the Restructuring
Plan, see Recent Developments
Business Recent Developments Insurance
and other Divestments, EC Agreement. ING plans to use the
remaining proceeds from the Offering to strengthen its capital
position, including by offsetting the EUR 1.3 billion
charge.
Use of
Proceeds
ING intends to use the proceeds of the Offering primarily to
fund the repurchase of EUR 5 billion in issue amount
of the Core Tier-1 Securities held by the Dutch State plus
accrued interest and the repurchase premium. The repurchase
premium payable in respect of the repurchased Core Tier-1
Securities will range from EUR 346 million to
EUR 705 million, based on the market price of the ING
shares at the time of the repurchase. Accrued interest at a rate
of 8.5% on the repurchased Core Tier-1 Securities is estimated
to be approximately EUR 260 million (assuming a
repayment on the Closing Date). Accordingly, the amount
necessary to repurchase the EUR 5 billion issue amount
is expected to be between EUR 5,605 million and
EUR 5,963 million. See Recent
Developments Business Recent
Developments Repurchase of a Portion of the Core
Tier-1 Securities Held by the Dutch State.
ING intends to use the remaining proceeds of the Offering to
strengthen its capital position, including to offset the
EUR 1.3 billion one-off pre-tax charge that will be
taken in the fourth quarter of 2009 as a result of the
additional payments to the Dutch State in the form of fee
adjustments to the Illiquid Assets
Back-Up
Facility as described under Recent
Developments Business Recent
Developments Transactions with the Dutch
State, and to allocate the remaining proceeds partially to
coupon payments due in December 2009 on its outstanding hybrid
securities, as required by the EC in order not to be required to
defer coupons on hybrid securities.
S-47
THE
OFFERING
General
The Offering relates to a total of 1,768,412,544 New Ordinary
Shares and an equal number of New BDRs, which may be represented
by New ADSs, and consists of the Rights Offering and the Global
Offering. The Rights Offering will be made by way of
(1) public offerings in the Netherlands, Belgium,
Luxembourg, Germany, France, Spain, Switzerland and the United
Kingdom, in reliance on Regulation S under the Securities
Act, (2) private placements to certain institutional
investors outside the United States in reliance on
Regulation S under the Securities Act and in accordance
with applicable securities laws and (3) a public offering
in the United States under the Securities Act. The Global
Offering will be made by way of (1) private placements to
certain institutional investors outside the United States in
reliance on Regulation S under the Securities Act and in
accordance with applicable securities laws and (2) a public
offering in the United States under the Securities Act. In the
Rights Offering, the Tradable Rights will be allocated by the
Company to holders of Existing Shares (other than the Trust),
with one Tradable Right being allocated per Existing Share held
at the BDR Record Date, and the ADS Rights will be granted to
holders of Existing ADSs, with one ADS Right being allocated per
Existing ADS held of record at the ADS Record Date. The total
amount of the Offering will be approximately
EUR 7.5 billion. The exercise of 7 ADS Rights entitles
the exercising holder to subscribe for 6 New ADSs against
payment of the ADS Subscription Price of US$6.42 (subject to
adjustment) per New ADS. The exercise of 7 Tradable Rights
entitles the exercising holder to subscribe for 6 New BDRs
against payment of the BDR Subscription Price of EUR 4.24
per New BDR. New BDRs for which Tradable Rights (including any
Tradable Rights received by holders of ADS Rights upon exchange
of their ADS Rights) have not been validly exercised during the
Tradable Rights Exercise Period (i.e., the Rump Shares)
may be sold by the Joint Global Coordinators and Joint
Bookrunners, acting on behalf of the Underwriters, in their sole
discretion in the Global Offering
and/or in
open market transactions.
The Offering of the New Shares and New ADSs is based on an
underwriting agreement between the Company and the Underwriters
dated as of October 25, 2009, which was supplemented by a
pricing agreement dated November 26, 2009 (together, the
Underwriting Agreement).
ADS
Rights
Timetable
We may adjust the dates, times and periods set out in the
timetable and throughout this prospectus supplement. If we
should decide to adjust the dates, times
and/or
periods, we will notify, among other entities, the ADS Rights
Agent, and issue a press release accordingly.
The below relates to the offering of ADS Rights to acquire New
ADSs. For information relating to Tradable Rights, see
Tradable Rights.
Subject to acceleration or extension of the timetable for the
Offering, the timetable for the offer of ADS Rights is envisaged
as follows:
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November 27, 2009 |
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Publication of the terms of the Rights Offering via press
release and on the Companys website |
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November 27, 2009 |
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Filing of prospectus supplement with the US Securities &
Exchange Commission |
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November 27, 2009 |
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ADS Record Date for Existing ADSs receiving ADS Rights (after
close of business in New York) |
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November 27, 2009 |
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Book entry of the ADS Rights of the existing ADS holders based
on their holdings as of the ADS Record Date |
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November 30, 2009 |
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Commencement of the ADS Rights Exercise Period |
S-48
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December 11, 2009 |
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ADS Rights Agent sale election and exchange election expires
(5:00 p.m. New York time) |
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December 11, 2009 |
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End of the ADS Rights Exercise Period (5:00 p.m. New York
time) |
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December 14, 2009 |
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Possible sale by ADS Rights Agent of Tradable Rights underlying
ADS Rights that have not been exercised or exchanged by the end
of the ADS Rights Exercise Period |
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On or about December 16, 2009 |
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Placement of Rump Shares, if any, in the Global Offering or in
open market transactions |
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December 16, 2009 |
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Publication of the Global Offering Price, if applicable |
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December 21, 2009 |
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Listing of New ADSs on the NYSE |
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December 21, 2009 |
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First day of trading of the New ADSs on the NYSE |
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December 21, 2009 |
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Closing Date: Payment for and delivery of the subscribed New
BDRs (and the New Ordinary Shares) against payment of the BDR
Subscription Price underlying the New ADSs by the ADS Rights
Agent into collective custody |
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On or about December 23, 2009 |
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Delivery of the subscribed New ADSs |
The last date
and/or time
before which notification of exercise instructions may be
validly given by you may be earlier than the date
and/or time
specified above as the end of the ADS Rights Exercise Period,
depending on the financial intermediary through which your ADS
Rights are held.
New
ADSs
The New ADSs are American depositary shares representing certain
of the New BDRs representing New Ordinary Shares, which are
ordinary shares of ING Groep N.V. with a par value of
EUR 0.24 each. The New ADSs will be evidenced by American
depositary receipts issued by the Depositary. The New Ordinary
Shares will be fully fungible and rank pari passu in all
respects with the other Existing Ordinary Shares.
The New Ordinary Shares (to be issued in the Offering) will
represent approximately 46.2% of the total issued share capital
of the Company immediately after completion of the Offering.
The ADS Rights are to be issued under the terms of a
supplemental agreement relating to the ADS Rights between us and
JPMorgan Chase Bank, N.A., which is acting as ADS Rights Agent.
JPMorgan Chase Bank, N.A., is also Depositary for the ADSs. We
have filed a copy of the supplemental agreement as an exhibit to
the registration statement of which this prospectus supplement
forms a part.
ADS
Subscription Price
The final ADS Subscription Price per New ADS will be the ADS
Rights Agents cost of the BDR Subscription Price of
EUR 4.24 in US dollars on or about December 15, 2009.
On November 26, 2009, the closing price of the ING shares
was EUR 8.92 per share on Euronext Amsterdam, and
EUR 8.92 per share on Euronext Brussels, and on
November 25, 2009, the closing price of the Existing ADSs
was US$12.28 per ADS on the NYSE. The ADS Rights Agent will need
to convert all or part of the ADS Subscription Price received
into Euro in order to pay the BDR Subscription Price to the
Company on the Closing Date, which is expected to be on or about
December 21, 2009.
In order to increase the likelihood that the ADS Rights Agent
will have sufficient funds to pay the final ADS Subscription
Price in light of a possible appreciation of the Euro against
the US dollar between the date hereof and the end of the ADS
Rights Exercise Period, and to pay any currency conversion
expenses, holders of Existing ADSs will be required to deposit
the preliminary US dollar equivalent of the BDR Subscription
Price, plus a margin of 10%, with any excess to be refunded
following final calculation of the US dollar equivalent of the
BDR Subscription Price. The preliminary ADS Subscription Price
is the US dollar equivalent of the BDR Subscription Price, using
an
S-49
exchange rate of US dollar 1.5134 per EUR (as published by
Bloomberg at close of business (New York time) on
November 25, 2009). A subscriber of the New ADSs must
deposit the preliminary ADS Subscription Price, plus US$0.64,
which represents 10% of the estimated ADS subscription price per
new ADS subscribed upon the exercise of each ADS Right. The
preliminary ADS Subscription Price plus such additional amount
are together referred to as the ADS deposit amount.
The actual ADS Subscription Price per New ADS will be the ADS
Rights Agents cost of the BDR Subscription Price of
EUR 4.24 in US dollars on or about December 15, 2009.
If the actual US dollar price (equal to the Euro BDR
Subscription Price converted into US dollars on or about
December 15, 2009) plus any currency conversion
expenses, governmental charges or taxes and the issuance fee of
US$0.05 per New ADS issued is less than the ADS deposit amount,
the ADS Rights Agent will refund such excess to the subscribing
ADS Rights holder without interest. However, if the actual US
dollar price plus any currency conversion expenses, governmental
charges or taxes and the issuance fee of US$0.05 per New ADS
issued, exceeds the ADS deposit amount, the ADS Rights Agent
will not deliver the New ADSs to such subscribing ADS Rights
holder until it has received payment of the deficiency from the
subscriber. The ADS Rights Agent may sell a portion of the New
ADSs that is sufficient to pay any shortfall that is not paid by
January 8, 2010. In that event, the ADS Rights Agent will
then send promptly any remaining New ADSs to such holder
together with a check in the amount of excess proceeds, if any,
from such sale provided.
Allocation
of ADS Rights
On November 30, 2009, before commencement of trading of the
Existing ADS on the NYSE, holders of record of Existing ADS will
be granted one ADS Right per Existing ADS held as of the ADS
Record Date (i.e., November 27, 2009 after close of
business in New York). 7 ADS Rights will grant the holder
thereof the right to subscribe for 6 New ADSs at the
estimated ADS Subscription Price of US$6.42 per New ADS.
For Existing ADSs held in the DTC system through custody
accounts with custodian banks or brokers, every Existing ADS
will be allocated one non-transferable ADS Right on the first
day of the ADS Rights Exercise Period before start of trading.
Allocation and notification to holders of Existing ADSs will be
made by DTC through the respective custodian bank or broker.
Trading
of ADS Rights
The ADS Rights are not transferable and will not be admitted to
trading on the NYSE or any other exchange. From
November 30, 2009, the Existing ADSs will be traded on the
NYSE ex subscription right.
Exercise
of ADS Rights
In accordance with the subscription rights ratio of 7:6, the
exercise of 7 ADS Rights entitles the exercising holder to
subscribe for 6 New ADSs against payment of the ADS Subscription
Price.
In order to avoid being excluded from being exercised, ADS
Rights must be validly exercised vis-à-vis the
Company during the ADS Rights Exercise Period that will run from
November 30, 2009 to 5:00 p.m. (New York time) on
December 11, 2009.
The exercise of ADS Rights is irrevocable and may not be
withdrawn, cancelled or modified.
Each eligible registered holder of Existing ADSs will be sent a
subscription form showing its ADS Rights entitlement and
instructions relating to the exercise of these ADS Rights,
instructions relating to the cancellation of the ADS Rights, the
sale by the ADS Rights Agent at the request of such holder of
the Tradable Rights underlying such ADS Rights, and the exchange
of the ADS Rights for delivery of underlying Tradable Rights.
Each eligible beneficial owner of ADSs held within DTC will
receive a book-entry credit of ADS Rights in its DTC participant
account and instructions relating to the exercise of the ADS
Rights, instructions relating to the sale by the Depositary of
ADS Rights at the request of such holder, and the exchange of
the ADS Rights for delivery of underlying Tradable Rights.
S-50
ADS Rights may only be exercised in multiples of 7. The
instructions for exercising ADS Rights are as follows:
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Existing ADSs held by beneficial holders through the DTC
system with custodian banks and
brokers: Instructions for exercising ADS Rights
need to be directed to the respective custodian bank or broker,
as the case may be, within the time period set by such custodian
bank or broker and will be subject to the shareholders
respective arrangements with it. Shareholders are asked to
follow the instructions of their custodian bank or broker. In
the event that shareholders have not been so informed by the
start of the ADS Rights Exercise Period, they should contact
their custodian bank or broker. The Depositary will use
reasonable efforts to sell ADS Rights not validly exercised,
exchanged or sold during the ADS Rights Exercise Period,
including ADS Rights in excess of the nearest integral multiple
of the subscription ratio, as described under
Sales of Tradable Rights by the ADS Rights
Agent. If such sales are not completed, the ADS Rights
will continue to be reflected in the securities account of each
holder of unexercised ADS Rights solely for the purpose of the
payment of the Excess Amount (as defined below), if any. See
General Excess Amount below.
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Subscription by brokers and banks that are DTC
participants: If you hold ADS Rights directly
through DTC, you can exercise your ADS Rights by delivering
completed subscription instructions for new ADSs through
DTCs system and instructing DTC to charge your applicable
DTC account for the ADS deposit amount for the New ADSs and to
deliver such amount to the ADS Rights Agent. DTC must receive
the subscription instructions and the payment of the ADS deposit
amount for the new ADSs so as to allow DTC sufficient time to
transmit the subscription instructions and payment of the ADS
deposit amount to the ADS Rights Agent prior to the expiration
of the ADS Rights Exercise Period. If the ADS deposit amount,
subscription instructions and payment with respect to ADS Rights
are not received by the ADS Rights Agent by the end of the ADS
Rights Exercise Period, the ADS Rights Agent will not be
authorized to, and consequently will not, accept any delivery or
exercise of subscription instructions with respect to those ADS
Rights.
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Subscription by registered holders: If you are
a holder of ADS Rights registered directly with the ADS Rights
Agent, you can exercise your ADS Rights by delivering to the ADS
Rights Agent a properly completed ADS subscription form and
paying in full the ADS deposit amount for the new ADSs. The
properly completed ADS subscription form (except in the case of
subscriptions submitted through DTC) and payment should be
delivered to:
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By Mail To:
J.P. Morgan Chase Bank NA
Voluntary Corporate Actions Dept
P.O. Box 64854
St. Paul, MN 55164-0854
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By Courier to:
J.P. Morgan Chase Bank NA
Voluntary Corporate Actions Dept
161 North Concord Exchange
South St. Paul, MN 55075
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The ADS Rights Agent must receive the ADS subscription form and
payment of the ADS deposit amount on or before the end of the
ADS Rights Exercise Period. Deposit in the mail will not
constitute delivery to the ADS Rights Agent. ING has discretion
to refuse to accept any improperly completed or unexecuted ADS
subscription form.
You will elect the method of delivering the ADS subscription
form and paying the ADS deposit amount to the ADS Rights Agent
and you will bear any risk associated with it. If you send the
ADS subscription form and payment by mail, you should use
registered mail, properly insured, with return receipt
requested, and allow sufficient time to ensure delivery to the
ADS Rights Agent.
Subscriptions and full payment must be received by the ADS
Rights Agent prior to 5:00 p.m. (New York City time) on
December 11, 2009.
ING Bank N.V. is acting as principal subscription agent.
JPMorgan Chase Bank, N.A., is acting as the ADS Rights Agent and
Depositary.
ING Bank N.V. reserves the right to treat as invalid any
acceptance or purported exercise of ADS Rights or acceptance of
the offer of New ADSs which appears to ING Bank N.V. or its
agents to have been executed, effected or dispatched in a manner
which may involve a breach of the securities laws or regulations
of any jurisdiction or if ING Bank N.V. or its agents believe
that the same may violate applicable legal or regulatory
requirements.
S-51
On completion of the Rights Offering, we will announce the
results of the Rights Offering and the commencement of the
Global Offering, if any, by means of a press release. Such
announcement is currently intended to take place on
December 16, 2009. After the Global Offering has ended, and
the placement of Rump Shares, if any, has taken place, we will
announce the results of the Global Offering by means of a press
release, including the aggregate number of Rump Shares validly
subscribed and paid for, and any Excess Amount to be
distributed. Such announcement is currently intended to take
place on December 16, 2009.
Partial
Exercise of ADS Rights
Subject to the requirements for the exercise of ADS Rights
contained herein, if a registered holder of ADS Rights wishes to
exercise only a portion of its total ADS Rights, such holder
will need to so indicate on the ADS subscription form; and if a
beneficial owner of ADS Rights wishes to exercise only a portion
of its total ADS Rights, such holder will need to instruct the
financial intermediary through which it holds its ADS Rights to
debit the ADS Rights from the applicable book-entry account and
deliver the ADS Rights to the ADS Rights Agent, and further
instruct the ADS Rights Agent to subscribe only for the number
of ADS Rights that it wishes to exercise.
Exchange
of ADS Rights for Tradable Rights
If an ADS Rights holder wishes to surrender any ADS Rights and
receive the underlying Tradable Rights, such holder must
instruct the ADS Rights Agent to cancel its ADS Rights before
5:00 p.m. (New York City time) on December 11, 2009.
After accounting for the ADS Rights Agents fees of up to
$0.05 per ADS Right in respect of which such instruction was
given, expenses, and any applicable taxes, the ADS Rights Agent
will deliver the underlying Tradable Rights to an account in the
Euroclear Netherlands, Clearstream or Euroclear systems
specified by such holder. Should you decide to so cancel any ADS
Rights held by you, you will be solely responsible for providing
a securities brokerage account in the Euroclear Netherlands,
Clearstream or Euroclear systems that can accept the rights for
your benefit. To the extent Tradable Rights represented by the
ADS Rights surrendered cannot be delivered due to incomplete or
erroneous instructions or to the extent the delivery of the
Tradable Rights is rejected by the broker, custodian or
intermediary to whom the ADS Rights Agent is instructed to
deliver such Tradable Rights, the ADS Rights will lapse.
Furthermore, you will be solely responsible for causing any
actions to be taken (or not) with respect to those Tradable
Rights, including the timely exercise or sale of the Tradable
Rights. ADS Rights may be surrendered for delivery of BDR Rights
through the DTC system or by completing and returning an ADS
subscription form. None of ING, JPMorgan Chase Bank, N.A., or
any of their respective agents (including, without limitation,
the custodian for the Depositary) assumes any responsibility for
the required securities brokerage account in the Euroclear
Netherlands, Clearstream or Euroclear systems or elsewhere or
for the execution of any such actions.
Sales of
Tradable Rights by the ADS Rights Agent
Assuming ADS Rights have not been exercised or exchanged as
described under Exercise of ADS Rights
and Exchange of ADS Rights for Tradable
Rights, Tradable Rights underlying ADS Rights may be sold
by the ADS Rights Agent in one of two ways:
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ADS Rights holders may deliver ADS Rights for cancellation along
with a fee of $0.05 per ADS Right so cancelled and direct the
ADS Rights Agent by no later than 5:00 p.m. (New York City
time) on December 11, 2009 to attempt to sell all or a
portion of the Tradable Rights underlying the ADS Rights on
behalf of such holder. The ADS Rights Agent will, assuming an
instruction to sell is received prior to 5:00 p.m. (New
York City time) on December 11, 2009, use reasonable
efforts to sell Tradable Rights underlying ADS Rights on
Euronext Amsterdam or Euronext Brussels beginning on the trading
day following the day on which the instruction to sell is
received. The ADS Rights Agent will distribute the net proceeds
from any such sale to the holders of ADS Rights entitled thereto
by whom it has been directed to make such sales on an averaged
or other practicable basis. The instruction to sell ADS
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Rights may be given through the DTC system or by completing and
returning an ADS subscription form.
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Assuming ADS Rights have not been exercised, exchanged or
otherwise sold as described under The Offering
ADS Rights Exercise of ADS Rights,
Exchange of ADS Rights for Tradable
Rights
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S-52
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and Sales of Tradable Rights by the ADS Rights
Agent, the holder will be deemed to have delivered his ADS
Rights to the ADS Rights Agent for cancellation and the ADS
Rights Agent will use reasonable efforts to sell the Tradable
Rights underlying the ADS Rights for such holder on or after
December 14, 2009 for a fee of US$0.05 per ADS Right
cancelled. Sales will be made either on Euronext Amsterdam or
Euronext Brussels beginning on the trading day following the end
of the ADS Rights Exercise Period until 5:00 p.m. (New York
City time) on December 14, 2009. The ADS Rights Agent will
distribute the net proceeds, after accounting for the
Depositarys fees of US$0.05 per ADS Right cancelled and
any currency conversion expenses, any applicable taxes and any
other applicable expenses, to the relevant holders of ADS Rights
entitled thereto.
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Payment,
Delivery, Clearing and Settlement of the New ADSs
The New ADSs have been accepted for clearance through DTC.
Delivery of the New ADSs is expected to take place on or about
December 23, 2009, or on such other date as ING Groep N.V.
may determine. Delivery of the New ADSs against payment will
take place through the book-entry systems of DTC. The Depositary
will receive the New BDRs to be represented by the New ADSs on
or about December 21, 2009. The Depositary will then
deliver to your brokers account or register in your name
the New ADSs subscribed for as soon as practicable thereafter,
provided that you have paid the ADS Rights Agent any shortfall
arising from the conversion of the US dollar payment and your
payment of the ADS Subscription Price has cleared.
ADS
Information Agent
Georgeson is acting as information agent for the Rights Offering
for holders of ADS Rights. If you have any questions on the
offering of ADS Rights or would like a copy of this prospectus
supplement, please telephone
(888) 877-5426
(from 9:00 a.m. to 9:00 p.m. (New York time) Monday to
Friday), or, if you are a bank or broker,
(212) 440-9800
(from 9:00 a.m. to 9:00 p.m. (New York time) Monday to
Friday). If you lose your subscription form, please telephone
JPMorgan Chase Bank, N.A. at (800) 990-1135.
Please note that, for legal reasons, the helpline will only be
able to provide you with information contained in or
incorporated by reference into the prospectus supplement, and
will not be able to give advice on the merits of the Rights
Offering or to provide financial advice.
Tradable
Rights
Timetable
We may adjust the dates, times and periods set out in the
timetable and throughout this prospectus supplement. If we
should decide to adjust the dates, times
and/or
periods, we will notify Euronext Amsterdam N.V. and the
Netherlands Authority for the Financial Markets (Stichting
Autoriteit Financiële Markten) (the
AFM) and issue a press release accordingly.
The below relates to the offering of Tradable Rights to acquire
New BDRs. For information relating to ADS Rights, see
ADS Rights above.
Subject to acceleration or extension of the timetable for the
offering of Tradable Rights is envisaged as follows:
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November 27, 2009 |
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Notice published via press release and on the Companys
website regarding the publication of the prospectus supplement |
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November 27, 2009 |
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Publication of the terms of the Rights Offering via press
release and on the Companys website |
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November 27, 2009 |
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Filing of prospectus supplement with the US
Securities & Exchange Commission |
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November 27, 2009 |
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BDR Record Date for ING shares receiving Tradable Rights (after
close of business) |
S-53
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November 27, 2009 |
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Book entry of the Tradable Rights of the shareholders based on
their holdings as of the Record Date (before start of trading in
Tradable Rights) |
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November 30, 2009 |
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Ex-right trading of bearer depositary receipts |
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November 30, 2009 |
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Commencement of the Tradable Rights Exercise Period |
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December 15, 2009 |
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End of the Tradable Rights Exercise Period (3:00 p.m.
Amsterdam time) |
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On or about December 16, 2009 |
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Placement of Rump Shares, if any, in the Global Offering |
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December 16, 2009 |
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Publication of the Global Offering Price, if applicable |
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December 21, 2009 |
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Listing of New BDRs on Euronext Amsterdam and Euronext Brussels |
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December 21, 2009 |
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First day of trading of the New BDRs on Euronext Amsterdam and
Euronext Brussels |
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December 21, 2009 |
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Closing Date: Payment for and delivery of the subscribed New
BDRs (and the New Ordinary Shares) against payment of the BDR
Subscription Price into collective custody |
The last date
and/or time
before which notification of exercise instructions may be
validly given by you may be earlier than the date
and/or time
specified above as the end of the Tradable Rights Exercise
Period, depending on the financial intermediary through which
your Tradable Rights are held.
New
BDRs
The New BDRs will be 1,768,412,544 bearer depositary receipts
representing an equal number of New Ordinary Shares, which are
ordinary shares of ING Groep N.V. with a par value of
EUR 0.24 each. The New Ordinary Shares will be fully
fungible and rank pari passu in all respects with the
other Existing Ordinary Shares. The New BDRs may be represented
by New ADSs.
The New Ordinary Shares (to be issued in the Offering) will
represent approximately 46.2% of the total issued share capital
of the Company immediately after completion of the Offering.
BDR
Subscription Price
The BDR Subscription Price will be EUR 4.24 per New BDR.
The BDR Subscription Price was established on November 26,
2009, together with the subscription ratio. On November 26,
2009, the closing price of the ING shares was EUR 8.92 per
share on Euronext Amsterdam and on Euronext Brussels. The BDR
Subscription Price is to be paid to the Company on the Closing
Date, which is expected to be on or about December 21, 2009.
Allocation
of Tradable Rights
On November 30, 2009, before commencement of trading of the
Existing BDRs or Existing Ordinary Shares on Euronext Amsterdam,
holders of Existing BDRs or Existing Ordinary Shares (other than
the Trust) will be granted by the Company one Tradable Right per
Existing BDR or Existing Ordinary Share held as of the Record
Date (i.e., November 27, 2009 after close of
business). 7 Tradable Rights will grant the holder thereof the
right to subscribe for 6 New BDRs at the Subscription Price of
EUR 4.24 per New BDR.
Tradable Rights will be allotted to holders of Existing BDRs or
Existing Ordinary Shares (other than the Trust) as follows:
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Existing BDRs held in the Euroclear system through custody
accounts with custodian banks or brokers, or with the custodian
for the Depositary: Every Existing BDR or
Existing Ordinary Share will be allocated one Tradable Right on
the first day of the BDR Rights Exercise Period before start of
trading in Tradable Rights.
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S-54
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Allocation and notification to holders of Existing BDRs or
Existing Ordinary Shares, other than the custodian for the
Depositary, will be made by their respective custodian bank or
broker.
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Ordinary shares held in registered form: Each
ordinary share (except the ordinary shares held by the Trust)
registered in the Companys shareholders register
will be allocated one Tradable Right on the first day of the BDR
Rights Trading Period before start of trading in Tradable
Rights. The Company will send you a letter informing you of the
number of Tradable Rights allocated to you and of the procedures
you must follow to exercise or trade your Tradable Rights. You
can also contact the Company at ING Wholesale Banking Securities
Services, Location BV 07.18 Van Heenvlietlaan 220 1083CN
Amsterdam, The Netherlands, or by telephone at +31 20 797 9389
if you have any questions.
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Trading
and Sale of Tradable Rights
From November 30, 2009, the Existing BDRs will be traded on
Euronext Amsterdam and Euronext Brussels ex subscription
right, at which time the Tradable Rights will start
trading on Euronext Amsterdam and Euronext Brussels.
In connection with the Offering of the New Shares, the Tradable
Rights (ISIN NL0009307941) will be traded on Euronext Amsterdam
and Euronext Brussels during the period from November 30,
2009 (inclusive) to 1:15 p.m. (Amsterdam time) on
December 15, 2009 (inclusive). Trades in the Tradable
Rights on Euronext Amsterdam and Euronext Brussels are expected
to be settled three trading days after execution (T+3).
During the period during which Tradable Rights are to be traded,
shareholders who hold their ING shares in the Euroclear system
will have the opportunity (but are under no obligation) to trade
their Tradable Rights and, accordingly, may instruct their
custodian bank or broker to sell part or all of their Tradable
Rights or buy additional Tradable Rights on Euronext Amsterdam
or Euronext Brussels.
The Underwriters may take suitable measures in order to create
the liquidity required for orderly trading in the Tradable
Rights, such as buying and selling Tradable Rights. In so doing,
the Underwriters reserve the right to carry out hedging
transactions in ING shares or corresponding derivatives. See
General Market-making and other
trading activities.
Exercise
of Tradable Rights
In accordance with the subscription rights ratio of 7:6, the
exercise of 7 Tradable Rights entitles the exercising holder to
subscribe for 6 New BDRs against payment of the BDR Subscription
Price.
In order to avoid being excluded from being exercised, Tradable
Rights must be validly exercised vis-à-vis the Company
during the Tradable Rights Exercise Period that runs from
November 30, 2009 to 3:00 pm (Amsterdam time) on
December 15, 2009.
The exercise of Tradable Rights is irrevocable and may not be
withdrawn, cancelled or modified, except in circumstances where
permitted under applicable law and the Underwriting Agreement.
Tradable Rights may only be exercised in multiples of 7. The
instructions for exercising Tradable Rights are as follows:
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Existing BDRs held in the Euroclear system through custody
accounts with custodian banks or
brokers: Instructions for exercising Tradable
Rights need to be directed to the respective custodian bank or
broker, as the case may be, within the time period set by such
custodian bank or broker and will be subject to the
shareholders respective arrangements with it. Shareholders
are asked to follow the instructions of their custodian bank or
broker. In the event that shareholders have not been so informed
by the start of the Rights Exercise Period, they should contact
their custodian bank or broker. Tradable Rights not exercised as
described above, including Tradable Rights in excess of the
nearest integral multiple of the subscription ratio, will
continue to be reflected in the securities account of each
holder of unexercised Tradable Rights solely for the purpose of
the payment of the Excess Amount (as defined below), if any.
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S-55
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Ordinary shares held in registered
form: Instructions for exercising Tradable Rights
need to be directed to the respective custodian bank or broker,
as the case may be, within the time period set by such custodian
bank or broker and will be subject to the shareholders
respective arrangements with it. Shareholders are asked to
follow the instructions of their custodian bank or broker. In
the event that shareholders have not been so informed by the
start of the Tradable Rights Exercise Period, they should
contact the Company. Tradable Rights not exercised as described
above, including Tradable Rights in excess of the nearest
integral multiple of the subscription ratio, will continue to be
reflected in the securities account of each holder of
unexercised Tradable Rights solely for the purpose of the
payment of the Excess Amount (as defined below), if any.
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ING Bank N.V. is acting as principal subscription agent.
ING Bank N.V. reserves the right to treat as invalid any
acceptance or purported exercise of Tradable Rights or
acceptance of the offer of New Shares which appears to ING Bank
N.V. or its agents to have been executed, effected or dispatched
in a manner which may involve a breach of the securities laws or
regulations of any jurisdiction or if ING Bank N.V. or its
agents believe that the same may violate applicable legal or
regulatory requirements.
Persons holding Tradable Rights wishing to exercise statutory
withdrawal rights in accordance with Dutch law, must do so by
lodging a written notice of withdrawal (which shall not include
a notice sent by facsimile or any other form of electronic
communication) with its depositary bank for immediate
transmittal to ING Groep N.V. so as to be received by ING Groep
N.V. no later than two business days after the date on which the
prospectus supplement is published. Notices of withdrawal given
by any other means or which are deposited with or received by
ING Groep N.V. after the expiry of such period will not
constitute a valid withdrawal.
After the Tradable Rights Exercise Period has ended, we will
announce the results of the Rights Offering and the commencement
of the Global Offering, if any, by means of a press release.
Such announcement is currently intended to take place on
December 16, 2009. After the Global Offering has ended, and
the placement of Rump Shares, if any, has taken place, we will
announce the results of the Global Offering by means of a press
release, including the aggregate number of Rump Shares validly
subscribed and paid for, and any Excess Amount to be
distributed. Such announcement is currently intended to take
place on December 16, 2009.
Payment,
Delivery, Clearing and Settlement of the New BDRs
The New BDRs have been accepted for clearance through Euroclear
Netherlands, Clearstream and Euroclear. Delivery of the New BDRs
against payment of the BDR Subscription Price or the Global
Offering Price, as the case may be, is expected to take place on
or about December 21, 2009, or on such other date as ING
Groep N.V. may determine. Delivery of the New BDRs against
payment will take place through the book-entry systems of
Euroclear Netherlands, Euroclear and Clearstream Luxembourg.
S-56
General
Unexercised
Tradable Rights and the Global Offering
Tradable Rights can no longer be exercised after the expiration
of the Tradable Rights Exercise Period. At that time, any
unexercised Tradable Rights (including any Tradable Rights
received by ADS Rights holders upon exchange of their ADS
Rights) will continue to be reflected in your securities
account, or, in the case of ADS Rights holders that have not
exchanged their ADS Rights for Tradable Rights, the account of
the Depositary or its custodian, solely for the purpose of the
distribution of the Excess Amount, if any. New BDRs for which
Tradable Rights have not been validly exercised prior to the end
of the Tradable Rights Exercise Period (i.e., the Rump
Shares) may be sold by the Joint Global Coordinators and Joint
Bookrunners, acting on behalf of the Underwriters, in their sole
discretion, in the Global Offering by way of (1) private
placements to certain institutional investors outside the United
States in reliance on Regulation S under the Securities Act
and in accordance with applicable securities laws and (2) a
public offering in the United States under the Securities Act.
Global
Offering Price
The Global Offering Price, if applicable, is expected to be
determined following an institutional bookbuilding procedure
commencing on or about December 16, 2009 and is expected to
be published in the electronic media on or about
December 16, 2009. The Global Offering Price, if any, will
be denominated in Euro.
In any event, including in the case of a Global Offering, the
issue price for the New Shares and New ADSs will be the BDR
Subscription Price and as described under
Excess Amount below, the Company will
not be entitled to receive any part of the Excess Amount, if any.
Excess
Amount
Upon the completion of the Offering, if the aggregate proceeds
for the Rump Shares offered and sold in the Global Offering,
after deduction of selling expenses (including any value added
tax) exceed the aggregate BDR Subscription Price for such Rump
Shares, this Excess Amount will be paid in the following manner:
Each holder of a Tradable Right (including any Tradable Rights
received by ADS Rights holders upon exchange of their ADS
Rights) that is not exercised at the end of the Tradable Rights
Exercise Period will be entitled to receive a part of the Excess
Amount in cash proportional to the number of unexercised
Tradable Rights reflected in such holders securities
account, but only if that amount exceeds 0.01 per
unexercised Tradable Right. In respect of Tradable Rights
underlying ADS Rights that have not been exercised, the
Depositary will convert these proceeds to US dollars and remit
the proceeds pro rata to the holders of such ADS Rights.
Payments will be made following the withholding of any
applicable taxes.
If it has been announced that an Excess Amount is available for
payment to holders of unexercised Tradable Rights and you have
not received payment thereof within a reasonable time following
the closing of the Global Offering, you should contact the
financial intermediary through which you hold unexercised
Tradable Rights.
We cannot guarantee that the Global Offering will be
successfully completed. None of us, the Joint Global
Coordinators and Joint Bookrunners, the Underwriters, the
Subscription Agent or any person procuring subscriptions for
Rump Shares will be responsible for any lack of Excess Amount
arising from any placement of the Rump Shares in the Global
Offering. The Excess Amount, if any, will only be available if
the Rump Shares are placed within two business days of the end
of the Tradable Rights Exercise Period.
ING Group will not be entitled to receive any part of the Excess
Amount.
Pre-emptive
Rights
The statutory pre-emptive rights (wettelijke
voorkeursrechten) in respect of the Rights Offering have
been excluded for the purpose of the Rights Offering. Both the
New BDRs and New Ordinary Shares and the Tradable Rights will be
created and issued under Dutch law.
S-57
Existing
Shares held in Treasury
As of October 31, 2009, the Company directly or indirectly
held a total of 35,041,271 Existing Shares. Such shares are
held, inter alia, to hedge awards granted under employee
equity compensation plans, including employee options.
Additionally, ING shares are used for market making and hedging
purposes. Existing Shares held in treasury will be allocated
Tradable Rights in the Rights Offering. The Company will sell
the Tradable Rights allocated to such shares.
Voting
Rights
The New Ordinary Shares will carry the same voting rights as the
Existing Ordinary Shares.
The New BDRs will carry the same entitlement to a voting proxy
as the Existing BDRs.
The New ADSs will carry the same entitlement as the Existing
ADSs to instruct the Depositary as to the exercise of a voting
proxy associated with the ADSs.
Distributions
The New Ordinary Shares underlying the New BDRs and the New ADSs
will be fully fungible and rank pari passu with the
Existing Ordinary Shares. As such, they will be entitled to any
distributions declared after the closing of the Offering.
Dilution
We expect to issue 1,768,412,544 New Ordinary Shares (and an
equal number of New BDRs, including New ADSs underlying New
BDRs) pursuant to the Offering. A holder of Rights that has not
exercised such Rights at the end of the ADS Rights Exercise
Period or Tradable Rights Exercise Period, as applicable, will
experience dilution of approximately 46.2% to its interest in
the Company as a result of the issue of the New Shares
(including New ADSs underlying New BDRs) pursuant to the
Offering. A holder who exercises the total number of Rights
granted to it with respect to the New Shares or New ADSs, as
applicable, and, accordingly, subscribes to the number of New
Shares or New ADSs offered to it in the Offering, will not
experience dilution to its interests in the Company as a result
of the Offering upon its completion.
Lock-Up
The Company has agreed with the Underwriters that, except for
the issue of ING shares in the Offering, for a period ending
90 days after the Closing Date, it will not directly or
indirectly issue, sell, offer or otherwise dispose of any ING
shares or other securities convertible or exchangeable into ING
shares or representing rights to subscribe for ING shares or
enter into a transaction with similar economic effect, subject
to certain exceptions including (1) the issuance by the
Company of bearer depositary receipts or ordinary shares upon
the exercise of an option, right, warrant or the conversion of a
security outstanding on the date of the Underwriting Agreement,
(2) transactions by any person other than the Company
relating to bearer depositary receipts or ordinary shares of ING
Groep N.V. or other securities acquired in open market
transactions after the completion of the offering of the New
Shares to be sold in the Offering, (3) sales of treasury
shares (or derivative transactions directly related thereto)
carried out in a manner consistent with the Companys
normal treasury activity, (4) market making, hedging,
brokerage and asset management activities in the ordinary course
of trading, and (5) hedging by the Company of its exposures
under existing employee option and long-term incentive programs.
Stock
Exchange Listing, ISINs, Common Codes, Ticker Symbols
Applications have been or will be made for listing the New BDRs
on Euronext Amsterdam and Euronext Brussels and for listing of
the New ADSs representing the New BDRs on the NYSE. The listings
are expected to become effective on December 21, 2009. The
first trading day for the New BDRs is scheduled to be
December 21, 2009. Upon commencement of trading, the New
BDRs will be included in the existing listing of ING shares and
the New ADSs will be included in the existing listing of ADSs.
All dealings in Rights, New Shares and New ADSs are at the sole
risk of the parties concerned. Euronext Amsterdam N.V., the
Company, the Joint Global Coordinators and Joint
S-58
Bookrunners, the Underwriters, the Listing Agent, the ADS Rights
Agent and the Subscription Agent do not accept any
responsibility or liability by any person as a result of the
withdrawal of the Offering or (the related) annulment of any
transactions in Rights, New Shares or New ADSs.
The securities identification numbers for the Tradable Rights
and the New BDRs are as follows:
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International Securities Identification
Numbers (ISIN): |
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Existing BDRs: NL0000303600 (Euronext Amsterdam and Euronext
Brussels) Existing ADSs: US4568371037 (NYSE) |
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Tradable Rights: NL0009307941 (Euronext Amsterdam and Euronext
Brussels) |
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CUSIPs: |
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Existing BDRs: N4578E413 (Euronext Amsterdam and Euronext
Brussels) Existing ADSs: 456837103 (NYSE) |
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SEDOL: |
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Existing BDRs: 7154182 (Euronext Amsterdam and Euronext Brussels) |
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Existing ADSs: 2452643 (NYSE) |
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Common Codes: |
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Existing BDRs: 013208344 (Euronext Amsterdam and Euronext
Brussels) |
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Existing ADSs: 010377293 (NYSE) |
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Tradable Rights: 047074070 (Euronext Amsterdam and Euronext
Brussels) |
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Ticker Symbols: |
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Existing BDRs: INGA (Euronext Amsterdam and Euronext
Brussels) Existing ADSs: ING (NYSE) |
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Tradable Rights: INGRI (Euronext Amsterdam and
Euronext Brussels) |
Withdrawal
of the Offering
The Offering is underwritten by the Underwriters based on an
underwriting agreement from which the Underwriters can withdraw
under certain circumstances. If the underwriting agreement is
terminated, the Offering will be cancelled, and the Company will
not receive the proceeds expected to be generated by the
Offering. See Underwriting.
If the Offering is withdrawn, both the exercised and unexercised
Rights will be forfeited without compensation to their holders
and subscription for and allotments of New ADSs and New BDRs
that have been made will be disregarded. Any subscription
payments received by ING Groep N.V., the Subscription Agent, the
ADS Rights Agent, the Paying Agent or the Underwriters will be
returned without interest. Any such forfeiture of Rights will be
without prejudice to the validity of any settled trades in the
Rights. There will be no refund of any Rights purchased in the
market. All trades in Rights, New Shares and New ADSs are at the
sole risk of the parties concerned. The Underwriters, the
Company, the Subscription Agent, the ADS Rights Agent, the
Listing Agent, the Paying Agent and Euronext Amsterdam N.V. do
not accept any responsibility or liability with respect to any
person as a result of the withdrawal of the Offering or (the
related) annulment of any transactions in Rights, New BDRs or
New ADSs on Euronext Amsterdam, Euronext Brussels or on the
NYSE, as applicable. See Risk Factors Risks
Related to the Offering If the Offering does not
take place, the credit ratings and funding costs could be
adversely affected, and the price of ING shares could drop
sharply. In either case, the Rights could become worthless.
Resolutions
The Offering was authorized by resolutions of the Executive
Board and the Supervisory Board prior to the date hereof. On
November 25, 2009, the General Meeting granted the
authority to the Executive Board to issue the new Ordinary
Shares and to limit or exclude the statutory pre-emptive rights
in respect of the Offering.
S-59
Paying
Agent
ING Bank N.V. is the global paying agent with respect to the
bearer depository receipts.
Listing
Agent
ING Bank N.V. is the listing agent with respect to the Tradable
Rights and the New BDRs.
Fees and
Expenses
In connection with the Offering, we anticipate that we will
receive total gross proceeds of EUR 7.5 billion. After
deducting fees and expenses of EUR 235,206,000, we
anticipate that we will receive net proceeds of
EUR 7,262,863,187. See Expenses of
the Offering.
Information
Agent
ING has appointed Georgeson as its information agent for the
Offering. Georgeson will receive inquiries regarding the
Offering, prospectus supplement and accompany prospectus
requests via telephone as of November 27, 2009 at
(888) 877-5426
or
(212) 440-9800
(if you are a bank or broker) from 9:00 a.m. to
9:00 p.m. (New York City time) Monday to Friday.
Market-making
and other trading activities
Certain of the underwriters have advised the Company that they
are currently making a market for the Existing Shares and they
intend to make a market in the Rights inside and outside of the
United States. The Underwriters may also engage in transactions
for the accounts of others in the Existing Shares and the Rights
and certain derivatives linked to the Existing Shares of the
Company.
In addition, in connection with the Offering, the Underwriters
may engage in trading activity with respect to the Rights and
the Existing Shares during the applicable Rights Exercise Period
for the sole purpose of hedging their commitments under the
Underwriting Agreement. Such activity may include purchases and
sales of the Rights and the Existing Shares and related or other
securities and instruments. These transactions may include short
sales of the Existing Shares and purchases of the Rights which
cover the positions created by short sales.
If these market-making and other activities are commenced, they
may be discontinued at any time at the sole discretion of the
relevant Underwriter and without notice. These activities may
occur on Euronext Amsterdam, Euronext Brussels and the NYSE, in
the
over-the-counter
market or elsewhere outside the United States in accordance with
applicable law and regulation.
During the distribution of BDRs representing ING shares
(including in the form of ADSs) in the Rights Offering and the
Global Offering, if applicable, ING and certain of its
affiliates intend to engage in various dealing and brokerage
activities involving BDRs representing ING shares (including in
the form of ADSs) when and to the extent permitted by applicable
law. Among other things, ING and certain of its affiliates, as
the case may be, intend (1) to make a market in BDRs
representing ING shares by purchasing and selling BDRs
representing ING shares for their own account or to facilitate
customer transactions; (2) to make a market, from time to
time, in derivatives (such as options, warrants, convertible
securities and other instruments) relating to BDRs representing
ING shares for their own account and the accounts of their
customers; (3) to engage in trades in BDRs representing ING
shares for their own account and the accounts of their customers
for the purpose of hedging their positions established in
connection with the derivatives market making described above;
(4) to market and sell to customers funds which include
BDRs representing ING shares; (5) to provide to customers
investment advice and financial planning guidance which may
include information about BDRs representing ING shares,
(6) to engage in unsolicited brokerage transactions in BDRs
representing ING shares and derivatives thereon with their
customers; (7) to trade in BDRs representing ING shares and
derivatives thereon as part of their asset management activities
for the accounts of their customers; (8) to lend BDRs
representing ING shares, as well as accept BDRs representing ING
shares as collateral for loans; and (9) to trade in ING
BDRs representing ING shares in connection with employee
incentive and pension plans. These activities may occur on
Euronext Amsterdam, Euronext Brussels, Chi-X, Turquoise, in the
over-the-counter
market in The Netherlands or elsewhere outside the United States.
S-60
In addition, certain ING affiliates intend (1) to engage in
unsolicited brokerage transactions in BDRs representing ING
shares (including in the form of ADSs) and derivatives thereon
with their customers; (2) to trade in BDRs representing ING
shares (including in the form of ADSs) and derivatives thereon
as part of their asset management activities for the accounts of
their customers; (3) to lend BDRs representing ING shares
(including in the form of ADSs), as well as accept BDRs
representing ING shares (including in the form of ADSs) as
collateral for loans; and (4) to trade in ING BDRs
representing ING shares (including in the form of ADSs) in
connection with employee incentive plans, in each case in the
United States.
ING and its affiliates are not obliged to make a market in or
otherwise purchase BDRs representing ING shares (including in
the form of ADSs) or derivatives on BDRs representing ING shares
(including in the form of ADSs) and any such market making or
other purchases may be discontinued at any time. These
activities could have the effect of preventing or retarding a
decline in the market price of BDRs representing ING shares.
Expenses
of the Offering
The following are the expenses, other than fees payable to the
Underwriters, expected to be incurred by ING in connection with
the issuance and distribution of the Rights, the New Shares and
the New ADSs.
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|
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Euronext Amsterdam and Euronext Brussels Exchange listing fees
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EUR 770,500 |
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AFM fee |
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EUR 10,500 |
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SEC registration fee |
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EUR 200,000 |
|
Printing expenses |
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EUR 400,000 |
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Legal fees and expenses |
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EUR 3,100,000 |
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Accounting fees and expenses |
|
EUR 325,000 |
|
Transfer agents fees |
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EUR 2,100,000 |
|
Miscellaneous |
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EUR 3,300,000 |
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Total |
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EUR 10,206,000 |
All amounts other than the SEC registration fee and the NYSE,
Euronext Amsterdam and Euronext Brussels listing fees are
estimates.
Adjustments
to Employee Benefit Plans
ING intends to amend the strike price of options and/or the
number of options or shares or to otherwise adjust the
parameters of the various outstanding employee compensation and
benefit plans, in each case as allowed under such plans or
instruments, to adjust for the effects of the Offering.
S-61
UNITED
STATES FEDERAL INCOME TAXATION
This section describes the material US federal income tax
consequences of the acquisition, ownership and disposition of
the Rights, the New Shares and the New ADSs. This section
applies to you only if you are a US Holder (as defined below),
receive the Rights, the New Shares or the New ADSs pursuant to
the Offering, and hold those Rights, New Shares or New ADSs as
capital assets for US federal income tax purposes. This section
does not apply to you if you are a member of a special class of
holders subject to special rules, including:
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a dealer in securities;
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a trader in securities that elects to use a
mark-to-market
method of accounting for securities holdings;
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a tax-exempt organization;
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a life insurance company;
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a person liable for alternative minimum tax;
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a person that actually or constructively owns 10% or more of the
Companys voting stock;
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a person that holds the Rights, the New Shares or the New ADSs
as part of a straddle or a hedging or conversion transaction;
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a person deemed to sell the Rights, the New Shares or the New
ADSs in a constructive sale transaction;
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a person owning the Rights, the New Shares or the New ADSs
through a partnership or other pass-through entity; or
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a person whose functional currency is not the US dollar.
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This section is based on the Internal Revenue Code of 1986, as
amended, its legislative history, existing and proposed
regulations, published rulings, court decision, and the income
tax convention between the United States and the Netherlands
(the Treaty), all as of the date hereof. These laws
are subject to change, possibly on a retroactive basis. In
addition, this section is based in part upon the representations
of the Depositary and the assumption that each obligation in the
deposit agreement and any related agreement will be performed in
accordance with its terms.
You are a US Holder if you are a beneficial owner of the Rights,
the New Shares or the New ADSs, and you are, for U.S. federal
income tax purposes:
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an individual who is a citizen or resident of the United States;
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a domestic corporation;
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an estate whose income is subject to US federal income tax
regardless of its source; or
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a trust if a US court can exercise primary supervision over the
trusts administration and one or more US persons are
authorized to control all substantial decisions of the trust.
|
You should consult your own tax advisor regarding the US
federal, state, local and other tax consequences of receiving,
owning and disposing of the Rights, the New Shares or the New
ADSs in your particular circumstances.
In general, for US federal income tax purposes, (i) holders
of the New BDRs or the New ADSs will be treated as the owners of
the New Ordinary Shares represented by those New BDRs or New
ADSs, and (ii) exchanges of the New Ordinary Shares for the
New BDRs and then for the New ADSs, and exchanges of the New
ADSs for the New BDRs and then for the New Ordinary Shares, will
not be subject to US federal income tax.
S-62
Taxation
of the Rights
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1.
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Distribution
of the Rights
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The distribution of the Rights to a US Holder should not
constitute a taxable event to the US Holder for US federal
income tax purposes. The remainder of this US federal income tax
discussion assumes the distribution of the Rights will not
constitute a taxable event to the US Holder for US federal
income tax purposes.
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2.
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Basis and
holding period in the Rights
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The tax basis of the Rights received by a US Holder will be
zero, unless either (i) the fair market value of the Rights
on the date the Rights are distributed is 15% or more of the
value of the underlying Existing Shares with respect to which
the Rights are distributed, or (ii) the US Holder elects to
allocate to the Rights a portion of its basis in the underlying
Existing Shares with respect to which the Rights were
distributed. If either of these applies, basis will be allocated
in proportion to the relative fair market values of the Existing
Shares and the Rights on the date the Rights are distributed. A
US Holder who wishes to make the election to allocate a portion
of its basis to the Rights must attach a statement to this
effect to its US federal income tax return for the taxable year
in which the Rights are received. The election will apply to all
of the Rights received by the US Holder pursuant to the Offering
and, once made, will be irrevocable. In the event that the value
of the Rights is less than 15% of the value of the underlying
Existing Shares, US Holders should consult their own tax
advisors regarding the advisability of making such an election
and the specific procedures for doing so.
A US Holders holding period for the Rights will include
the US Holders holding period in the underlying Existing
Shares with respect to which the Rights were distributed
(whether or not basis is allocated to the Rights).
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3.
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Sale,
exchange or expiration of the Rights
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Subject to the passive foreign investment company rules (the
PFIC rules) described below, a US Holder will
recognize capital gain or loss on the sale or other disposition
of the Rights in an amount equal to the US dollar value of the
difference between the amount realized on the disposition and
the US Holders tax basis in the Rights. A US Holder
generally will not recognize taxable income upon the receipt of
the Tradable Rights through a surrender of ADS Rights.
Subject to the PFIC rules described below, if a US Holder does
not dispose of or exercise the Rights and, as a result, receives
a part of the Excess Amount, the US Holder should recognize
capital gain or loss in an amount equal to the US dollar value
of the difference between the amount the US Holder receives and
the US Holders tax basis in the Rights. If a US Holder
does not dispose of or exercise the Rights but does not receive
any amount as a part of the Excess Amount, the US Holder should
not recognize a loss for US federal income tax purposes.
Instead, if the US Holder previously allocated to those Rights a
portion of its tax basis in the underlying Existing Shares, that
basis will be re-allocated to the Existing Shares.
Capital gain of a non-corporate US Holder that is recognized in
taxable years beginning before January 1, 2011 generally
will be taxed at a maximum rate of 15% if the US Holder has a
holding period greater than one year, or at the same rates as
ordinary income if the US Holder has a holding period of one
year or less. A US Holders ability to deduct any capital
losses may be subject to limitations. The gain or loss will
generally be income or loss from sources within the United
States for foreign tax credit limitation purposes.
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4.
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Exercise
of the Rights
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A US Holder will not recognize taxable income upon the receipt
of the New Shares or the New ADSs through an exercise of the
Rights.
Taxation
of the New Shares and the New ADSs
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1.
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Basis and
holding period in the New Shares and the New ADSs
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A US Holders tax basis in the New Shares or the New ADSs
received through an exercise of the Rights will equal the US
dollar value of the sum of (i) the ADS Subscription Price or the
BDR Subscription Price, as applicable,
S-63
determined at the spot rate on the date of exercise and
(ii) the US Holders basis in the Rights exercised to
obtain the New Shares or the New ADSs.
A US Holders holding period for the New Shares or the New
ADSs received through an exercise of the Rights will not include
the US Holders holding period for the underlying Rights.
Subject to the PFIC rules described below, a US Holder will
include in gross income the gross amount of any distribution
(other than certain stock distributions) paid by the Company out
of its current or accumulated earnings and profits (as
determined for US federal income tax purposes) as dividend
income when the distribution is actually or constructively
received by the US Holder (or, in the case of the New ADSs, the
Depositary). Any distribution paid by the Company in excess of
its current and accumulated earnings and profits will be treated
as a non-taxable return of capital to the extent of the US
Holders tax basis in the New Shares or the New ADSs and
thereafter as a capital gain. Because the Company does not keep
account of its earnings and profits (as determined for US
federal income tax purposes), any distribution should generally
be treated as dividend income for US federal income tax purposes.
The gross amount of the distribution includes any Dutch tax
withheld from the distribution even if the US Holder does not in
fact receive the withheld amount.
Subject to certain limitations, the Dutch tax withheld in
accordance with the Treaty and paid over to the Netherlands will
be creditable or deductible against the US Holders US
federal income tax liability. However, any Dutch tax withheld
from distributions will not be eligible for a foreign tax credit
to the extent a refund of the tax withheld is available to the
US Holder. Further, any Dutch tax withheld may not be eligible
for a foreign tax credit to the extent that the Company reduces
the amount of dividend withholding tax paid over to the Dutch
tax administration by crediting withholding tax imposed on
certain dividends paid to the Company. Currently, the Company
may, with respect to certain dividends received from qualifying
non-Dutch subsidiaries, credit taxes withheld from those
dividends against Dutch withholding tax imposed on dividends
paid by the Company, up to a maximum of the lesser of
(i) 3% of the portion of the gross amount of the dividends
paid by the Company that is subject to Dutch withholding tax;
and (ii) 3% of the gross amount of certain dividends
received from qualifying non-Dutch subsidiaries during a certain
period. The credit reduces the amount of dividend withholding
tax that the Company is required to pay to the Dutch tax
administration but does not reduce the amount of tax the Company
is required to withhold from dividends paid by the Company.
Dividends paid to a non-corporate US Holder in taxable years
beginning before January 1, 2011 that constitute qualified
dividend income generally will be subject to a maximum tax rate
of 15% provided certain holding period requirements are met.
Dividends the Company pays with respect to the New Shares or the
New ADSs generally will be qualified dividend income. Dividends
paid to a corporate US Holder will not be eligible for the
dividends-received deduction generally allowed to
US corporations in respect of dividends received from other
US corporations.
For foreign tax credit limitation purposes, distributions that
are dividends for US federal income tax purposes will generally
be income from sources outside the United States and will,
depending on the US Holders circumstances, be
passive category income or general category
income.
The amount of the dividend includible in the income of a US
Holder will be the US dollar value of the payment made,
determined at the spot rate on the date the dividend is
includible in the income of the US Holder, regardless of whether
the payment is in fact converted to US dollars. Generally, any
gain or loss resulting from currency exchange fluctuations
during the period from the date the dividend is includible in
income to the date the payment is converted into US dollars will
be treated as ordinary income or loss and will not be eligible
for the special tax rate applicable to qualified dividend
income. The gain or loss will generally be income or loss from
sources within the United States for foreign tax credit
limitation purposes.
S-64
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3.
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Sale or
exchange of the New Shares and the New ADSs
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Subject to the PFIC rules described below, a US Holder will
recognize capital gain or loss on the sale or other disposition
of the New Shares or the New ADSs in an amount equal to the US
dollar value of the difference between the amount realized on
the disposition and the US Holders tax basis in the New
Shares or the New ADSs.
Capital gain of a non-corporate US Holder that is recognized in
taxable years beginning before January 1, 2011 generally
will be taxed at a maximum rate of 15% if the US Holder has a
holding period greater than one year, or at the same rates as
ordinary income if the US Holder has a holding period of one
year or less. A US Holders ability to deduct any capital
loss may be subject to limitations. The gain or loss will
generally be income or loss from sources within the United
States for foreign tax credit limitation purposes.
Passive
foreign investment company rules
The Company believes that it should not be a passive
foreign investment company (a PFIC) for US
federal income tax purposes, but this conclusion is made
annually and thus may be subject to change. If the Company is
treated as a PFIC and you are a US Holder that did not make a
mark-to-market
election, you will be subject to special rules with respect to
(i) any gain you realize on the disposition of your Rights
(under proposed regulations), New Shares or New ADSs, and
(ii) any excess distribution that the Company makes to you.
With certain exceptions, your Rights (under proposed
regulations), New Shares or New ADSs will be treated as stock in
a PFIC if the Company was a PFIC at any time during your holding
period in the Rights, New Shares or New ADSs. In addition,
dividends that you receive from the Company will not constitute
qualified dividend income to you if the Company is deemed to be
a PFIC either in the taxable year of the distribution or the
preceding taxable year, but instead will be taxable at rates
applicable to ordinary income.
US
information reporting and backup withholding
For a non-corporate US Holder, information reporting
requirements, on Internal Revenue Service Form 1099,
generally will apply to dividends or other taxable distributions
made to the US Holder within the United States or through
certain
US-related
financial intermediaries, and to the payment of proceeds to the
US Holder from the sale of the Rights, the New Shares or the New
ADSs effected at a US office of a broker. Additionally, backup
withholding may apply to such payments if the non-corporate US
Holder fails to provide an accurate taxpayer identification
number, is notified by the Internal Revenue Service that the US
Holder has failed to report all interest and dividends required
to be shown on the US Holders US federal income tax
returns, or in certain circumstances, fails to comply with
applicable certification requirements.
A US Holder subject to backup withholding generally may obtain a
refund of any amounts withheld under the backup withholding
rules that exceed the US Holders US federal income tax
liability by filing a refund claim with the Internal Revenue
Service.
S-65
THE
NETHERLANDS TAXATION
General
The information set out below is a general summary of certain
Dutch tax consequences in connection with the acquisition,
ownership and transfer of New Shares, New ADSs
and/or
Rights and the exercise of Rights. The summary does not purport
to be a comprehensive description of all the Dutch tax
considerations that may be relevant for a particular holder of
New Shares, New ADSs
and/or
Rights. Such holders may be subject to special tax treatment
under any applicable law and this summary is not intended to be
applicable in respect of all categories of holders of New
Shares, New ADSs
and/or
Rights. The summary is based upon the tax laws of the
Netherlands as in effect on the date of the date hereof,
including official regulations, rulings and decisions of the
Netherlands and its taxing and other authorities available in
printed form on or before such date and now in effect. These tax
laws are subject to change, which could apply retroactively and
could affect the continuing validity of this summary. As this is
a general summary, we recommend investors and shareholders to
consult their own tax advisors as to the Dutch or other tax
consequences of the acquisition, ownership and transfer of New
Shares, New ADSs
and/or
Rights and the exercise of Rights, including, in particular, the
application of their particular situations of the tax
considerations discussed below.
The Company is of the opinion that the ultimate beneficial
owners of the New BDRs and the New ADSs will be treated for
Dutch tax purposes as the absolute beneficial owners of the New
Ordinary Shares represented by the New BDRs and the New ADSs and
any references to New Shares and New ADSs should be read
accordingly. In addition, it is anticipated by the Company that
the ultimate beneficial owners of the ADS Rights will be treated
for Dutch tax purposes as the absolute beneficial owners of the
Tradable Rights represented by the ADS Rights and any references
to Rights should be read accordingly.
The following summary does not address the tax consequences
arising in any jurisdiction other than the Netherlands in
connection with the acquisition, ownership and transfer of New
Shares, New ADSs
and/or
Rights and the exercise of Rights.
Dividend
Withholding Tax
Dividends paid on New Shares and/or New ADSs to a holder of such
New Shares and/or New ADSs are generally subject to withholding
tax of 15% imposed by the Netherlands. Generally, the dividend
withholding tax will not be borne by us, but will be withheld by
us from the gross dividends paid on the New Shares and/or New
ADSs. The term dividends for this purpose includes,
but is not limited to:
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distributions in cash or in kind, deemed and constructive
distributions, and repayments of paid-in capital not recognized
for Dutch dividend withholding tax purposes;
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liquidation proceeds, proceeds of redemption of shares or,
generally, consideration for the repurchase of shares in excess
of the average paid-in capital recognized for Dutch dividend
withholding tax purposes;
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the nominal value of shares issued to a shareholder or an
increase of the nominal value of shares, as the case may be, to
the extent that it does not appear that a contribution to the
capital recognized for Dutch dividend withholding tax purposes
was made or will be made; and
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partial repayment of paid-in capital, recognized for Dutch
dividend withholding tax purposes, if and to the extent that
there are net profits (zuivere winst), within the meaning
of the Dividend Withholding Tax Act 1965 (Wet op de
dividendbelasting 1965), unless the General Meeting has
resolved in advance to make such a repayment and provided that
the nominal value of the shares concerned has been reduced by a
corresponding amount by way of an amendment of our Articles of
Association.
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A holder of New Shares and/or New ADSs who is, or who is deemed
to be, a resident of the Netherlands can generally credit the
withholding tax against his Dutch income tax or Dutch corporate
income tax liability and is generally entitled to a refund of
dividend withholding taxes exceeding his aggregate Dutch income
tax or Dutch corporate income tax liability, provided certain
conditions are met, unless such holder of New Shares and/or New
ADSs is not considered to be the beneficial owner of the
dividends.
S-66
A holder of New Shares and/or New ADSs, who is the recipient of
dividends (the Recipient) will not be considered the
beneficial owner of the dividends for this purpose if:
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as a consequence of a combination of transactions, a person
other than the Recipient wholly or partly benefits from the
dividends;
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whereby such other person retains, directly or indirectly, an
interest similar to that in the New Shares and/or New ADSs on
which the dividends were paid; and
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that other person is entitled to a credit, reduction or refund
of dividend withholding tax that is less than that of the
Recipient (Dividend Stripping).
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If dividends are distributed to a corporate holder of the New
Shares and/or New ADSs that qualifies in respect of the New
Shares and/or New ADSs for the participation exemption, as
defined in the Dutch Corporate Income Tax Act 1969 (Wet op de
vennootschapsbelasting 1969), and if such New Shares and/or
New ADSs are attributable to an enterprise carried out in the
Netherlands, such dividends are exempt from Dutch dividend
withholding tax provided that the recipient of the dividends can
be considered the beneficial owner of the dividends. In
addition, subject to certain conditions, a legal entity resident
in the Netherlands that is not subject to Dutch corporate income
tax may request a refund of the tax withheld, provided it is the
beneficial owner as defined by the Dutch Dividend
Withholding Tax Act 1965 of the dividends.
With respect to a holder of New Shares and/or New ADSs , who is
not and is not deemed to be a resident of the Netherlands for
purposes of Dutch taxation (including, if he is an individual, a
holder who opts to be taxed as a resident of the Netherlands for
purposes of Dutch taxation) and who is considered to be a
resident of the Netherlands Antilles or Aruba under the
provisions of the Tax Arrangement for the Kingdom of the
Netherlands (Belastingregeling voor het Koninkrijk), or
who is considered to be a resident of a country other than the
Netherlands under the provisions of a double taxation convention
the Netherlands has concluded with such country, the following
may apply. Such holder of New Shares and/or New ADSs may,
depending on the terms of and subject to compliance with the
procedures for claiming benefits under the Tax Arrangement for
the Kingdom of the Netherlands or such double taxation
convention, be eligible for a full or partial exemption from or
a reduction or refund of Dutch dividend withholding tax.
In addition, subject to certain conditions and based on Dutch
legislation implementing the Parent Subsidiary Directive
(Directive 90/435/EEC, as amended) an exemption from Dutch
dividend withholding tax will generally apply to dividends
distributed to certain qualifying entities (that have a legal
form mentioned in the annex to the Parent Subsidiary Directive
and that are subject to a profit-based tax as mentioned in the
relevant provision in the Parent-Subsidiary
Directive the Legal
Form Requirement and Subject to Tax
Requirement, respectively) that are residents in another
EU Member State and that hold an interest of at least 5% of the
nominal paid-in capital or, in relation to certain
jurisdictions, of the voting power of the distributing entity.
Furthermore, certain entities resident in an EU Member State and
not subject to tax on their profits in such EU Member State
might be entitled to obtain a full refund of Dutch dividend
withholding tax provided they would not have been subject to
Dutch corporate income tax had they been resident in the
Netherlands. Following recent case law by the Court of Justice
of the European Communities, a law proposal has been published
on September 15, 2009, which is intended to be effective as
per January 1, 2010 and which purports to make an exemption
from or refund of Dutch dividend withholding tax also available
to certain qualifying entities tax resident within the European
Economic Area under the same conditions that apply to entities
that are tax resident within the EU. In the same law proposal,
it is proposed to abolish both the Legal Form Requirement
and Subject to Tax Requirement for the above exemption. It
should be noted that, notwithstanding the proposed abolishment
of the Subject to Tax Requirement, the exemption of dividend
withholding tax will remain inapplicable for cross border
dividend payments to entities that perform a similar function to
Dutch fiscal investment institutions and exempt investment
institutions, as domestic dividend payments to these
institutions will also not benefit from the exemption.
The concept of Dividend Stripping, described above, is
applicable to determine whether a holder of New Shares and/or
New ADSs may be eligible for a full or partial exemption from,
reduction or refund of Dutch dividend withholding tax, as
described in the preceding paragraphs.
S-67
Rights issued by the Company and payments in cash of the Excess
Amount, if any, made by the Joint Global Coordinator(s) to
holders of Rights that were not exercised at the end of the
Rights Exercise Period, should not be subject to Dutch dividend
withholding tax.
Taxes on
Income and Capital Gains
General
The description of taxation set out in this section of this
prospectus supplement is not intended for any holder of New
Shares, New ADSs
and/or
Rights, who:
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is an individual and for whom the income or capital gains
derived from New Shares, New ADSs
and/or
Rights are attributable to employment activities, the income
from which is taxable in the Netherlands;
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holds a Substantial Interest, or a deemed Substantial Interest
in us (as defined below);
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is an entity that is a resident or deemed to be a resident of
the Netherlands and that, in whole or in part, is not subject to
or is exempt from Dutch corporate income tax;
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is an entity for which the income
and/or
capital gains derived in respect of New Shares, New ADSs
and/or
Rights are exempt under the participation exemption
(deelnemingsvrijstelling) as set out in the Dutch
Corporate Income Tax Act 1969; or
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is a fiscal investment institution (fiscale
beleggingsinstelling) or an exempt investment institution
(vrijgestelde beleggingsinstelling) as defined in the
Dutch Corporate Income Tax Act 1969.
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Generally a holder of New Shares, New ADSs
and/or
Rights will have a substantial interest in us (a
Substantial Interest) if he holds, alone or together
with his partner (statutorily defined term), whether directly or
indirectly, the ownership of, or certain other rights (including
the New Shares and/or New ADSs) over, shares representing 5% or
more of our total issued and outstanding capital (or the issued
and outstanding capital of any class of shares), or rights to
acquire shares, whether or not already issued, that represent at
any time 5% or more of our total issued and outstanding capital
(or the issued and outstanding capital of any class of shares)
or the ownership of certain profit participating certificates
that relate to 5% or more of the annual profit
and/or to 5%
or more of our liquidation proceeds. A holder of New Shares, New
ADSs and/or
Rights will also have a Substantial Interest in us if one of
certain relatives of that holder or of his partner has a
Substantial Interest in us. If a holder of New Shares, New ADSs
and/or
Rights does not have a Substantial Interest, a deemed
Substantial Interest will be present if (part of) a Substantial
Interest has been disposed of, or is deemed to have been
disposed of, without recognizing taxable gain.
Residents
of the Netherlands
Individuals
An individual who is resident or deemed to be resident in the
Netherlands, or who opts to be taxed as a resident of the
Netherlands for purposes of Dutch taxation (a Dutch
Resident Individual) and who holds New Shares, New ADSs
and/or
Rights is subject to Dutch income tax on income
and/or
capital gains derived from the New Shares, New ADSs
and/or
Rights at the progressive rate (up to 52%; rate for
2009) if:
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(i)
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the holder has an enterprise (onderneming) or an interest
in an enterprise (whether pursuant to a co-entitlement to the
net worth of such enterprise or otherwise) to which enterprise
the New Shares, New ADSs
and/or
Rights are attributable; or
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(ii)
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the holder derives income or capital gains from the New Shares,
New ADSs
and/or
Rights that are taxable as benefits from miscellaneous
activities (resultaat uit overige werkzaamheden, as
defined in the Dutch Income Tax Act 2001; Wet
inkomstenbelasting 2001), which include the performance of
activities with respect to the New Shares, New ADSs
and/or
Rights that exceed regular, active portfolio management
(normaal, actief vermogensbeheer).
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If neither condition (i) nor condition (ii) applies to
the holder of New Shares, New ADSs
and/or
Rights, taxable income with regard to the New Shares, New ADSs
and/or
Rights must be determined on the basis of a deemed return
S-68
on income from savings and investments (sparen en
beleggen), rather than on the basis of income actually
received or gains actually realized. At present, this deemed
return on income from savings and investments has been fixed at
a rate of 4% (rate for 2009) of the average of the
individuals yield basis (rendementsgrondslag) at
the beginning of the calendar year and the individuals
yield basis at the end of the calendar year, insofar as the
average exceeds a certain threshold. The average of the
individuals yield basis is determined as the fair market
value of certain qualifying assets held by the holder of the New
Shares, New ADSs
and/or
Rights less the fair market value of certain qualifying
liabilities on January 1 and December 31, divided by two.
The fair market value of the New Shares, New ADSs
and/or
Rights will be included as an asset in the individuals
yield basis. The deemed return on income from savings and
investments of 4% (rate for 2009) will be taxed at a rate
of 30% (rate for 2009).
Entities
An entity that is resident or deemed to be resident in the
Netherlands (a Dutch Resident Entity) will generally
be subject to Dutch corporate income tax with respect to income
and capital gains derived from the New Shares, New ADSs
and/or
Rights. The Dutch corporate income tax rate is 20% for the first
200,000 of taxable income and 25.5% for taxable income
exceeding 200,000 (rates applicable for 2009 and 2010).
Non-Residents
of the Netherlands
A person that is not a Dutch Resident Individual or Dutch
Resident Entity (a Non-Dutch Resident) and that
holds New Shares, New ADSs
and/or
Rights is generally not subject to Dutch income or corporate
income tax (other than dividend withholding tax described above)
on the income and capital gains derived from the New Shares, New
ADSs and/or
Rights, provided that:
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such Non-Dutch Resident does not derive profits from an
enterprise or deemed enterprise, whether as an entrepreneur
(ondernemer) or pursuant to a co-entitlement to the net
worth of such enterprise (other than as an entrepreneur or a
shareholder) which enterprise is, in whole or in part, carried
on through a permanent establishment or a permanent
representative in the Netherlands and to which enterprise or
part of an enterprise, as the case may be, the New Shares, New
ADSs and/or
Rights are attributable or deemed attributable;
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in the case of a Non-Dutch Resident who is an individual, such
individual does not derive income or capital gains from the New
Shares, New ADSs
and/or
Rights that are taxable as benefits from miscellaneous
activities in the Netherlands (resultaat uit overige
werkzaamheden, as defined the Dutch Income Tax Act 2001) ,
which include the performance of activities with respect to the
New Shares, New ADSs
and/or
Rights that exceed regular, active portfolio management
(normaal, actief vermogensbeheer).; and
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such Non-Dutch Resident is neither entitled to a share in the
profits of an enterprise nor co-entitled to the net worth of
such enterprise effectively managed in the Netherlands, other
than by way of the holding of securities or, in the case of an
individual, through an employment contract, to which enterprise
the New Shares, New ADSs
and/or
Rights or payments in respect of the New Shares, New ADSs
and/or
Rights are attributable.
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Gift,
Estate or Inheritance Taxes
Residents
of the Netherlands
Generally, gift, estate and inheritance tax will be due in the
Netherlands in respect of the acquisition of the New Shares, New
ADSs and/or
Rights by way of a gift by, or on the death of, a holder who is
a resident or deemed to be a resident of the Netherlands for the
purposes of Dutch gift, estate and inheritance tax at the date
of the gift or his or her death.
Non
Residents of the Netherlands
No Dutch gift, estate or inheritance taxes will be levied on the
transfer of New Shares, New ADSs
and/or
Rights by way of gift by or on the death of a holder, who is
neither a resident nor is deemed including based
upon
S-69
request to be a resident of the Netherlands for the
purpose of the relevant provisions (Non-Dutch Resident for
Purposes of Gift, Estate or Inheritance Tax), unless:
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the transfer is construed as an inheritance or bequest or as a
gift made by or on behalf of a person who, at the time of the
gift or death, is or is deemed to be a resident of the
Netherlands for the purpose of the relevant provisions; or
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the New Shares, New ADSs
and/or
Rights qualify as domestic assets (binnenlandse
bezittingen) as defined in the Inheritance Tax Act 1956
(Successiewet 1956). New Shares, New ADSs
and/or
Rights will generally qualify as domestic assets (i) if
they are attributable to an enterprise or part of an enterprise
which is carried on through a permanent establishment or a
permanent representative in the Netherlands, or (ii) if the
holder of such New Shares, New ADSs
and/or
Rights is entitled to a share in the profits of an enterprise
effectively managed in the Netherlands, other than by way of the
holding of securities or through an employment contract, to
which enterprise such New Shares, New ADSs
and/or
Rights are attributable.
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For purposes of Dutch gift, estate and inheritance tax, an
individual who is of Dutch nationality will be deemed to be a
resident of the Netherlands if he has been resident in the
Netherlands at any time during the 10 years preceding the
date of the gift or his death. In addition, for purposes of
Dutch gift tax, an individual will, regardless of his
nationality, be deemed to be resident of the Netherlands if he
has been a resident in the Netherlands at any time during the
12 months preceding the date of the gift.
For purposes of Dutch gift, estate and inheritance tax, if an
individual transfers the New Shares, New ADSs
and/or
Rights by way of a gift while he is not and is not deemed to be
a resident of the Netherlands and dies within 180 days
after the date of such gift, while being resident or deemed to
be resident in the Netherlands, such New Shares, New ADSs
and/or
Rights are construed as an inheritance or bequest at the time of
the death of such holder.
At present, a law proposal to amend the Inheritance Tax Act
1956, published on April 28, 2009 and intended to be
effective as per January 1, 2010, is pending before Dutch
parliament, which proposal intends to abolish the levy of Dutch
gift, estate and inheritance tax in respect of domestic assets
of Non-Dutch Residents for Purposes of Gift, Estate or
Inheritance Tax. In addition, this law proposal contains an
amendment to the effect that for purposes of the Inheritance Tax
Act a gift that is completed after the death of an individual
making such gift, will be construed as an inheritance or bequest
at the time of the death of the giver.
Value-Added
Tax
There is no Dutch value-added tax payable by a holder of New
Shares, New ADSs
and/or
Rights in respect of payments in consideration for the Offer of
the New Shares, New ADSs
and/or
Rights (other than value-added tax payable in respect of
services not exempt from Dutch value-added tax).
Other
Taxes and Duties
There is no Dutch registration tax, capital tax, customs duty,
stamp duty or any other similar tax or duty other than court
fees payable in the Netherlands by a holder of New Shares, New
ADSs and/or
Rights in respect of or in connection with the execution,
delivery and enforcement by legal proceedings (including any
foreign judgment in the courts of the Netherlands) of the New
Shares, New ADSs
and/or
Rights.
Residence
A holder of New Shares, New ADSs
and/or
Rights will not become or be deemed to become a resident of the
Netherlands solely by reason of holding these New Shares, New
ADSs and/or
Rights.
S-70
UNDERWRITING
Underwriters;
Underwriting Agreement
The Underwriters for the Offering are listed in the table below.
The Company, ING Bank N.V. and the Underwriters have entered
into the Underwriting Agreement. In the Underwriting Agreement,
the Underwriters have, severally and not jointly, agreed,
subject to certain terms and conditions, to underwrite the New
Shares (the Underwritten Shares) at the
Subscription Price (the Underwriting
Commitment). With respect to purchases under the
Underwriting Agreement, the Underwriters will subscribe for the
Underwritten Shares in the percentages and amounts indicated in
the table below.
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Underwriting
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Underwriting
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Commitment in
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Commitment in
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Number of
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Percentage of
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% of Share Capital
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% of Share Capital
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Underwritten
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Underwritten
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Prior to the
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after the
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Underwriters
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Shares
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Shares
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Offering
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Offering
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Goldman Sachs International
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265,261,887
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15.00%
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12.86%
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6.92%
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Peterborough Court
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133 Fleet Street
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London EC4A 2BB
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United Kingdom
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J.P. Morgan Securities Ltd.
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265,261,887
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15.00%
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12.86%
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6.92%
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125 London Wall
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London EC2Y 5AJ
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United Kingdom
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Credit Suisse Securities (Europe) Limited
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159,157,128
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9.00%
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7.71%
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4.15%
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One Cabot Square
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London E14 4QJ
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United Kingdom
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Morgan Stanley & Co. International plc
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159,157,128
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9.00%
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7.71%
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4.15%
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25 Cabot Square
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Canary Wharf
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London E14 4QA
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United Kingdom
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Deutsche Bank AG
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159,157,128
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9.00%
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7.71%
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4.15%
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1 Great Winchester Street
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London EC2N 2DB
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United Kingdom
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HSBC Bank Plc
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141,473,003
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8.00%
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6.86%
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3.69%
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8 Canada Square
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London E14 5HQ
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United Kingdom
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Citigroup Global Markets Limited
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106,104,752
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6.00%
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5.14%
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2.77%
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Citigroup Centre, Canada Square
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London E14 5LB
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United Kingdom
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S-71
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Underwriting
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Underwriting
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Commitment in
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Commitment in
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Number of
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Percentage of
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% of Share Capital
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% of Share Capital
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Underwritten
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Underwritten
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Prior to the
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after the
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Underwriters
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Shares
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Shares
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Offering
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Offering
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ABN AMRO Bank N.V.
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106,104,752
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6.00%
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5.14%
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2.77%
|
|
Gustav Mahlerlaan 10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1082 PP Amsterdam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Netherlands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UBS Limited
|
|
|
106,104,752
|
|
|
|
6.00%
|
|
|
|
5.14%
|
|
|
|
2.77%
|
|
1 Finsbury Avenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EC2M 2PP London
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fortis Bank (Nederland) N.V.
|
|
|
44,210,313
|
|
|
|
2.50%
|
|
|
|
2.14%
|
|
|
|
1.15%
|
|
Prins Bernhardplein 200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1097 JB Amsterdam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Netherlands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lloyds TSB Bank Plc
|
|
|
44,210,313
|
|
|
|
2.50%
|
|
|
|
2.14%
|
|
|
|
1.15%
|
|
25 Gresham Street
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
London EC2V 7HN
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United Kingdom
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A.
|
|
|
44,210,313
|
|
|
|
2.50%
|
|
|
|
2.14%
|
|
|
|
1.15%
|
|
Amstelplein 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1096 HA Amsterdam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Netherlands
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banco Santander S.A.
|
|
|
44,210,313
|
|
|
|
2.50%
|
|
|
|
2.14%
|
|
|
|
1.15%
|
|
Paseo de Pereda 9-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
39004 Santander
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Spain
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Banca IMI S.p.A
|
|
|
35,368,250
|
|
|
|
2.00%
|
|
|
|
1.71%
|
|
|
|
0.92%
|
|
Piazzetta Giordano dellAmore, 3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20121 Milano
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Italy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
UniCredit Group (Bayerische Hypo- und Vereinsbank AG)
|
|
|
35,368,250
|
|
|
|
2.00%
|
|
|
|
1.71%
|
|
|
|
0.92%
|
|
Kardinal-Faulhaber-Street 1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
80333 Munich
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BNP PARIBAS
|
|
|
17,684,125
|
|
|
|
1.00%
|
|
|
|
0.86%
|
|
|
|
0.46%
|
|
16, Boulevard des Italiens
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75009 Paris
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
France
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underwriting
|
|
Underwriting
|
|
|
|
|
|
|
Commitment in
|
|
Commitment in
|
|
|
Number of
|
|
Percentage of
|
|
% of Share Capital
|
|
% of Share Capital
|
|
|
Underwritten
|
|
Underwritten
|
|
Prior to the
|
|
after the
|
Underwriters
|
|
Shares
|
|
Shares
|
|
Offering
|
|
Offering
|
|
COMMERZBANK Aktiengesellschaft
|
|
|
17,684,125
|
|
|
|
1.00%
|
|
|
|
0.86%
|
|
|
|
0.46%
|
|
Kaiserstrasse 16 (Kaiserplatz)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60311 Frankfurt am Main
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Germany
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Société Générale
|
|
|
17,684,125
|
|
|
|
1.00%
|
|
|
|
0.86%
|
|
|
|
0.46%
|
|
29 Boulevard Haussmann
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75009 Paris
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
France
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,768,412,544
|
|
|
|
100%
|
|
|
|
|
|
|
|
|
|
According to the Underwriting Agreement, the Underwriters will
pay the Company the BDR Subscription Price for the New BDRs with
respect to which Tradable Rights are not exercised. Such New
BDRs may include New BDRs underlying New ADSs with respect to
which Tradable Rights underlying ADS Rights are not exercised.
Subject to certain conditions, the Underwriters will also pay to
each holder of a Tradable Right that was not exercised at the
end of the Tradable Rights Exercise Period a part of the Excess
Amount in cash proportional to the number of unexercised
Tradable Rights reflected in such holders securities
account, but only if that amount exceeds 0.01 per
unexercised Tradable Right. See The Offering
Excess Amount.
According to the Underwriting Agreement, the Company has agreed
to pay certain commissions as follows: (1) to the Joint
Global Coordinators and Joint Bookrunners a management fee of
0.60% of the gross proceeds of the Offering payable at the
closing date, (2) to the Representatives for distribution
to the Underwriters, an underwriting commission of 1.90% of the
gross proceeds of the Offering, payable at the closing date, and
(3) to the Joint Global Coordinators and Joint Bookrunners
and/or the
Underwriters at the Companys absolute discretion, after
consultation with ING Bank N.V., payable up to six months after
the closing date an incentive fee of up to 0.50% of the gross
proceeds of the Offering, including any amount of VAT. The
Company also agreed in the Underwriting Agreement to indemnify
the Underwriters against certain liability obligations,
including liabilities under applicable securities laws.
The Underwriting Agreement also provides that the obligations of
the Underwriters to consummate the Offering are subject to the
reservation that certain conditions are satisfied, including,
among others, (1) the absence of a downgrading, or notice
of a potential downgrading or review, of the rating assigned to
the Companys securities (other than any
perpetual or hybrid securities) to below
BBB+ or equivalent, (2) a material adverse change in the
results of operations, financial condition, shareholders
equity, management or business of ING (excluding the effects of
the Restructuring Plan), (3) the receipt of customary
confirmations and legal opinions meeting the Underwriters
requirements, and (4) the making of necessary filings and
the receipt of necessary approvals in connection with the
Offering.
The Underwriting Agreement may also be terminated by the
Representatives on behalf of the Underwriters, by giving notice
to the Company at any time prior to the closing date if certain
events occur, including customary termination events such as,
among others, a material adverse change in the results of
operations, financial condition, shareholders equity,
management or business of ING (excluding the effects of the
Restructuring Plan), a material adverse change in the financial
markets, suspension of trading of the Companys securities
and material disruptions in trading and settlement more
generally or if the closing has not occurred before
March 31, 2010.
One or more of the Underwriters may be unable to make offers or
sales of New Shares otherwise than through an agent, which may
be an affiliate of such Underwriter, that is a broker-dealer
registered as such under the US Securities Exchange Act of 1934.
S-73
Other
Relations Between the Underwriters and the Company
Certain of the Underwriters and their respective affiliates have
performed, and may in the future perform, various financial
advisory, investment banking, commercial banking or other
services for, or together with, the Company or its affiliates,
for which they have received and are likely to continue to
receive customary fees and expenses. The Company or its
affiliates have performed, and may also in the future perform,
various financial advisory, investment banking, commercial
banking or other services for, or together with, certain of the
Underwriters or their respective affiliates, for which they have
received and are likely to continue to receive customary fees
and expenses.
In connection with the Offering, each of the Underwriters and
any affiliate acting as an investor for its own account may
receive Rights (if they are current shareholders of the Company)
in connection with the Rights Offering, and may exercise its
right to take up such Rights and acquire New Shares, or may take
up Rump Shares, if any, as part of the Global Offering and in
that capacity, may retain, purchase or sell Rights, New Shares
or Rump Shares and any other securities of the Company or other
investments for its own account and may offer or sell such
securities (or other investments) otherwise than in connection
with the Offering. References in this prospectus supplement to
the Rump Shares being offered or placed should be read as
including any offering or placement of New Shares to any of the
Underwriters and any affiliate acting in such capacity. The
Underwriters do not intend to disclose the extent of any such
investments or transactions otherwise than in accordance with
any legal or regulatory obligation to do so.
During the distribution of BDRs representing ING shares
(including in the form of ADSs) in the Rights Offering and the
Global Offering, if applicable, ING and certain of its
affiliates intend to engage in various dealing and brokerage
activities involving BDRs representing ING shares (including in
the form of ADSs) when and to the extent permitted by applicable
law. Among other things, ING and certain of its affiliates, as
the case may be, intend (1) to make a market in BDRs
representing ING shares by purchasing and selling BDRs
representing ING shares for their own account or to facilitate
customer transactions; (2) to make a market, from time to
time, in derivatives (such as options, warrants, convertible
securities and other instruments) relating to BDRs representing
ING shares for their own account and the accounts of their
customers; (3) to engage in trades in BDRs representing ING
shares for their own account and the accounts of their customers
for the purpose of hedging their positions established in
connection with the derivatives market making described above;
(4) to market and sell to customers funds which include
BDRs representing ING shares; (5) to provide to customers
investment advice and financial planning guidance which may
include information about BDRs representing ING shares,
(6) to engage in unsolicited brokerage transactions in BDRs
representing ING shares and derivatives thereon with their
customers; (7) to trade in BDRs representing ING shares and
derivatives thereon as part of their asset management activities
for the accounts of their customers; (8) to lend BDRs
representing ING shares, as well as accept BDRs representing ING
shares as collateral for loans; and (9) to trade in ING
BDRs representing ING shares in connection with employee
incentive and pension plans. These activities may occur on
Euronext Amsterdam, Euronext Brussels, Chi-X, Turquoise, in the
over-the-counter
market in The Netherlands or elsewhere outside the United States.
In addition, certain ING affiliates intend (1) to engage in
unsolicited brokerage transactions in BDRs representing ING
shares (including in the form of ADSs) and derivatives thereon
with their customers; (2) to trade in BDRs representing ING
shares (including in the form of ADSs) and derivatives thereon
as part of their asset management activities for the accounts of
their customers; (3) to lend BDRs representing ING shares
(including in the form of ADSs), as well as accept BDRs
representing ING shares (including in the form of ADSs) as
collateral for loans; and (4) to trade in ING BDRs
representing ING shares (including in the form of ADSs) in
connection with employee incentive plans, in each case in the
United States.
ING and its affiliates are not obliged to make a market in or
otherwise purchase BDRs representing ING shares (including in
the form of ADSs) or derivatives on BDRs representing ING shares
(including in the form of ADSs) and any such market making or
other purchases may be discontinued at any time. These
activities could have the effect of preventing or retarding a
decline in the market price of BDRs representing ING shares.
S-74
VALIDITY
OF THE SECURITIES
Sullivan & Cromwell LLP, our US counsel, and Davis
Polk & Wardwell, US counsel for the underwriters, will
pass on certain matters relating to the securities with respect
to New York law. Stibbe N.V., Amsterdam, The Netherlands, and
Allen & Overy LLP, The Netherlands, will pass on
certain matters relating to the securities under Dutch law.
Sullivan & Cromwell LLP and Davis Polk &
Wardwell LLP may rely upon the opinion of Stibbe N.V. and
Allen & Overy LLP, as applicable, with respect to all
matters of Dutch law.
EXPERTS
The consolidated financial statements of ING Groep N.V.,
appearing in ING Groep N.V.s Report of Foreign Private
Issuer
(Form 6-K)
filed with the Securities and Exchange Commission on
October 23, 2009 (including schedules appearing therein),
have been audited by Ernst & Young Accountants LLP,
independent registered public accounting firm, as set forth in
their report thereon, included therein and incorporated herein
by reference. The report of Ernst & Young Accountants
LLP for the years 2007 and 2006 is based in part on the report
of KPMG Accountants N.V., independent registered public
accounting firm, whose report, in turn, is based upon the report
of Ernst & Young Réviseurs dEntreprises
SCCRL, independent registered public accounting firm. The
reports of KPMG Accountants N.V. and Ernst & Young
Réviseurs dEntreprises SCCRL are also included in the
above referenced
Form 6-K,
and are incorporated herein by reference. Such consolidated
financial statements are incorporated herein by reference in
reliance upon such reports given on the authority of such firms
as experts in accounting and auditing.
S-75
PROSPECTUS
ING GROEP N.V.
(Amsterdam, The
Netherlands)
Debt Securities
Ordinary Shares
American Depositary
Shares
Rights to Purchase Bearer
Depositary Receipts
ING Groep N.V. from time to time may offer to sell debt
securities, bearer depositary receipts of Stichting ING
Aandelen in respect of ordinary shares, par value
EUR 0.24 per share, American depositary shares
(ADSs), and rights to purchase bearer depositary
receipts of Stichting ING Aandelen in respect of ordinary
shares. Bearer depositary receipts representing our ordinary
shares are traded on Euronext Amsterdam by NYSE Euronext, which
we refer to as Euronext Amsterdam. Euronext Amsterdam is the
principal trading market for the bearer depositary receipts
representing our ordinary shares. The bearer depositary receipts
representing our ordinary shares are also listed on Euronext
Brussels. ADSs, representing bearer depositary receipts
representing our ordinary shares, are listed on the New York
Stock Exchange under the symbol ING.
When we offer securities, we will provide you with a prospectus
supplement describing the terms of the specific issues of
securities including the offering price of the securities and
the specific manner in which they may be offered. You should
read this prospectus and the accompanying supplement carefully
before you invest. We may offer and sell the securities directly
to purchasers, through underwriters, dealers or agents,
including ING Financial Markets LLC, one of our affiliates, or
through any combination of these methods, on a continuous or
delayed basis.
Investing in the securities involves risks. Please see the risk
factors set forth in our Annual Report on
Form 20-F
for the year ended December 31, 2008, and in other reports
incorporated herein by reference. We may include specific risk
factors in an applicable prospectus supplement under the heading
Risk Factors.
Neither the Securities and Exchange Commission nor any other
regulatory body has approved or disapproved of these securities
or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
We may use this prospectus in the initial sale of these
securities. In addition, one or more of our subsidiaries may use
this prospectus in a market-making transaction involving any of
these securities after our initial sale. Unless we or our
agent inform the purchaser otherwise in the confirmation of
sale, this prospectus is being used in a market-making
transaction.
ING
WHOLESALE
Prospectus
dated October 27, 2009
TABLE OF
CONTENTS
|
|
|
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|
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|
Page
|
|
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1
|
|
|
|
|
2
|
|
|
|
|
3
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
4
|
|
|
|
|
26
|
|
|
|
|
30
|
|
|
|
|
32
|
|
|
|
|
34
|
|
|
|
|
40
|
|
|
|
|
40
|
|
|
|
|
44
|
|
|
|
|
65
|
|
|
|
|
66
|
|
|
|
|
68
|
|
|
|
|
68
|
|
|
|
|
69
|
|
(i)
PROSPECTUS
SUMMARY
This summary highlights information contained elsewhere in this
prospectus or incorporated by reference into this prospectus as
further described below under Available Information.
This summary does not contain all the information that you
should consider before investing in the securities being offered
by this prospectus. You should carefully read the entire
prospectus, the documents incorporated by reference into this
prospectus and the prospectus supplement relating to the
securities that you propose to buy, especially any description
of investment risks that we may include in the prospectus
supplement.
ING Groep
N.V.
ING Groep N.V. is a holding company, which was incorporated in
1991 under the laws of The Netherlands, with its corporate seat
and headquarters in Amsterdam, The Netherlands. ING Group is one
of the worlds largest financial service providers,
offering a comprehensive range of life and non-life insurance,
commercial and investment banking, asset management and related
products and services in over 50 countries worldwide through its
various subsidiary operations. ING Groep N.V.s
headquarters are located at Amstelveenseweg 500, 1081 KL
Amsterdam, P.O. Box 810, 1000 AV Amsterdam, The
Netherlands, telephone
011-31-20-541-54-11.
For further information about ING Groep N.V., please refer to
the section entitled Available Information.
The
Securities We Are Offering
We may offer any of the following securities from time to time:
|
|
|
|
|
debt securities;
|
|
|
|
bearer depositary receipts in respect of ordinary shares;
|
|
|
|
American depositary shares; and
|
|
|
|
rights, entitling the holder to purchase bearer depositary
receipts in respect of ordinary shares.
|
When we use the term securities in this prospectus,
we mean any of the securities we may offer pursuant to this
prospectus and a prospectus supplement, unless we say otherwise.
This prospectus, including the following summary, describes the
general terms that may apply to the securities. The specific
terms of any particular securities that we may offer will be
described in a separate supplement to this prospectus.
Debt
Securities
Our debt securities may be senior or subordinated in right of
payment. For any particular debt securities we offer, your
prospectus supplement will describe the specific designation,
the aggregate principal or face amount and the purchase price;
the ranking, whether senior or subordinated; the stated
maturity, if any; the redemption terms, if any; the rate, or
manner of calculating the rate, and the payment dates for
interest, if any; the amount or manner of calculating the amount
payable at maturity; and any other specific terms.
We will issue the senior and subordinated debt securities, if
any, under separate indentures between us and The Bank of New
York Mellon, as trustee.
American
Depositary Shares and Ordinary Shares
We may offer bearer depositary receipts representing our
ordinary shares, which will be held in the form of ADSs, as
evidenced by ADRs. ADRs are American depositary receipts, which
usually make owning foreign shares easier. Each ADR will
represent one bearer depositary receipt representing one
ordinary share. The ADRs will be issued by JPMorgan Chase Bank,
as depositary. See Description of Ordinary Shares
and Description of the Trust and the Bearer Depositary
Receipts for a description of the ordinary shares and the
bearer depositary receipts that the ADRs represent.
1
Rights
to Purchase Bearer Depositary Receipts in Respect of Ordinary
Shares
We may also offer the rights to purchase bearer depositary
receipts of Stichting ING Aandelen in respect of ordinary
shares, and the terms of such offer would be described in the
relevant prospectus supplement.
Form
of Securities
We will issue the securities in book-entry form through one or
more depositaries, such as The Depository Trust Company,
which we refer to as DTC, Euroclear Bank S.A./N.V., as operator
of the Euroclear system, which we refer to as Euroclear, or
Clearstream Banking, société anonyme,
Luxembourg, which we refer to as Clearstream, named in your
prospectus supplement. Each sale of a security in book-entry
form will settle in immediately available funds through the
depositary, unless otherwise stated. We will generally issue
debt securities only in registered form, without coupons,
although we may issue debt securities in bearer form if so
specified in your prospectus supplement.
Payment
Currencies
Amounts payable in respect of the securities, (other than bearer
depositary receipts representing our ordinary shares), including
the purchase price, will be payable in U.S. dollars, unless
your prospectus supplement says otherwise.
Listing
If any securities are to be listed on a securities exchange or
quoted on a quotation system, your prospectus supplement will
say so.
Use of
Proceeds
Unless we indicate otherwise in your prospectus supplement, we
intend to use the net proceeds from the initial sales of
securities to provide additional funds for our operations and
for other general corporate purposes.
Manner
of Offering
The securities will be offered in connection with their initial
issuance or in market-making transactions by our affiliates
after initial issuance. Those offered in market-making
transactions may be securities that will only be issued after
the date of this prospectus, as well as debt securities that we
have previously issued.
When we issue new securities, we may offer them for sale to or
through underwriters, dealers and agents, including our
affiliates, or directly to purchasers. Your prospectus
supplement will include any required information about the firms
we use and the discounts or commissions we may pay them for
their services.
AVAILABLE
INFORMATION
We file annual reports on
Form 20-F
with, and furnish other reports and information on
Form 6-K
to, the Securities and Exchange Commission, or the SEC. You may
also read and copy any document we file or furnish at the
SECs public reference room at 100 F Street,
N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330
for more information about the public reference rooms. Our
filings with the SEC are also available through the SECs
Internet site at
http://www.sec.gov
and through the New York Stock Exchange, Inc., 11 Wall
Street, New York, New York 10005, on which our ADSs are listed.
We have filed a registration statement on
Form F-3
under the Securities Act of 1933, as amended, with the SEC
covering the securities. For further information on the
securities of ING Groep N.V., you should review our registration
statement and its exhibits. This prospectus is a part of the
registration statement and summarizes material provisions of the
contracts and other documents to which we refer you. Since this
prospectus may not contain all the information that you may find
important, you should review the full text of these documents.
We have included copies of these documents as exhibits to our
registration statement.
2
The SEC allows us to incorporate by reference the
information we file with them, which means:
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incorporated documents are considered part of this prospectus;
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we can disclose important information to you by referring you to
those documents; and
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information that we file with the SEC in the future and
incorporate by reference herein will automatically update and
supersede information in this prospectus and information
previously incorporated by reference herein.
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We incorporate by reference the following documents or
information which we filed with the SEC (other than, in each
case, documents or information deemed to have been furnished and
not filed in accordance with SEC rules):
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our Annual Report on
Form 20-F
for the year ended December 31, 2008, filed on
March 19, 2009;
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current reports on
Form 6-K
filed on September 10, 2009 (related to our six-month
results, except for references therein to Underlying
Profit Before Tax and any other non-GAAP financial
measure as such term is defined in Regulation G under the
Securities Exchange Act of 1934, as amended), on
September 29, 2009, on October 7, 2009, on
October 15, 2009, on October 19, 2009 and on
October 23, 2009.
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our registration statement on
Form 8-A
filed on May 20, 1997, describing the ordinary shares,
bearer depositary receipts and ADSs, including any further
amendments or reports filed for the purpose of updating those
descriptions; and
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any filings made by us with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
well as any Form
6-K
furnished to the SEC to the extent such
Form 6-K
expressly states that we incorporate such form by reference, on
or after the date of this prospectus and before the termination
of any offering of securities hereunder.
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You may request, orally or in writing, a copy of any filings
referred to above, excluding exhibits, other than those
specifically incorporated by reference into the documents you
request, at no cost, by contacting us at the following address:
ING Groep N.V., Attention: Investor Relations, Amstelveenseweg
500, 1081 KL Amsterdam, P.O. Box 810, 1000 AV
Amsterdam, The Netherlands, telephone:
011-31-20-541-54-11.
You should rely only on the information contained or
incorporated by reference in this prospectus or any applicable
prospectus supplement(s). We have not authorized any other
person to provide you with different information. If anyone
provides you with different or inconsistent information, you
should not rely on it. We are not making an offer to sell these
securities in any jurisdiction where the offer or sale is
prohibited. You should assume that the information appearing in
this prospectus or any applicable prospectus supplement(s), as
well as information we previously filed with, or furnished to,
the SEC and incorporated by reference, is accurate as of the
date on the front cover of such documents only. Our business,
financial condition, results of operations and prospects may
have changed since that date.
FORWARD-LOOKING
STATEMENTS
Some of the information contained or incorporated by reference
in this prospectus may constitute forward-looking
statements within the meaning of the safe harbor
provisions of The Private Securities Litigation Reform Act of
1995. Although we have based these forward-looking statements on
our expectations and projections about future events, it is
possible that actual results may differ materially from our
expectations. In many cases, we include a discussion of the
factors that are most likely to cause forward-looking statements
to differ from actual results together with the forward-looking
statements themselves.
Information regarding important factors that could cause actual
results to differ, perhaps materially, from those in our forward
looking statements is contained under Cautionary Statement
with Respect to Forward-Looking Statements in our Annual
Report on
Form 20-F
for 2008, which is incorporated in this prospectus by reference
(and will be contained in our annual reports for any subsequent
year that are so incorporated). See Available
Information above for information about how to obtain a
copy of this annual report.
3
In light of the factors described in the applicable Annual
Report on
Form 20-F
and the other factors described in this prospectus or any
applicable prospectus supplement(s), events which are described
might not occur at all or may occur differently than as
described. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of
new information or future events or for any other reason.
ABOUT
THIS PROSPECTUS
Unless otherwise specified, in this prospectus ING Groep
N.V., refers to ING Groep N.V., the holding company
incorporated under the laws of The Netherlands; and
we, our and us, as well as
ING, ING Group, or the Group
refers to ING Groep N.V. and its consolidated subsidiaries. ING
Groep N.V.s primary insurance and banking subholdings are
ING Verzekeringen N.V. and ING Bank N.V., respectively. When we
refer to ING Bank, we mean ING Bank N.V., together
with its consolidated subsidiaries. The Trust refers
to the Stichting ING Aandelen, an administrative trust
that holds approximately 99.9% of the outstanding ordinary
shares of ING Groep N.V. and that issues bearer depositary
receipts for such shares.
USE OF
PROCEEDS
Except as may be described in your prospectus supplement, we
will use the net proceeds from the initial sales of the
securities offered under this prospectus and your prospectus
supplement to provide additional funds for our operations and
for other general corporate purposes. Our general corporate
purposes may include the repayment or reduction of indebtedness,
acquisitions and working capital requirements.
DESCRIPTION
OF DEBT SECURITIES WE MAY OFFER
Please note that in this section entitled Description of
Debt Securities We May Offer, references to ING
Groep N.V., we, our and
us refer only to ING Groep N.V. and not to
INGs consolidated subsidiaries. Also, in this section,
references to holders mean those who own debt
securities registered in their own names, on the books that we
or the trustee maintain for this purpose, and not those who own
beneficial interests in debt securities registered in street
name or in debt securities issued in book-entry form through one
or more depositaries. Owners of beneficial interests in the debt
securities should read the section below entitled Legal
Ownership and Book-Entry Issuance.
This section and your prospectus supplement will summarize all
the material terms of each indenture and your debt security.
They do not, however, describe every aspect of each indenture
and your debt security. For example, in this section and your
prospectus supplement, we use terms that have been given special
meaning in the indenture, but we describe the meaning for only
the more important of those terms. As you read this section,
please remember that the specific terms of your debt security as
described in your prospectus supplement will supplement and, if
applicable, may modify or replace the general terms described in
this section. If there are any differences between your
prospectus supplement and this prospectus, your prospectus
supplement will control. Thus, the statements we make in this
section may not apply to your debt security. The indentures and
their associated documents, including your debt security,
contain the full legal text of the matters described in this
section and your prospectus supplement. We have filed a copy of
the indentures with the SEC as exhibits to our registration
statement. See Available Information above for
information on how to obtain a copy.
General
The debt securities are not deposits and are not insured by any
regulatory body of the United States or The Netherlands.
Because our assets consist principally of interests in the
subsidiaries through which we conduct our businesses, our cash
flow and our consequent ability to service our debt, including
the debt securities, are largely dependent upon the cash flow
and earnings of our subsidiaries, including dividends we receive
from some of those subsidiaries. Since we also guarantee certain
obligations of some of our subsidiaries, any liability we may
incur for our subsidiaries obligations could reduce the
assets that are available to satisfy claims of our direct
creditors, including
4
investors in the debt securities. Additionally, our right to
participate as an equity holder in any distribution of assets of
any of our subsidiaries upon the subsidiarys liquidation
or otherwise, and thus the ability of our security holders to
benefit from the distribution, is junior to the rights of
creditors of the subsidiary, except to the extent that any
claims we may have as a creditor of the subsidiary are
recognized. In addition, dividends, loans and advances to us
from some of our subsidiaries may be restricted by the net
capital requirements of our various regulators.
Your prospectus supplement will describe the specific terms of
your debt security, which will include some or all of the
following:
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the title of the series of debt securities;
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whether it is a senior debt security or a subordinated debt
security;
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any limit on the total principal amount of the debt securities
of the same series;
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the stated maturity or maturities, if any;
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the price at which we will originally issue your debt security,
expressed as a percentage of the principal amount of the debt
securities of the same series, and the original issue date;
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any provisions for reopening the offering at a later
time to offer additional debt securities having the same terms
as your debt security;
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the authorized denominations, if other than $1,000 and integral
multiples of $1,000;
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the specified currency or currencies for principal and interest,
if not U.S. dollars;
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if we or you have a right to choose the currency, currency unit
or composite currency in which payments on any of the debt
securities of the series will be made, the currency, currency
unit or composite currency that we or you may elect, the period
during which we or you must make the election and the other
material terms applicable to the right to make such elections;
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whether your debt security is a fixed rate debt security, a
floating rate debt security or an indexed debt security and also
whether it is an original issue discount debt security or a
perpetual debt security;
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if your debt security is an original issue discount debt
security, the yield to maturity;
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if applicable, the circumstances under which your debt security
may be redeemed at our option or repaid at the holders
option before the stated maturity and other relevant terms,
including any redemption commencement date, repayment date(s),
redemption price(s) and redemption period(s);
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the date or dates on which any interest on the debt securities
of the series will be payable, the regular record date or dates
we will use to determine who is entitled to receive interest
payments and any right to extend or defer the interest payment
periods and the duration of the extension;
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the place or places where the principal and any premium and
interest in respect of the debt securities of the series will be
payable and where any transfer, conversion or exchange, if
applicable, will occur;
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the depositary for your debt security, if other than DTC, and
any circumstances under which the holder may request securities
in non-global form, if we choose not to issue your debt security
in book-entry form only;
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if the debt securities may be converted into or exercised or
exchanged for our ordinary shares, American depositary receipts,
or other of our securities or the debt or equity securities of
third parties, the terms on which conversion, exercise or
exchange may occur, including whether conversion, exercise or
exchange is mandatory, at the option of the holder or at our
option, the period during which conversion, exercise or exchange
may occur, the initial conversion, exercise or exchange price or
rate and the circumstances or manner in which the amount of
ordinary shares, American depositary receipts, or other
securities or the debt or equity securities of third parties
issuable upon conversion, exercise or exchange may be adjusted;
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if applicable, the circumstances under which we will pay
additional amounts on any debt securities and under which we can
redeem the debt securities if we have to pay additional amounts;
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whether your debt securities will be listed on the New York
Stock Exchange or any other securities exchange or whether the
debt securities will not be listed;
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if your debt security will be issued in bearer form, any special
provisions relating to bearer securities that are not addressed
in this prospectus;
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if applicable, any additional investment considerations relating
to the debt securities;
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if your debt security is subject to mandatory or optional
remarketing or other mandatory or optional resale provisions,
the date or period during which such resale may occur, any
conditions to such resale and any right of the holder to
substitute securities for the securities subject to resale;
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any conditions or limitations to defeasance of the debt
securities, to the extent different from those described under
Defeasance in this prospectus;
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any changes or additions to the events of default or covenants
contained in the relevant indenture;
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if applicable, any subordination provisions that will apply, to
the extent different from those described in this prospectus;
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the names and duties of any co-trustees, authenticating agents,
paying agents, transfer agents or registrars for your debt
security;
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any specific Dutch or U.S. federal income tax
considerations relating to the debt securities not addressed in
this prospectus; and
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any other terms of your debt security, which could be different
from those described in this prospectus.
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If your debt security is a fixed rate debt security, the
prospectus supplement will also describe:
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the annual rate or rates at which your debt security will bear
interest, if any;
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the date or dates from which that interest, if any, will
accrue; and
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the interest payment dates to the extent different from those
described herein.
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If your debt security is a floating rate debt security, the
prospectus supplement will also describe:
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the interest rate basis;
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any applicable index currency or maturity, spread or spread
multiplier or initial maximum or minimum rate;
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the interest reset, determination, calculation and payment dates;
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the day count used to calculate interest payments for any
period; and
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the calculation agent.
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If your debt security is an indexed debt security, the
prospectus supplement will also describe:
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the principal amount, if any, we will pay you at maturity;
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the index that your security is based upon;
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the amount of interest, if any, we will pay you on an interest
payment date or the formula we will use to calculate these
amounts, if any; and
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the terms on which your debt security will be exchangeable for
or payable in cash, securities or other property.
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If your debt security is a perpetual debt security, the
prospectus supplement will also describe:
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the circumstances under which we have a right to defer interest
payments; and
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if applicable, our ability to satisfy our payment through the
issuance of ordinary shares or cumulative preference shares.
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While this prospectus describes terms that apply generally to
all the debt securities, the prospectus supplement applicable to
your debt security will summarize specific financial and other
terms of your debt security. Consequently, as you read this
section, please remember that the specific terms of your debt
security as described in your prospectus supplement will
supplement and, if applicable, may modify or replace the general
terms described in this section. If there are any differences
between your prospectus supplement and this prospectus, your
prospectus supplement will control. Thus, the statements we make
in this section may not apply to your debt security.
Market-Making
Transactions
If you purchase your debt security or any of our
other securities we describe in this prospectus in a
market-making transaction, you will receive information about
the price you pay and your trade and settlement dates in a
separate confirmation of sale. A market-making transaction is
one in which ING Financial Markets LLC or another of our
affiliates resells a security that it has previously acquired
from another holder. A market-making transaction in a particular
security occurs after the original issuance and sale of that
security.
Debt
Securities May Be Senior or Subordinated
We may issue senior or subordinated debt securities. Neither the
senior debt securities nor the subordinated debt securities will
be secured by any property or assets of the Group. Thus, by
owning a debt security, you are one of our unsecured creditors.
The senior debt securities and, in the case of senior debt
securities in bearer form, any related interest coupons, will
constitute part of our senior debt, will be issued under our
senior debt indenture described below and will rank on a parity
with all of our other unsecured and unsubordinated debt.
The subordinated debt securities and, in the case of
subordinated debt securities in bearer form, any related
interest coupons, will constitute part of our subordinated debt,
will be issued under our subordinated debt indenture described
below and, except as otherwise described in your prospectus
supplement, will be subordinate in right of payment to all of
our senior debt, as defined in the subordinated debt
indenture. The prospectus supplement for any series of
subordinated debt securities or the information incorporated in
this prospectus by reference will indicate the approximate
amount of senior indebtedness outstanding as of the end of our
most recent fiscal quarter.
When we refer to debt securities in this prospectus,
we mean both the senior debt securities and the subordinated
debt securities.
The
Senior Debt Indenture and the Subordinated Debt
Indenture
The senior debt securities and the subordinated debt securities
are each governed by a document called an indenture
the senior debt indenture, in the case of the senior debt
securities, and the subordinated debt indenture, in the case of
the subordinated debt securities. Each indenture is a contract
between us and The Bank of New York Mellon, which will initially
act as trustee. The indentures are substantially identical,
except for the provisions relating to subordination, which are
included only in the subordinated debt indenture. Neither
indenture limits our ability to incur additional indebtedness,
including additional senior indebtedness.
The trustee under each indenture has two main roles:
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first, the trustee can enforce your rights against us if we
default. There are some limitations on the extent to which the
trustee acts on your behalf, which we describe later under
Default, Remedies and Waiver of
Default; and
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second, the trustee performs administrative duties for us, such
as sending you interest payments and notices.
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See Our Relationship with the Trustee
below for more information about the trustee.
The indenture and its associated documents, including any
supplemental indenture and your debt security, contain the full
text of the matters described in this section and the other
terms described in your prospectus supplement. A copy of each
indenture has been filed with the SEC as part of our
registration statement. See Available Information
above for information on how to obtain a copy.
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When we refer to the indenture or the trustee with respect to
any debt securities, we mean the indenture under which those
debt securities are issued, including any supplemental
indenture, and the trustee under that indenture.
Subordination
Provisions
Holders of subordinated debt securities should recognize that
contractual provisions in the subordinated debt indenture may
prohibit us from making payments on those securities.
Subordinated debt securities are subordinate in right of
payment, to the extent and in the manner stated in the
subordinated debt indenture, to all of our senior indebtedness,
including all debt securities we have issued and will issue
under the senior debt indenture.
Except as otherwise modified with respect to a particular
issuance of debt securities, the subordinated debt indenture
defines senior debt as all indebtedness and
obligations of, or guaranteed or assumed by, ING Groep N.V. for
borrowed money or evidenced by bonds, debentures, notes or other
similar instruments, whether existing now or in the future, and
all amendments, renewals, extensions, modifications and
refundings of any indebtedness or obligations of that kind, all
the foregoing not stated in the instrument which created,
incurred or guaranteed such indebtedness or obligation to be
subordinated. Senior debt excludes the subordinated debt
securities and any other indebtedness or obligations
specifically designated as being subordinate, or not superior,
in right of payment to the subordinated debt securities.
We may modify the subordination provisions, including the
definition of senior indebtedness, with respect to one or more
series of subordinated debt securities. We will describe any
such modification in your prospectus supplement. Some of the
modifications applicable to perpetual debt securities are
described below in this subsection.
The subordinated debt indenture provides that, unless all
principal of, and any premium or interest on, the senior
indebtedness has been paid in full, no payment or other
distribution may be made in respect of any subordinated debt
securities in the following circumstances:
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in the event of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization, assignment for
creditors or other similar proceedings or events involving us or
our assets; or
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(a) in the event and during the continuation of any default
in the payment of principal, premium or interest on any senior
indebtedness beyond any applicable grace period or (b) in
the event that any event of default with respect to any senior
indebtedness has occurred and is continuing, permitting the
holders of that senior indebtedness (or a trustee) to accelerate
the maturity of that senior indebtedness, whether or not the
maturity is in fact accelerated (unless, in the case of
(a) or (b), the payment default or event of default has
been cured or waived or ceased to exist and any related
acceleration has been rescinded) or (c) in the event that
any judicial proceeding is pending with respect to a payment
default or event of default described in (a) or (b); or
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in the event that any subordinated debt securities have been
declared due and payable before their stated maturity.
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If the trustee under the subordinated debt indenture or any
holders of the subordinated debt securities receive any payment
or distribution that is prohibited under the subordination
provisions, then the trustee or the holders will have to repay
that money to the holders of the senior indebtedness.
Even if the subordination provisions prevent us from making any
payment when due on the subordinated debt securities of any
series, we will be in default on our obligations under that
series if we do not make the payment when due. This means that
the trustee under the subordinated debt indenture, and the
holders of that series, can take action against us, but they
will not receive any money until the claims of the holders of
senior indebtedness are fully satisfied.
The subordinated debt indenture allows the holder of senior
indebtedness to obtain a court order requiring us and any holder
of subordinated debt securities to comply with the subordination
provisions.
In the case of perpetual debt securities, which are described in
more detail below under Types of Debt
Securities Perpetual Debt Securities, the
definition of senior debt will be different than the definition
of senior debt described above and will be specified in your
prospectus supplement. Unless otherwise specified in your
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prospectus supplement, we will also enter into a supplemental
indenture that sets out the specific terms of the perpetual debt
securities, including our covenant that so long as any of the
perpetual debt securities are outstanding, we will not issue any
preference shares (or other securities which are akin to
preference shares as regards distributions on a return of assets
upon our liquidation or in respect of distribution or payment of
dividends
and/or any
other amounts thereunder by us) or give any guarantee or
contractual support arrangement in respect of any of our
preference shares or such other securities or in respect of any
other entity if such preference shares, such other securities
akin to preference shares, guarantees or contractual support
arrangements would rank (as regards distributions on a return of
assets upon our liquidation or in respect of distribution or
payment of dividends
and/or any
other amounts thereunder by us) senior to the perpetual debt
securities, unless we alter the terms of the perpetual debt
securities such that the perpetual debt securities effectively
rank pari passu from a financial point of view with any
such preference shares, such other securities akin to preference
shares or such guarantee or support undertaking.
We are
a Holding Company
Because our assets consist principally of interests in the
subsidiaries through which we conduct our businesses, our right
to participate as an equity holder in any distribution of assets
of any of our subsidiaries upon the subsidiarys
liquidation or otherwise, and thus the ability of our security
holders to benefit from the distribution, is junior to creditors
of the subsidiary, except to the extent that any claims we may
have as a creditor of the subsidiary are recognized. In
addition, dividends, loans and advances to us from some of our
subsidiaries may be restricted by net capital requirements of
our various regulators. We also guarantee certain obligations of
some of our subsidiaries. Any liability we may have for our
subsidiaries obligations could reduce our assets that are
available to satisfy our direct creditors, including investors
in our securities.
Our
Relationship with the Trustee
The Bank of New York Mellon is initially serving as the trustee
for all series of debt securities to be issued under each
indenture. The Bank of New York Mellon has provided commercial
banking and other services for us and our related companies in
the past and may continue to do so in the future. Among other
things, The Bank of New York Mellon serves as, or may serve as,
trustee or agent with regard to certain of our other outstanding
debt obligations.
Consequently, if an actual or potential event of default occurs
with respect to any of these securities, trust agreements or
subordinated guarantees, the trustee may be considered to have a
conflicting interest for purposes of the Trust Indenture
Act of 1939. In that case, the trustee may be required to resign
under one or more of the indentures, trust agreements or
subordinated guarantees and we would be required to appoint a
successor trustee. For this purpose, a potential
event of default means an event that would be an event of
default if the requirements for giving us default notice or for
the default having to exist for a specific period of time were
disregarded.
Governing
Law
Each indenture and the debt securities will be governed by New
York law, unless otherwise specified in your prospectus
supplement.
We May
Issue Many Series of Debt Securities
We may issue as many distinct series of debt securities under
either indenture as we wish. This section summarizes terms of
the securities that apply generally to all series. The
provisions of each indenture allow us not only to issue debt
securities with terms different from those of debt securities
previously issued under that indenture, but also to
reopen a previous issue of a series of debt
securities and issue additional debt securities of that series.
We will only reopen an issuance if such reopening will be a
qualified reopening for U.S. federal income tax
purposes. Most of the financial and other specific terms of your
series, whether it be a series of the senior debt securities or
subordinated debt securities, will be described in your
prospectus supplement. Those terms may vary from the terms
described here.
When we refer to a series of debt securities, we mean a series
issued under the applicable indenture. When we refer to your
prospectus supplement, we mean the prospectus supplement
describing the specific terms of the debt
9
security you purchase. The terms used in your prospectus
supplement will have the meanings described in this prospectus,
unless otherwise specified.
Amounts
that We May Issue
Neither indenture limits the aggregate amount of debt securities
that we may issue or the number of series or the aggregate
amount of any particular series. Any debt securities owned by us
or any of our affiliates are not deemed to be outstanding.
Neither the indentures nor the debt securities limit our ability
to incur other indebtedness or to issue other securities. Also,
we are not subject to financial or similar restrictions by the
terms of the debt securities, unless described in your
prospectus supplement.
Principal
Amount, Stated Maturity and Maturity
The principal amount of a debt security means the principal
amount payable at its stated maturity, if any, unless that
amount is not determinable, in which case the principal amount
of a debt security is its face amount.
The term stated maturity with respect to any debt
security means the day on which the principal amount of your
debt security is scheduled to become due. The principal may
become due sooner by reason of redemption or acceleration after
a default or otherwise in accordance with the terms of the debt
security. The day on which the principal actually becomes due,
whether at the stated maturity or earlier, is called the
maturity of the principal. We may also issue debt securities
that do not have a stated maturity and are perpetual in nature.
We also use the terms stated maturity and
maturity to refer to the days when other payments
become due. For example, we may refer to a regular interest
payment date when an installment of interest is scheduled to
become due as the stated maturity of that
installment.
When we refer to the stated maturity or the
maturity of a debt security without specifying a
particular payment, we mean the stated maturity or maturity, as
the case may be, of the principal.
Currency
of Debt Securities
Amounts that become due and payable on your debt security in
cash will be payable in a currency, composite currency, basket
of currencies or currency unit or units specified in your
prospectus supplement. We refer to this currency, composite
currency, basket of currencies or currency unit or units as a
specified currency. The specified currency for your
debt security will be U.S. dollars, unless your prospectus
supplement states otherwise. Some debt securities may have
different specified currencies for principal and interest. You
will have to pay for your debt securities by delivering the
requisite amount of the specified currency for the principal to
ING Groep N.V. or another firm that we name in your prospectus
supplement, unless other arrangements have been made between you
and us or you and that firm. We will make payments on your debt
securities in the specified currency, except as described below
in Payment Mechanics for Debt Securities in
Registered Form. See Considerations
Relating to Securities Linked to a Foreign Currency below
for more information about risks of investing in debt securities
of this kind.
Debt
Securities Not Secured by Assets
No series of debt securities will be secured by any property or
assets of ING Group.
Types of
Debt Securities
We may issue any of the following three types of senior debt
securities or subordinated debt securities:
Fixed
Rate Debt Securities
A debt security of this type will bear interest at a fixed rate
described in your prospectus supplement. This type includes zero
coupon debt securities, which bear no interest and are instead
issued at a price lower than the principal
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amount. See Original Issue Discount Debt
Securities below for more information about zero coupon
and other original issue discount debt securities.
Unless otherwise specified in your prospectus supplement, each
fixed rate debt security, except any zero coupon debt security,
will bear interest from its original issue date or from the most
recent date to which interest on the debt security has been paid
or made available for payment. Interest will accrue on the
principal of a fixed rate debt security at the fixed yearly rate
stated in your prospectus supplement, until the principal is
paid or made available for payment. Each payment of interest due
on an interest payment date or the date of maturity will include
interest accrued from and including the last date to which
interest has been paid, or made available for payment, or from
the issue date if none has been paid or made available for
payment to but excluding the interest payment date or the date
of maturity. Unless otherwise specified in your prospectus
supplement, we will compute interest on fixed rate debt
securities on the basis of a
360-day year
of twelve
30-day
months. We will pay interest on each interest payment date and
at maturity as described below under Payment
Mechanics for Debt Securities in Registered Form.
Floating
Rate Debt Securities
A debt security of this type will bear interest at rates that
are determined by reference to an interest rate formula. In some
cases, the rates may also be adjusted by adding or subtracting a
spread or multiplying by a spread multiplier and may be subject
to a minimum rate or a maximum rate. If your debt security is a
floating rate debt security, the formula and any adjustments
that apply to the interest rate will be specified in your
prospectus supplement.
Unless otherwise specified in your prospectus supplement, each
floating rate debt security will bear interest from its original
issue date or from the most recent date to which interest on the
debt security has been paid or made available for payment.
Interest will accrue on the principal of a floating rate debt
security at the yearly rate determined according to the interest
rate formula stated in your prospectus supplement, until the
principal is paid or made available for payment. We will pay
interest on each interest payment date and at maturity as
described below under Payment Mechanics for
Debt Securities in Registered Form.
Calculation of Interest. Calculations relating
to floating rate debt securities will be made by the calculation
agent, an institution that we appoint as our agent for this
purpose. That institution may be an affiliate of ours. The
prospectus supplement for a particular floating rate debt
security will name the institution that we have appointed to act
as the calculation agent for that debt security as of its
original issue date. We may appoint a different institution to
serve as calculation agent from time to time after the original
issue date of the debt security without your consent and without
notifying you of the change.
For each floating rate debt security, the calculation agent will
determine, on the corresponding interest calculation or
determination date, as described in your prospectus supplement,
the interest rate that takes effect on each interest reset date.
In addition, the calculation agent will calculate the amount of
interest that has accrued during each interest
period i.e., the period from and including
the original issue date, or the last date to which interest has
been paid or made available for payment, to but excluding the
payment date. For each interest period, the calculation agent
will calculate the amount of accrued interest by multiplying the
face or other specified amount of the floating rate debt
security by an accrued interest factor for the interest period.
This factor will equal the sum of the interest factors
calculated for each day during the interest period. The interest
factor for each day will be expressed as a decimal and will be
calculated by dividing the interest rate, also expressed as a
decimal, applicable to that day by 360 or by the actual number
of days in the year, as specified in your prospectus supplement.
Upon the request of the holder of any floating rate debt
security, the calculation agent will provide for that debt
security the interest rate then in effect and, if
determined, the interest rate that will become effective on the
next interest reset date. The calculation agents
determination of any interest rate, and its calculation of the
amount of interest for any interest period, will be final and
binding in the absence of manifest error.
All percentages resulting from any calculation relating to a
debt security will be rounded upward or downward, as
appropriate, to the next higher or lower one hundred-thousandth
of a percentage point, e.g., 9.876541% (or 0.09876541)
being rounded down to 9.87654% (or 0.0987654) and 9.876545% (or
0.09876545) being rounded up
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to 9.87655% (or .0987655). All amounts used in or resulting from
any calculation relating to a floating rate debt security will
be rounded upward or downward, as appropriate, to the nearest
cent, in the case of U.S. dollars, or to the nearest
corresponding hundredth of a unit, in the case of a currency
other than U.S. dollars, with one-half cent or one-half of
a corresponding hundredth of a unit or more being rounded upward.
In determining the base rate that applies to a floating rate
debt security during a particular interest period, the
calculation agent may obtain rate quotes from various banks or
dealers active in the relevant market, as described in your
prospectus supplement. Those reference banks and dealers may
include the calculation agent itself and its affiliates, as well
as any underwriter, dealer or agent participating in the
distribution of the relevant floating rate debt securities and
its affiliates, and they may include affiliates of ING.
Indexed
Debt Securities
A debt security of this type provides that the principal amount
payable at its maturity,
and/or the
amount of interest payable on an interest payment date, will be
determined by reference to:
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securities of one or more issuers;
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one or more currencies;
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one or more commodities;
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any other financial, economic or other measure or instrument,
including the occurrence or non-occurrence of any event or
circumstance; and/or
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one or more indices or baskets of the items described above.
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If you are a holder of an indexed debt security, you may receive
an amount at maturity that is greater than or less than the face
amount of your debt security, depending upon the value of the
applicable index at maturity. The value of the applicable index
will fluctuate over time.
An indexed debt security may provide either for cash settlement
or for physical settlement by delivery of the underlying
property or another property of the type listed above. An
indexed debt security may also provide that the form of
settlement may be determined at our option or at the
holders option. Some indexed debt securities may be
exchangeable, at our option or the holders option, for
securities of an issuer other than ING Groep N.V.
If you purchase an indexed debt security, your prospectus
supplement will include information about the relevant index,
about how amounts that are to become payable will be determined
by reference to the price or value of that index and about the
terms on which the security may be settled physically or in
cash. Your prospectus supplement will also identify the
calculation agent that will calculate the amounts payable with
respect to the indexed debt security and may exercise
significant discretion in doing so. See
Considerations Relating to Indexed
Securities for more information about risks of investing
in debt securities of this type.
Perpetual
Debt Securities
A fixed rate debt security, a floating rate debt security or an
indexed debt security may be a perpetual debt security.
A debt security of this type has no fixed maturity or mandatory
redemption date and may be subject to our right to defer
interest payments as described in your prospectus supplement. A
perpetual debt security is not redeemable at the option of the
holder of a perpetual debt security at any time and is not
redeemable at our option except as described in your prospectus
supplement. A perpetual debt security may be convertible, at our
option, into cumulative preference shares or ordinary shares
under certain circumstances described in your prospectus
supplement. Unless otherwise specified in your prospectus
supplement, we will compute interest on perpetual debt
securities on the basis of a
360-day year
of twelve
30-day
months. We will pay interest on each interest payment date and
at redemption as described below under Payment
Mechanics for Debt Securities in Registered Form How
We May Make Payments on Perpetual Debt Securities.
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Interest payments and any other payments in respect of the
perpetual debt securities may be subject to deferral in certain
circumstances. These circumstances, along with the circumstances
under which we cannot defer payment, will be described in your
prospectus supplement.
Original
Issue Discount Debt Securities
A fixed rate debt security, a floating rate debt security or an
indexed debt security may be an original issue discount debt
security. A debt security of this type is issued at a price
lower than its principal amount and provides that, upon
redemption or acceleration of its maturity, an amount less than
its principal amount will be payable. An original issue discount
debt security may be a zero coupon debt security. A debt
security issued at a discount to its principal may, for
U.S. federal income tax purposes, be considered an original
issue discount debt security, regardless of the amount payable
upon redemption or acceleration of maturity. See
Taxation Material Tax Consequences of Owning
Our Debt Securities U.S. Taxation
U.S. Holders Original Issue Discount
below for a description of the U.S. federal income tax
consequences of owning an original issue discount debt security.
Redemption
and Repayment
Unless otherwise indicated in your prospectus supplement, your
debt security will not be entitled to the benefit of any sinking
fund that is, we will not deposit money on a regular
basis into any separate custodial account to repay your debt
securities. In addition, we will not be entitled to redeem your
debt security before its stated maturity, if any, unless your
prospectus supplement specifies a redemption date. You will not
be entitled to require us to buy your debt security from you,
before its stated maturity, if any, unless your prospectus
supplement specifies one or more repayment dates.
If your prospectus supplement specifies a redemption date or a
repayment date, it will also specify one or more redemption
prices or repayment prices, which will be expressed as a
percentage of the principal amount of your debt security. It may
also specify one or more redemption periods during which the
redemption prices relating to a redemption of debt securities
during those periods will apply.
If your prospectus supplement specifies a redemption
commencement date, your debt security will be redeemable at our
option at any time on or after that date or on specific dates
after such date. If we redeem your debt security, we will do so
at the specified redemption price, together with interest
accrued to the redemption date. If different prices are
specified for different redemption periods, the price we pay
will be the price that applies to the redemption period during
which your debt security is redeemed.
If your prospectus supplement specifies a repayment date, your
debt security will be repayable at your option on the specified
repayment date at the specified repayment price, together with
interest accrued to the repayment date.
In the event that we exercise an option to redeem any debt
security, we will give to the trustee and the holder written
notice of the principal amount of the debt security to be
redeemed, not less than 30 days nor more than 60 days
before the applicable redemption date, except in the event of an
optional tax redemption as described below. We will give the
notice in the manner described below in Notices.
If a debt security represented by a global security is subject
to repayment at the holders option, the depositary or its
nominee, as the holder, will be the only person who can exercise
the right to repayment. Any indirect owners who own beneficial
interests in the global security and wish to exercise a
repayment right must give proper and timely instructions to
their banks or brokers through which they hold their interests,
requesting that such banks or brokers notify the depositary to
exercise the repayment right on their behalf. Different firms
have different deadlines for accepting instructions from their
customers, and you should take care to act promptly enough to
ensure that your request is given effect by the depositary
before the applicable deadline for exercise.
We urge street name and other indirect owners to contact
their banks or brokers for information about how to exercise a
repayment right in a timely manner.
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We or our affiliates may purchase debt securities from investors
who are willing to sell from time to time, either in the open
market at prevailing prices or in private transactions at
negotiated prices. Debt securities that we or they purchase may,
at our discretion, be held, resold or canceled.
Optional
Tax Redemption
Unless otherwise indicated in your prospectus supplement, we may
redeem each series of debt securities in whole, but not in part,
at our option at any time upon not more than 60 nor less than
10 days notice to the trustee, at a redemption price
equal to the principal amount of such debt securities (or if the
debt securities are original issue discount securities, such
amount as determined pursuant to the formula set forth in the
applicable prospectus supplement) plus any additional amounts
due as a result of any withheld tax, if:
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we would be required to pay additional amounts as a result of
any change in or amendment to the tax laws (or any regulations
or rulings promulgated thereunder) of The Netherlands, or of a
jurisdiction in which a successor of ING Groep N.V. is
organized, which becomes effective on or after the date of
issuance of that series, as explained below under
Payment of Additional Amounts with Respect to
the Debt Securities; or
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a person located outside The Netherlands, or a jurisdiction in
which a successor of ING Groep N.V. is organized, to which we
have conveyed, transferred or leased property, would be required
to pay additional amounts. We are not required, however, to use
reasonable measures to avoid the obligation to pay additional
amounts in such an event.
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If we redeem your debt security, we will do so at the specified
redemption price, together with interest accrued to the
redemption date.
Conversion
Your debt securities may be convertible into or exchangeable for
ordinary shares, cumulative preference shares, ADSs or other
securities of ING Groep N.V. or another issuer if your
prospectus supplement so provides. If your debt securities are
convertible or exchangeable, your prospectus supplement will
include provisions as to whether conversion or exchange is
mandatory, at your option or at our option. Your prospectus
supplement would also include provisions regarding the
adjustment of the number of ordinary shares, cumulative
preference shares, ADSs or other securities of ING Groep N.V. or
another issuer to be received by you upon conversion or exchange.
Mergers
and Similar Transactions
We are generally permitted to merge or consolidate with or into
another company. We are also permitted to sell substantially all
our assets to another company. With regard to any series of debt
securities, however, we may not take any of these actions unless
all the following conditions are met:
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if we are not the successor entity, the successor entity must
expressly agree to be legally responsible for the debt
securities of that series and the indenture with respect to that
series and must be organized as a corporation, partnership,
trust, limited liability company or similar entity. The
successor entity may be organized under the laws of any
jurisdiction; and
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the merger, sale of assets or other transaction must not cause a
default on the debt securities, and we must not already be in
default, unless the merger or other transaction would cure the
default. For purposes of this no-default test, a default would
include an event of default that has occurred and not been
cured, as described below under Default Remedies and
Waiver of Default Events of Default. A default
for this purpose would also include any event that would be an
event of default if the requirements for giving us default
notice or our default having to exist for a specific period of
time were disregarded.
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If the conditions described above are satisfied with respect to
the debt securities of any series, we will not need to obtain
the approval of the holders of those debt securities in order to
merge or consolidate or to sell our assets. Also, these
conditions will apply only if we wish to merge or consolidate
with another entity or sell our assets substantially as an
entirety to another entity. We will not need to satisfy these
conditions if we enter into other types
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of transactions, including any transaction in which we acquire
the stock or assets of another entity, any transaction that
involves a change of control of ING Groep N.V. but in which we
do not merge or consolidate, and any transaction in which we
sell less than substantially all our assets.
Also, if we merge, consolidate or sell our assets substantially
in their entirety, neither we nor any successor would have any
obligation to compensate you for any resulting adverse tax
consequences relating to your debt securities.
Defeasance
Defeasance
and Covenant Defeasance
Unless we say otherwise in your prospectus supplement, the
provisions for full defeasance and covenant defeasance described
below apply to each series of senior or subordinated debt
securities. In general, we expect these provisions to apply to
each debt security that has a specified currency of
U.S. dollars and is not a floating rate, indexed debt
security or perpetual debt security.
Full Defeasance. If there is a change in
U.S. federal tax law, as described below, we can legally
release ourselves from all payments and other obligations on
your debt securities. This is called full defeasance. To do so,
each of the following must occur:
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We must deposit in trust for the benefit of all holders a
combination of money and U.S. government or
U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and any other payments
on your debt securities on their various due dates.
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There must be a change in current U.S. federal tax law or
an Internal Revenue Service ruling that lets us make the above
deposit without causing you to be taxed on your debt security
any differently than if we did not make the deposit and just
repaid the debt security ourselves. Under current
U.S. federal tax law, the deposit and our legal release
from the debt security would be treated as though we took back
your debt security and gave you your share of the cash or bonds
deposited in trust. In that event, you could recognize gain or
loss on your debt security.
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We must deliver to the trustee a legal opinion of our counsel
confirming the tax law change or Internal Revenue Service ruling
described above.
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In the case of the subordinated debt securities, the following
requirements must also be met:
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no event or condition may exist that, under the provisions
described above under The Senior Debt
Indenture and the Subordinated Debt Indenture
Subordination Provisions, would prevent us from making
payments of principal, premium or interest on those subordinated
debt securities on the date of the deposit referred to above or
during the 90 days after that date; and
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we must deliver to the trustee an opinion of counsel to the
effect that (a) the trust funds will not be subject to any
rights of holders of senior indebtedness; and (b) after the
90-day
period referred to above, the trust funds will not be subject to
any applicable bankruptcy, insolvency, reorganization or similar
laws affecting creditors rights generally, except that if
a court were to rule under any of those laws in any case or
proceeding that the trust funds remained our property, then the
relevant trustee and the holders of the subordinated debt
securities would be entitled to some enumerated rights as
secured creditors in the trust funds.
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If we ever fully defease your debt security, you will have to
rely solely on the trust deposit for payments on your debt
security. You could not look to us for payment in the event of
any shortfall.
Covenant Defeasance. Under current
U.S. federal tax law, we can make the same type of deposit
described above and be released from any restrictive covenants
relating to your debt security that may be described in your
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prospectus supplement. This is called covenant defeasance. In
that event, you would lose the protection of those restrictive
covenants. In order to achieve covenant defeasance, we must do
both of the following:
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we must deposit in trust for the benefit of the holders of those
debt securities a combination of money and U.S. government
or U.S. government agency notes or bonds that will generate
enough cash to make interest, principal and other payments on
your debt security on their various due dates; and
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we must deliver to the trustee a legal opinion of our counsel
confirming that under then-current U.S. federal income tax
law we may make the above deposit without causing you to be
taxed on your debt security any differently than if we did not
make the deposit and just repaid the debt security ourselves.
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In addition, in order to achieve covenant defeasance for any
subordinated debt securities that have the benefit of any
restrictive covenants, the conditions described in the last two
bullet points under Full Defeasance
above must be satisfied. Subordinated debt securities will not
have the benefit of any restrictive covenants unless your
prospectus supplement specifically provides that they do.
If we accomplish covenant defeasance with regard to your debt
security, the following provisions of the indenture and the debt
securities would no longer apply:
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any additional covenants that your prospectus supplement may
state are applicable to your debt security; and
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the events of default resulting from a breach of covenants,
described below in the third item under
Default, Remedies and Waiver of
Default Events of Default.
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If we accomplish covenant defeasance, you can still look to us
for repayment of your debt security in the event of any
shortfall in the trust deposit. You should note, however, that
if one of the remaining events of default occurs, like our
bankruptcy, and your debt security becomes immediately due and
payable, there may be a shortfall. Depending on the event
causing the default, you may not be able to obtain payment of
the shortfall.
Default,
Remedies and Waiver of Default
You will have special rights if an event of default with respect
to your debt security occurs and is not cured, as described in
this subsection.
Events
of Default
Unless otherwise indicated in your prospectus supplement, with
respect to any series of debt securities, when we refer to an
event of default, we mean any of the following:
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we do not pay the principal of, or any premium on, any debt
security of that series on its due date;
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we do not pay interest on any debt security of that series
within 30 days of its due date;
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we remain in breach of any covenant or warranty we make in the
applicable indenture which is applicable to the debt security of
that series for 60 days after we receive a notice of
default stating we are in breach. The notice must be sent by
either the trustee or holders of 25% of the principal amount of
debt security of the affected series;
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we file for bankruptcy, or other events of bankruptcy,
insolvency or reorganization relating to ING Groep N.V. occur,
under any applicable Dutch law;
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we do not deposit a sinking fund payment with regard to any debt
security of that series on the due date, but only if the payment
is required under provisions described in your prospectus
supplement; or
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if your prospectus supplement states that any additional event
of default applies to the series, that event of default occurs.
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Remedies
if an Event of Default Occurs
If you are the holder of a subordinated debt security, all
the remedies available upon the occurrence of an event of
default under the subordinated debt indenture will be subject to
the restrictions on the subordinated debt
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securities described above under The Senior
Debt Indenture and the Subordinated Debt Indenture
Subordination Provisions.
Except as specified in your prospectus supplement, if an event
of default has occurred and has not been cured or waived, the
trustee or the holders of 25% or more in principal amount of all
debt securities of the affected series may declare the entire
principal amount of all such debt securities to be due
immediately. Except as specified in your prospectus supplement,
if an event of default occurs because of events in bankruptcy,
insolvency or reorganization relating to ING Groep N.V., the
entire principal amount of all the debt securities will be
automatically accelerated, without any action by the trustee or
any holder.
Each of the situations described above is called an acceleration
of the maturity of the affected debt securities. If the maturity
of any debt securities is accelerated and a judgment for payment
has not yet been obtained, the holders of a majority in
principal amount of the debt securities affected by the
acceleration may cancel the acceleration for all the affected
debt securities.
If an event of default occurs, the trustee will have special
duties. In that situation, the trustee will be obligated to use
its rights and powers under the applicable indenture, and in
doing so, to use the same degree of care and skill that a
prudent person would use in that situation in conducting his or
her own affairs.
Except as described in the prior paragraph, the trustee is not
required to take any action under the applicable indenture at
the request of any holders unless the holders offer the trustee
reasonable protection from expenses and liability. This is
called an indemnity. If the trustee is provided with an
indemnity reasonably satisfactory to it, the holders of a
majority in principal amount of the relevant series of debt
securities may direct, from time to time, the method and place
of conducting any lawsuit or other formal legal action seeking
any remedy available to the trustee. These majority holders may
also direct the trustee in performing any other action under the
applicable indenture with respect to the relevant series of debt
securities.
Before you bypass the trustee and bring your own lawsuit or
other formal legal action or take other steps to enforce your
rights or protect your interests relating to the debt
securities, all of the following must occur:
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the holder of your debt security must give the trustee written
notice that an event of default has occurred with respect to the
relevant series of debt securities, and the event of default
must not have been cured or waived;
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the holders of 25% or more in principal amount of the relevant
series of debt securities must make a written request that the
trustee take action because of the default, and they or other
holders must offer to the trustee indemnity reasonably
satisfactory to the trustee against the cost and other
liabilities of taking that action;
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the trustee must not have taken action for 60 days after
the above steps have been taken; and
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during those 60 days, the holders of a majority in
principal amount of the relevant series of debt securities must
not have given the trustee directions that are inconsistent with
the written request of the holders of not less than 25% in
principal amount of the relevant series of debt securities.
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You are, however, entitled at any time to bring a lawsuit for
the payment of money due on your debt securities on or about its
due date.
Waiver
of Default
The holders of not less than a majority in principal amount of
the debt securities of any series may waive a default for all
debt securities of that series. If this happens, the default
will be treated as if it has not occurred. No one can waive a
payment default on your debt security, however, without your
approval.
We
Will Give the Trustee Information About Defaults
Annually
We will furnish to the trustee every year a written statement of
two of our officers certifying that to their knowledge we are in
compliance with the debt securities and the indenture they are
issued under, or else specifying any default.
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We urge book-entry and other indirect owners to consult their
banks or brokers for information on how to give notice or
direction to or make a request of the trustee and how to declare
a cancellation of an acceleration of maturity. Book-entry and
other indirect owners are described under Legal Ownership
and Book-Entry Issuance.
Modifications
of the Indentures
There are four types of changes we can make to a particular
indenture and the debt securities issued thereunder.
Changes
Requiring Each Holders Approval
First, there are changes that we or the trustee cannot make
without the approval of each holder of a debt security affected
by the change under a particular indenture. We cannot:
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change the stated maturity, if any, for any principal or
interest payment on a debt security;
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reduce the principal amount, the amount payable on acceleration
of the maturity after a default, the interest rate or the
redemption price for a debt security;
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permit redemption of a debt security if not previously permitted;
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modify the provisions of the indenture with respect to the
subordination of the debt securities in a manner adverse to
holders;
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impair any right a holder may have to require repayment or
conversion of its debt security;
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change the currency of any payment on a debt security other than
as permitted by the debt security;
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change the place of payment on a debt security, if it is in
non-global form;
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impair a holders right to sue for payment of any amount
due on its debt security;
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reduce the percentage in principal amount of the debt securities
and any other affected series of debt securities, taken
together, the approval of whose holders is needed to change the
indenture or the debt securities;
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reduce the percentage in principal amount of the debt securities
and any other affected series of debt securities, taken
separately or together, as the case may be, the consent of whose
holders is needed to waive our compliance with the applicable
indenture or to waive defaults; and
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change the provisions of the applicable indenture dealing with
modification and waiver in any other respect, except to increase
any required percentage referred to above or to add to the
provisions that cannot be changed or waived without approval of
the holder of each affected debt security.
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Changes
Not Requiring Approval
The second type of change does not require any approval by
holders of the debt securities. These changes are limited to
clarifications and changes that would not adversely affect the
debt securities in any material respect. Nor do we need any
approval to make any change that affects only debt securities to
be issued under the applicable indenture after the changes take
effect.
We may also make changes or obtain waivers that do not adversely
affect a particular debt security, even if they affect other
debt securities. In those cases, we do not need to obtain the
approval of the holder of that debt security; we need only
obtain any required approvals from the holders of the affected
debt securities or other debt securities.
Modification
of Subordination Provisions
We may not amend the subordinated debt indenture to alter the
subordination of any outstanding subordinated debt securities
without the written consent of each holder of senior
indebtedness then outstanding who would be adversely affected.
In addition, we may not modify the subordination provisions of
the subordinated debt indenture in a manner that would adversely
affect the subordinated debt securities of any one or more
series then outstanding in any material respect, without the
consent of the holders of a majority in aggregate principal
amount of all affected
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series then outstanding, voting together as one class (and also
of any affected series that by its terms is entitled to vote
separately as a series, as described below).
Changes
Requiring Majority Approval
Any other change to either indenture and the debt securities
issued under that indenture would require the following approval:
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if the change affects only one series of debt securities, it
must be approved by the holders of a majority in principal
amount of the relevant series of debt securities; or
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if the change affects more than one series of debt securities
issued under an indenture, it must be approved by the holders of
a majority in principal amount of the series affected by the
change, with all affected series voting together as one class
for this purpose (and of any series that by its terms is
entitled to vote separately as a series, as described below).
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In each case, the required approval must be given by written
consent.
The same majority approval would be required for us to obtain a
waiver of any of our covenants in either indenture. Our
covenants include the promises we make about merging which we
describe above under Mergers and Similar
Transactions. If the holders agree to waive a covenant, we
will not have to comply with it. A majority of holders, however,
cannot approve a waiver of any provision in a particular debt
security, or in the applicable indenture as it affects that debt
security, that we cannot change without the approval of each
holder of that debt security as described above in
Changes Requiring Each Holders
Approval unless that holder approves the waiver.
Book-entry and other indirect owners should consult their
banks or brokers for information on how approval may be granted
or denied if we seek to change the applicable indenture or the
debt securities or request a waiver.
Special
Rules for Action by Holders
When holders take any action under either indenture, such as
giving a notice of default, declaring an acceleration, approving
any change or waiver or giving the trustee an instruction, we
will apply the following rules.
Only
Outstanding Debt Securities Are Eligible
Only holders of outstanding debt securities of the applicable
series will be eligible to participate in any action by holders
of debt securities of that series. Also, we will count only
outstanding debt securities of that series in determining
whether the various percentage requirements for taking action
have been met. For these purposes, a debt security will not be
outstanding:
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if it has been surrendered for cancellation;
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if we have deposited or set aside, in trust for its holder,
money for its payment or redemption;
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if we have fully defeased it as described above under
Defeasance Defeasance and Covenant
Defeasance Full Defeasance; or
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if we or one or our affiliates is the owner.
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Special
Series Voting Rights
We may issue series of debt securities that are entitled, by
their terms, to vote separately on matters (for example,
modification or waiver of provisions in the applicable
indenture) that would otherwise require a vote of all affected
series, voting together as a single class. Any such series would
be entitled to vote together with all other affected series,
voting together as a single class, and would also be entitled to
vote separately, as a series only. In some cases, other parties
may be entitled to exercise these special voting rights on
behalf of holders of the relevant series. For series of debt
securities that have these rights, the rights will be described
in your prospectus supplement. For series that do not have these
special rights, voting will occur as described in the preceding
section, but subject to
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any separate voting rights of any series having special rights.
We may issue series having these or other special rights without
obtaining the consent of or giving notice to holders of
outstanding securities.
Eligible
Principal Amount of Some Debt Securities
In some situations, we may follow special rules in calculating
the principal amount of a debt security that is to be treated as
outstanding for the purposes described above. This may happen,
for example, if the principal amount is payable in a
non-U.S. dollar
currency, increases over time or is not to be fixed until
maturity.
For any debt security of the kind described below, we will
decide how much principal amount to attribute to the debt
security as follows:
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for an original issue discount debt security, we will use the
principal amount that would be due and payable on the action
date if the maturity of the debt security were accelerated to
that date because of a default;
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for a debt security whose principal amount is not known, we will
use any amount that we indicate in the prospectus supplement for
that debt security. The principal amount of a debt security may
not be known, for example, because it is based on an index that
changes from time to time and the principal amount is not to be
determined until a later date; or
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for debt securities with a principal amount denominated in one
or more
non-U.S. dollar
currencies or currency units, we will use the U.S. dollar
equivalent, which we will determine.
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Determining
Record Dates for Action by Holders
We will generally be entitled to set any date as a record date
for the purpose of determining the holders that are entitled to
take action under either indenture. In certain limited
circumstances, only the trustee will be entitled to set a record
date for action by the holders. If we or the trustee set a
record date for an approval or other action to be taken by the
holders, that vote or action may be taken only by persons or
entities who are holders on the record date and must be taken
during the period that we specify for this purpose, or that the
trustee specifies if it sets the record date. We or the trustee,
as applicable, may shorten or lengthen this period from time to
time. This period, however, may not extend beyond the
180th day after the record date for the action. In
addition, record dates for any global debt security may be set
in accordance with procedures established by the depositary from
time to time. Accordingly, record dates for global debt
securities may differ from those for other debt securities.
Form,
Exchange and Transfer of Debt Securities
Form
We will issue each debt security in global
i.e., book-entry form only, unless we specify
otherwise in your prospectus supplement. Debt securities in
book-entry form will be represented by a global security
registered in the name of a depositary, which will be the holder
of all the debt securities represented by the global security.
Those who own beneficial interests in a global debt security
will do so through participants in the depositarys
securities clearance system, and the rights of these indirect
owners will be governed solely by the applicable procedures of
the depositary and its participants. We describe book-entry
securities below under Legal Ownership and Book-Entry
Issuance.
In addition, we will generally issue each debt security in
registered form, without coupons, unless we specify otherwise in
your prospectus supplement.
If any debt securities cease to be issued in registered global
form, they will be issued:
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only in fully registered form;
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without interest coupons; and
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unless we indicate otherwise in your prospectus supplement, in
denominations of $1,000 and integral multiples of $1,000.
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Transfer
and Exchange
Unless we indicate otherwise in your prospectus supplement,
holders may exchange their debt securities for debt securities
of smaller denominations or combined into fewer debt securities
of larger denominations, as long as the total principal amount
is not changed.
Holders may exchange or transfer their debt securities at the
office of the trustee. They may also replace lost, stolen,
destroyed or mutilated debt securities at that office. We have
appointed the trustee to act as our agent for registering debt
securities in the names of holders and transferring and
replacing debt securities. We may appoint another entity to
perform these functions or perform them ourselves.
Holders will not be required to pay a service charge to transfer
or exchange their debt securities, but they may be required to
pay for any tax or other governmental charge associated with the
exchange or transfer. The transfer or exchange, and any
replacement, will be made only if our transfer agent is
satisfied with the holders proof of legal ownership. The
transfer agent may require an indemnity before replacing any
debt securities.
If we have designated additional transfer agents for your debt
security, they will be named in your prospectus supplement. We
may appoint additional transfer agents or cancel the appointment
of any particular transfer agent. We may also approve a change
in the office through which any transfer agent acts.
If the debt securities of any series are redeemable and we
redeem less than all those debt securities, we may block the
transfer or exchange of those debt securities during the period
beginning 15 days before the day we mail the notice of
redemption and ending on the day of that mailing, in order to
freeze the list of holders to prepare the mailing. We may also
refuse to register transfers of or exchange any debt security
selected for redemption, except that we will continue to permit
transfers and exchanges of the unredeemed portion of any debt
security being partially redeemed.
If a debt security is issued as a global debt security, only the
depositary e.g., DTC, Euroclear or
Clearstream will be entitled to transfer and
exchange the debt security as described in this subsection,
since the depositary will be the sole holder of the debt
security.
The rules for exchange described above apply to exchanges of
debt securities for other debt securities of the same series and
kind. If a debt security is exchangeable for a different kind of
security, such as one that we have not issued, or for other
property, the rules governing that type of exchange will be
described in your prospectus supplement.
Payment
Mechanics for Debt Securities in Registered Form
Who
Receives Payment?
If interest is due on a debt security on an interest payment
date, we will pay the interest to the person or entity in whose
name the debt security is registered at the close of business on
the regular record date relating to the interest payment date as
described below under Payment and Record Dates
for Interest. If interest is due at maturity but on a day
that is not an interest payment date, we will pay the interest
to the person or entity entitled to receive the principal of the
debt security. If the principal or another amount besides
interest is due on a debt security at maturity, we will pay the
amount to the holder of the debt security against surrender of
the debt security at a proper place of payment, or, in the case
of a global security, in accordance with the applicable policies
of DTC, Euroclear and Clearstream, as applicable.
Payment
and Record Dates for Interest
Unless we specify otherwise in your prospectus supplement,
interest on any fixed rate debt security (other than perpetual
debt securities) will be payable semiannually each May 15 and
November 15 and at maturity, and the regular record date
relating to an interest payment date for any fixed rate debt
security will be the May 1 or November 1 next preceding that
interest payment date. The regular record date relating to an
interest payment date for any floating rate debt security will
be the 15th calendar day before that interest payment date.
Unless we specify otherwise in your prospectus supplement,
interest on any perpetual debt security will be payable
quarterly each January 15, April 15, July 15 and
October 15. The regular record date relating to an interest
payment date for any
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perpetual debt security shall be January 1, April 1,
July 1 and October 1, respectively. These record dates will
apply regardless of whether a particular record date is a
business day, as defined below. For the purpose of
determining the holder at the close of business on a regular
record date when business is not being conducted, the close of
business will mean 5:00 P.M., New York City time, on that
day.
Notwithstanding the foregoing, the record date for any payment
date for a debt security in book-entry form will be the business
day prior to the payment date.
Business
Day
The term business day means, for any debt security,
a day that meets all the following applicable requirements:
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for all debt securities, it is a Monday, Tuesday, Wednesday,
Thursday or Friday that is not a day on which banking
institutions in The Netherlands or New York City generally are
authorized or obligated by law, regulation or executive order to
close and that satisfies any other criteria specified in your
prospectus supplement;
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if the debt security is a floating rate debt security whose
interest rate is based on LIBOR, it is also a day on which
dealings in the relevant index currency specified in your
prospectus supplement are transacted in the London interbank
market;
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if the debt security has a specified currency other than
U.S. dollars or euro, it is also a day on which banking
institutions are not authorized or obligated by law, regulation
or executive order to close in the principal financial center of
the country issuing the specified currency;
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if the debt security either is a floating rate debt security
whose interest rate is based on EURIBOR or has a specified
currency of euro, it is also a day on which the Eurosystem-owned
European Real-Time Gross Settlement (RTGS) system
(TARGET2), or any successor system, is open for
business;
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if the debt security is held through Euroclear, it is also not a
day on which banking institutions in Brussels, Belgium are
generally authorized or obligated by law, regulation or
executive order to close; and
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if the debt security is held through Clearstream, it is also not
a day on which banking institutions in Luxembourg are generally
authorized or obligated by law, regulation or executive order to
close.
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How We
May Make Payments on Perpetual Debt Securities
Deferral of Interest Payments. Interest
payments and any other payments on perpetual debt securities may
be subject to deferral in some circumstances. We may be required
to defer payment if we do not satisfy solvency conditions or if,
after making such a payment, we would not satisfy certain
solvency conditions that will be described in your prospectus
supplement. In addition, we may defer payment if we comply with
a number of requirements. In either case, unless we obtain
permission from our relevant regulator, we may be required to
satisfy our obligation to pay in accordance with the alternative
interest satisfaction mechanism described below.
Alternative Interest Satisfaction
Mechanism. We may be permitted, and under certain
circumstances required, to satisfy our obligation to pay you
through the issuance of our ordinary shares which, when sold,
will provide a cash amount sufficient for us to make payments
due to you in respect of the relevant payment. Absent certain
conditions, we may elect to use this alternative interest
satisfaction mechanism in order to satisfy our obligation to
make any interest payment by giving not less than 16 business
days notice to the trustee.
Our obligation to pay in accordance with the alternative
interest satisfaction mechanism will be satisfied in accordance
with the procedures described in your prospectus supplement.
If we elect to make any payment in accordance with the
alternative interest satisfaction mechanism, the receipt of cash
proceeds on the sale of our ordinary shares issued to the
trustee or its agent will satisfy the relevant payment or the
relevant part of such payment. The proceeds from the sale of
ordinary shares pursuant to the alternative interest
satisfaction mechanism will be paid to you by the trustee in
respect of the relevant payment.
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How We
Will Make Payments Due in U.S. Dollars
We will follow the practice described in this subsection when
paying amounts due in U.S. dollars. Payments of amounts due
in other currencies will be made as described in the next
subsection.
Payments on Global Debt Securities. We will
make payments on a global debt security in accordance with the
applicable policies of the depositary as in effect from time to
time. Under those policies, we will pay directly to the
depositary, or its nominee, and not to any indirect owners who
own beneficial interests in the global debt security. An
indirect owners right to those payments will be governed
by the rules and practices of the depositary and its
participants, as described under Legal Ownership and
Book-Entry Issuance What Is a Global Security?
Payments on Non-Global Debt Securities. Unless
otherwise specified in your prospectus supplement, we will make
payments on a debt security in non-global form as follows. We
will pay interest that is due on an interest payment date by
check mailed on the interest payment date to the holder at his
or her address shown on the trustees records as of the
close of business on the record date. We will make all other
payments by check to the paying agent described below, against
surrender of the debt security. All payments by check will be
made in
next-day
funds, i.e., funds that become available on the day after
the check is cashed.
Alternatively, if a non-global security has a face amount of at
least $1,000,000 and the holder asks us to do so, we will pay
any amount that becomes due on the debt security by wire
transfer of immediately available funds to an account at a bank
in New York City, on the due date. To request wire payment, the
holder must give the paying agent appropriate transfer
instructions at least five business days before the requested
wire payment is due. In the case of any interest payment due on
an interest payment date, the instructions must be given by the
person who is the holder on the relevant regular record date. In
the case of any other payment, payment will be made only after
the debt security is surrendered to the paying agent. Any wire
instructions, once properly given, will remain in effect unless
and until new instructions are given in the manner described
above.
Book-entry and other indirect owners should consult their
banks or brokers for information on how they will receive
payments on their debt securities.
How We
Will Make Payments Due in Other Currencies
We will follow the practice described in this subsection for
payment amounts that are due in a specified currency other than
U.S. dollars.
Payments on Global Debt Securities. We will
make payments on a global debt security in the applicable
specified currency in accordance with the applicable policies of
the depositary as in effect from time to time. Under those
policies, we will pay directly to the depositary, or its
nominee, and not to any indirect owners who own beneficial
interests in the global debt security. An indirect owners
right to receive those payments will be governed by the rules
and practices of the depositary and its participants, as
described below in the section entitled Legal Ownership
and Book-Entry Issuance What is a Global
Security?.
Indirect owners of a global security denominated in a
currency other than U.S. dollars should consult their banks
or brokers for information on how to request payment in the
specified currency.
Payments on Non-Global Debt Securities. Except
as described in the last paragraph under this heading, we will
make payments on debt securities in non-global form in the
applicable specified currency. We will make these payments by
wire transfer of immediately available funds to any account that
is maintained in the applicable specified currency at a bank
designated by the holder and acceptable to us and the trustee.
To designate an account for wire payment, the holder must give
the paying agent appropriate wire instructions at least five
business days before the requested wire payment is due. In the
case of any interest payment due on an interest payment date,
the instructions must be given by the person or entity who is
the holder on the regular record date. In the case of any other
payment, the payment will be made only after the debt security
is surrendered to the paying agent. Any instructions, once
properly given, will remain in effect unless and until new
instructions are properly given in the manner described above.
If a holder fails to give instructions as described above, we
will notify the holder at the address in the trustees
records and will make the payment within five business days
after the holder provides appropriate instructions. Any
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late payment made in these circumstances will be treated under
the indenture as if made on the due date, and no interest will
accrue on the late payment from the due date to the date paid.
Although a payment on a debt security in non-global form may be
due in a specified currency other than U.S. dollars, we
will make the payment in U.S. dollars if the holder asks us
to do so. To request U.S. dollar payment, the holder must
provide appropriate written notice to the trustee at least five
business days before the next due date for which payment in
U.S. dollars is requested. In the case of any interest
payment due on an interest date, the request must be made by the
person or entity who is the holder on the regular record date.
Any request, once properly made, will remain in effect unless
and until revoked by notice properly given in the manner
described above.
Book-entry and other indirect owners of a debt security with
a specified currency other than U.S. dollars should contact
their banks or brokers for information about how to receive
payments in the specified currency or in U.S. dollars.
Conversion to U.S. Dollars. Unless
otherwise indicated in your prospectus supplement, holders are
not entitled to receive payment in U.S. dollars of an
amount due in another currency, whether on a global debt
security or on a non-global debt security.
If your prospectus supplement specifies that holders may request
that we make payments in U.S. dollars of an amount due in
another currency, the exchange rate agent described below will
calculate the U.S. dollar amount you receive in the
exchange agents discretion. A holder that requests payment
in U.S. dollars will bear all associated currency exchange
costs, which will be deducted from the payment.
When the Specified Currency Is Not
Available. If we are obligated to make any
payment in a specified currency other than U.S. dollars,
and the specified currency is not available to us due to
circumstances beyond our control which may include
the imposition of exchange controls or a disruption in the
currency markets we will be entitled to satisfy our
obligation to make the payment in that specified currency by
making the payment in U.S. dollars, on the basis of the
exchange rate determined by the exchange rate agent described
below in its discretion.
The foregoing will apply to any debt security, whether in global
or non-global form, and to any payment, including a payment at
maturity. Any payment made under the circumstances and in the
manner described above will not result in a default under any
debt security or the applicable indenture.
Exchange Rate Agent. If we issue a debt
security in a specified currency other than U.S. dollars,
we will appoint a financial institution to act as the exchange
rate agent and will name the institution initially appointed
when the debt security is originally issued in your prospectus
supplement. We may select ING Financial Markets LLC or another
of our affiliates to perform this role. We may change the
exchange rate agent from time to time after the original issue
date of the debt security without your consent and without
notifying you of the change.
All determinations made by the exchange rate agent will be made
in its sole discretion unless we state in your prospectus
supplement that any determination is subject to our approval. In
the absence of manifest error, those determinations will be
conclusive for all purposes and binding on you and us, without
any liability on the part of the exchange rate agent.
Payment
When Offices Are Closed
If any payment is due on a debt security on a day that is not a
business day, unless we specify otherwise in your prospectus
supplement, we will make the payment on the next day that is a
business day unless such business day would fall in the next
calendar year. Payments postponed to the next business day in
this situation will be treated under the indenture as if they
were made on the original due date. A postponement of this kind
will not result in a default under any debt security or the
applicable indenture, and no interest will accrue on the
postponed amount from the original due date to the next day that
is a business day. The term business day has a special meaning,
which we describe above under Business
Day.
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Paying
Agent
We may appoint one or more financial institutions to act as our
paying agents, at whose designated offices debt securities in
non-global form may be surrendered for payment at their
maturity. We call each of those offices a paying agent. We may
add, replace or terminate paying agents from time to time. We
may also choose to act as our own paying agent. Initially, we
have appointed the trustee, at its corporate trust office in New
York City, as the paying agent. We must notify you of changes in
the paying agents.
Unclaimed
Payments
Regardless of who acts as paying agent, all money paid by us to
a paying agent that remains unclaimed at the end of two years
after the amount is due to a holder will be repaid to us. After
that two-year period, the holder may look only to us for payment
and not to the trustee, any other paying agent or anyone else.
Payment
of Additional Amounts with Respect to the Debt
Securities
Unless otherwise indicated in your prospectus supplement, all
amounts of principal of, and any premium and interest on, any
debt securities will be paid by ING Groep N.V. without deduction
or withholding for any taxes, assessments or other charges
imposed by the government of The Netherlands, or the government
of a jurisdiction in which a successor to ING Groep N.V. is
organized, unless such deduction or withholding is required by
applicable law. If deduction or withholding of any of these
charges is required by The Netherlands, or by a jurisdiction in
which a successor to ING Groep N.V. is organized, ING Groep N.V.
or such successor, as the case may be, will pay as additional
interest any additional amounts necessary to make the net amount
paid to the affected holders equal the amount the holders would
have received in the absence of the deduction or withholding.
However, additional amounts will not be paid for:
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the amount of any tax, assessment or other governmental charge
imposed by any taxing authority of or in the United States;
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the amount of any tax, assessment or other governmental charge
which is only payable because:
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a connection exists between the holder and The Netherlands (or
such jurisdiction in which a successor to ING Groep N.V. is
organized);
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the holder presented the debt security for payment (where
presentation is required) more than 15 days after the date
on which the relevant payment became due or was provided for,
whichever is later;
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the amount of any estate, inheritance, gift, sales, transfer or
personal property tax or any similar tax, duty, assessment or
governmental charge;
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the amount of any tax, assessment or other governmental charge
which is payable other than by withholding from a payment on or
in respect of the debt securities;
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the amount of any tax, assessment or other governmental charge
that is imposed or withheld due to the beneficial owner of the
debt security failing to comply with a timely request from us to
either provide information concerning the beneficial
owners nationality, residence or identity or make any
claim to satisfy any information or reporting requirement, if
the completion of either would have provided an exemption from
the applicable governmental charge;
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the amount of any tax imposed on a payment to an individual that
is required to be made pursuant to the Directive of the European
Council of Economics and Finance Ministers, adopted on
June 3, 2003
(2003/48/EC)
or any law implementing or complying with, or introduced in
order to conform to, that Directive; or
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any combination of the taxes, assessments or other governmental
charges described above.
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In addition, we will not pay additional amounts to a
holder that is a fiduciary or partnership or an entity that is
not the sole beneficial owner of the payment where the law
requires the payment to be included in the income of a
25
beneficiary or settlor for tax purposes with respect to such
fiduciary or a member of such partnership or a beneficial owner
who would not have been entitled to such additional
amounts had it been the holder.
Whenever reference is made in any context to the principal of,
and any interest on, any debt security, such mention shall be
deemed to include any relevant premium or additional amounts to
the extent that, in such context, additional amounts are, were
or would be payable in respect thereof.
The prospectus supplement will describe any additional
circumstances under which additional amounts will not be paid
with respect to debt securities.
Notices
Notices to be given to holders of a global debt security will be
given only to the depositary, in accordance with its applicable
policies as in effect from time to time. Notices to be given to
holders of debt securities not in global form will be sent by
mail to the respective addresses of the holders as they appear
in the trustees records, and will be deemed given when
mailed. Neither the failure to give any notice to a particular
holder, nor any defect in a notice given to a particular holder,
will affect the sufficiency of any notice given to another
holder.
Book-entry and other indirect owners should consult their
banks or brokers for information on how they will receive
notices.
Service
of Process
We have appointed ING Financial Holdings Corporation, acting
through its office at 1325 Avenue of the Americas, New York, New
York, as our authorized agent for service of process in any
legal action or proceeding to which we are party relating to
either indenture or any debt securities brought in any federal
or state court in New York City and have submitted to the
non-exclusive jurisdiction of those courts.
CONSIDERATIONS
RELATING TO OUR DEBT SECURITIES
Considerations
Relating to Indexed Securities
We use the term indexed securities to mean debt
securities whose value is determined by reference to the price
or value of one or more securities of one or more issuers,
currencies, commodities, any other financial, economic or other
measure or instrument, including the occurrence or
non-occurrence of any event or circumstance,
and/or one
or more indices or baskets of any of these items. We refer to
each of these as an index. Indexed securities may
present a high level of risk, and investors in certain indexed
securities may lose their entire investment. In addition, the
treatment of indexed securities for U.S. federal income tax
purposes is often unclear due to the absence of any authority
specifically addressing the issues presented by any particular
indexed security. Thus, if you propose to invest in indexed
securities, you should independently evaluate the federal income
tax consequences of purchasing an indexed security that apply in
your particular circumstances. You should also read your
prospectus supplement for a discussion of U.S. federal tax
matters.
Investors
in Indexed Securities Could Lose Their Investment
The principal amount of an indexed debt security payable at
maturity,
and/or the
amount of interest payable on an indexed debt security on an
interest payment date, will be determined by reference to the
price or value of one or more indices. The direction and
magnitude of the change in the value of the relevant index will
determine the principal amount of an indexed debt security
payable at maturity
and/or the
amount of interest payable on an indexed debt security on an
interest payment date. The terms of a particular indexed debt
security may or may not include a guaranteed return of a
percentage of the face amount at maturity or a minimum interest
rate. Thus, if you purchase an indexed security, you may lose
all or a portion of the principal you invest and may receive no
interest on your investment.
26
The
Issuer of a Security or Currency that Serves as an Index Could
Take Actions that May Adversely Affect an Indexed
Security
The issuer of a security that serves as an index or part of an
index for an indexed debt security will have no involvement in
the offer and sale of the indexed security and no obligations to
the holder of the indexed security. The issuer may take actions,
such as a merger or sale of assets, without regard to the
interests of the holder. Any of these actions could adversely
affect the value of a debt security indexed to that security or
to an index of which that security is a component.
If the index for an indexed security includes a
non-U.S. dollar
currency or other asset denominated in a
non-U.S. dollar
currency, the government that issues that currency will also
have no involvement in the offer and sale of the indexed
security and no obligations to the holder of the indexed
security. That government may take actions that could adversely
affect the value of the security. See
Considerations Relating to Securities Linked
to a
Non-U.S. Dollar
Currency Government Policy Can Adversely Affect
Currency Exchange Rates and an Investment in a
Non-U.S. Dollar
Security for more information about these kinds of
government actions.
An
Indexed Security May Be Linked to a Volatile Index, Which Could
Hurt Your Investment
Some indices are highly volatile, which means that their value
may change significantly, up or down, over a short period of
time. The amount of principal or interest that can be expected
to become payable on an indexed security may vary substantially
from time to time. Because the amounts payable with respect to
an indexed security are generally calculated based on the value
of the relevant index on a specified date or over a limited
period of time, volatility in the index increases the risk that
the return on the indexed security may be adversely affected by
a fluctuation in the level of the relevant index.
The volatility of an index may be affected by political or
economic events, including governmental actions, or by the
activities of participants in the relevant markets. Any of these
events or activities could adversely affect the value of an
indexed security.
An
Index to Which a Security Is Linked Could Be Changed or Become
Unavailable
Some indices compiled by us or our affiliates or third parties
may consist of or refer to several or many different securities,
commodities or currencies or other instruments or measures. The
compiler of such an index typically reserves the right to alter
the composition of the index and the manner in which the value
of the index is calculated. An alteration may result in a
decrease in the value of or return on an indexed security that
is linked to the index. The indices for our indexed securities
may include published indices of this kind or customized indices
developed by us or our affiliates in connection with particular
issues of indexed securities.
A published index may become unavailable, or a customized index
may become impossible to calculate in the normal manner, due to
events such as war, natural disasters, cessation of publication
of the index or a suspension or disruption of trading in one or
more securities, commodities or currencies or other instruments
or measures on which the index is based. If an index becomes
unavailable or impossible to calculate in the normal manner, the
terms of a particular indexed security may allow us to delay
determining the amount payable as principal or interest on an
indexed debt security, or we may use an alternative method to
determine the value of the unavailable index. Alternative
methods of valuation are generally intended to produce a value
similar to the value resulting from reference to the relevant
index. However, it is unlikely that any alternative method of
valuation we use will produce a value identical to the value
that the actual index would produce. If we use an alternative
method of valuation for a debt security linked to an index of
this kind, the value of the security, or the rate of return on
it, may be lower than it otherwise would be.
Some indexed securities are linked to indices that are not
commonly used or that have been developed only recently. The
lack of a trading history may make it difficult to anticipate
the volatility or other risks associated with an indexed
security of this kind. In addition, trading in these indices or
their underlying stocks, commodities or currencies or other
instruments or measures, or options or futures contracts on
these stocks, commodities or currencies or other instruments or
measures, may be limited, which could increase their volatility
and decrease the value of the related indexed securities or the
rates of return on them.
27
We May
Engage in Hedging Activities that Could Adversely Affect an
Indexed Security
In order to hedge an exposure on a particular indexed security,
we may, directly or through our affiliates, enter into
transactions involving the securities, commodities or currencies
or other instruments or measures that underlie the index for
that security, or derivative instruments, such as swaps, options
or futures, on the index or any of its component items. By
engaging in transactions of this kind, we could adversely affect
the value of an indexed security. It is possible that we could
achieve substantial returns from our hedging transactions while
the value of the indexed security may decline.
Information
about Indices May Not Be Indicative of Future
Performance
If we issue an indexed security, we may include historical
information about the relevant index in your prospectus
supplement. Any information about indices that we may provide
will be furnished as a matter of information only, and you
should not regard the information as indicative of the range of,
or trends in, fluctuations in the relevant index that may occur
in the future.
We May
Have Conflicts of Interest Regarding an Indexed
Security
ING Bank N.V. and our other affiliates may have conflicts of
interest with respect to some indexed securities. ING Bank N.V.
and our other affiliates may engage in trading, including
trading for hedging purposes, for their proprietary accounts or
for other accounts under their management, in indexed securities
and in the securities, commodities or currencies or other
instruments or measures on which the index is based or in other
derivative instruments related to the index or its component
items. These trading activities could adversely affect the value
of indexed securities. We and our affiliates may also issue or
underwrite securities or derivative instruments or act as
financial adviser to issuers of the securities that are linked
to the same index as one or more indexed securities. By
introducing competing products into the marketplace in this
manner, we could adversely affect the value of an indexed
security.
ING Bank N.V. or another of our affiliates may serve as
calculation agent for the indexed securities and may have
considerable discretion in calculating the amounts payable in
respect of the securities. To the extent that ING Bank N.V. or
another of our affiliates calculates or compiles a particular
index, it may also have considerable discretion in performing
the calculation or compilation of the index. Exercising
discretion in this manner could adversely affect the value of an
indexed security based on the index or the rate of return on
your security.
Considerations
Relating to Securities Linked to a
Non-U.S.
Dollar Currency
If you intend to invest in a debt security whose principal
and/or
interest is payable in a currency other than U.S. dollars,
you should consult your own financial and legal advisors as to
the currency risks entailed by your investment. Securities of
this kind are not an appropriate investment for investors who
are unsophisticated with respect to foreign currency
transactions.
The information in this prospectus is directed primarily to
investors who are U.S. residents. Investors who are not
U.S. residents should consult their own financial and legal
advisors about currency-related risks particular to their
investment.
An
Investment in a Non-Dollar Security Involves Currency-Related
Risks
An investment in a debt security with a specified currency other
than U.S. dollars entails significant risks that are not
associated with a similar investment in a security payable
solely in U.S. dollars. These risks include the possibility
of significant changes in rates of exchange between the
U.S. dollar and the various non-dollar currencies or
composite currencies and the possibility of the imposition or
modification of foreign exchange controls or other conditions by
either the U.S. or
non-U.S. governments.
These risks generally depend on factors over which we have no
control, such as economic and political events and the supply of
and demand for the relevant currencies in the global markets.
28
Changes
in Currency Exchange Rates Can Be Volatile and
Unpredictable
Rates of exchange between the U.S. dollar and many other
currencies have been highly volatile, and this volatility may
continue and perhaps spread to other currencies in the future.
Fluctuations in currency exchange rates could adversely affect
an investment in a security denominated in a specified currency
other than U.S. dollars. Depreciation of the specified
currency against the U.S. dollar could result in a decrease
in the U.S. dollar-equivalent value of payments on the
security, including the principal payable at maturity or
settlement value payable upon exercise. That in turn could cause
the market value of the security to fall. Depreciation of the
specified currency against the U.S. dollar could result in
a loss to the investor on a U.S. dollar basis.
Government
Policy Can Adversely Affect Currency Exchange Rates and an
Investment in a Non-Dollar Security
Currency exchange rates can either float or be fixed by
sovereign governments. From time to time, governments use a
variety of techniques, such as intervention by a countrys
central bank or imposition of regulatory controls or taxes, to
affect the exchange rate of their currencies. Governments may
also issue a new currency to replace an existing currency or
alter the exchange rate or exchange characteristics by
devaluation or revaluation of a currency. Thus, a special risk
in purchasing
non-U.S. dollar-denominated
securities is that their U.S. dollar-equivalent yields or
payouts could be significantly and unpredictably affected by
governmental actions. Even in the absence of governmental action
directly affecting currency exchange rates, political or
economic developments in the country issuing the specified
currency for a non- dollar security or elsewhere could lead to
significant and sudden changes in the exchange rate between the
dollar and the specified currency. These changes could affect
the U.S. dollar-equivalent value of the security as
participants in the global currency markets move to buy or sell
the specified currency or U.S. dollars in reaction to these
developments.
Governments have imposed from time to time and may in the future
impose exchange controls or other conditions with respect to the
exchange or transfer of a specified currency that could affect
exchange rates as well as the availability of a specified
currency for a security at its maturity or on any other payment
date. In addition, the ability of a holder to move currency
freely out of the country in which payment in the currency is
received or to convert the currency at a freely determined
market rate could be limited by governmental actions.
Non-Dollar
Securities Will Permit Us to Make Payments in Dollars or Delay
Payment if We Are Unable to Obtain the Specified
Currency
Securities payable in a currency other than U.S. dollars
will provide that if, because of circumstances beyond our
control, the other currency is subject to convertibility,
transferability, market disruption or other conditions affecting
its availability at or about the time when a payment on the
securities comes due, we will be entitled to make the payment in
U.S. dollars or delay making the payment. These
circumstances could include the imposition of exchange controls
or our inability to obtain the other currency because of a
disruption in the currency markets. If we made payment in
U.S. dollars, the exchange rate we would use would be
determined in the manner described under
Payment Mechanics for Debt Securities in
Registered Form How We Will Make Payments Due in
Other Currencies When the Specified Currency Is Not
Available. A determination of this kind may be based on
limited information and would involve significant discretion on
the part of our foreign exchange agent. As a result, the value
of the payment in dollars an investor would receive on the
payment date may be less than the value of the payment the
investor would have received in the other currency if it had
been available, and may even be zero. In addition, a government
may impose extraordinary taxes on transfers of a currency. If
that happens, we will be entitled to deduct these taxes from any
payment on securities payable in that currency.
We
Will Not Adjust Non-Dollar Securities to Compensate for Changes
in Currency Exchange Rates
Except as described above, we will not make any adjustment or
change in the terms of a debt security payable in a currency
other than U.S. dollars in the event of any change in
exchange rates for that currency, whether in the event of any
devaluation, revaluation or imposition of exchange or other
regulatory controls or taxes or in the event of other
developments affecting that currency, the U.S. dollar or
any other currency. Consequently, investors in non-dollar debt
securities will bear the risk that their investment may be
adversely affected by these types of events.
29
In a
Lawsuit for Payment on a Non-Dollar Security, an Investor May
Bear Currency Exchange Risk
Unless otherwise specified in your prospectus supplement, the
debt securities under the applicable indenture will be governed
by New York law. Under Section 27 of the New York Judiciary
Law, a state court in the State of New York rendering a judgment
on a security denominated in a currency other than
U.S. dollars would be required to render the judgment in
the specified currency; however, the judgment would be converted
into U.S. dollars at the exchange rate prevailing on the
date of entry of the judgment. Consequently, in a lawsuit for
payment on a security denominated in a currency other than
U.S. dollars, investors would bear currency exchange risk
until judgment is entered, which could be a long time.
In courts outside of New York, investors may not be able to
obtain judgment in a specified currency other than
U.S. dollars. For example, a judgment for money in an
action based on a non-dollar security in many other
U.S. federal or state courts ordinarily would be enforced
in the United States only in U.S. dollars. The date used to
determine the rate of conversion of the currency in which any
particular security is denominated into U.S. dollars will
depend upon various factors, including which court renders the
judgment.
Information
about Exchange Rates May Not Be Indicative of Future
Performance
If we issue a debt security denominated in a specified currency
other than U.S. dollars, we may include in your prospectus
supplement a currency supplement that provides information about
historical exchange rates for the specified currency. Any
information about exchange rates that we may provide will be
furnished as a matter of information only, and you should not
regard the information as indicative of the range of, or trends
in, fluctuations in currency exchange rates that may occur in
the future. That rate will likely differ from the exchange rate
used under the terms that apply to a particular debt security.
Determinations
Made by the Exchange Rate Agent
All determinations made by the exchange rate agent will be made
in its sole discretion (except to the extent expressly provided
in this prospectus or in your prospectus supplement that any
determination is subject to approval by ING Groep N.V.). In the
absence of manifest error, its determinations will be conclusive
for all purposes and will bind all holders and us. The exchange
rate agent will not have any liability for its determinations.
DESCRIPTION
OF ORDINARY SHARES WE MAY OFFER
Please note that in this section entitled Description of
Ordinary Shares We May Offer, reference to ING Groep
N.V., we, our and us
refer only to ING Groep N.V. and not to INGs consolidated
subsidiaries. This section and your prospectus supplement will
summarize all the material terms of our ordinary shares,
including summaries of certain provisions of our articles of
association and applicable Dutch law in effect on the date
hereof. They do not, however, describe every aspect of the
ordinary shares, the articles of association or Dutch law.
References to provisions of our articles of association are
qualified in their entirety by reference to the full articles of
association, an English translation of which has been filed as
an exhibit to the registration statement of which this
prospectus is a part.
General
As of September 30, 2009 our authorized share capital is
divided into 4,500 million ordinary shares, with a nominal
value of EUR 0.24 per ordinary share, and
4,500 million cumulative preference shares with a nominal
value of EUR 0.24 per cumulative preference share. The
ordinary shares and the cumulative preference shares are each in
registered form. The outstanding ordinary shares are fully paid
and non-assessable. Approximately 99.9% of the outstanding
ordinary shares are currently held by the Trust, which has
issued bearer depositary receipts in exchange therefor. As of
September 30, 2009, 2,063,147,969 ordinary shares were
issued and outstanding. In addition, as of September 30,
2009, no cumulative preference shares were issued and
outstanding.
30
Dividends
Dividends, whether in cash or shares, may be payable out of our
annual profits as reflected in the annual accounts adopted by
the general meeting of shareholders of ING Groep N.V. The
declaration of interim dividends is subject to the discretion of
our Executive Board, whose decision to that effect is subject to
the approval of our Supervisory Board. The Executive Board
decides, subject to the approval of our Supervisory Board, which
part of the annual profits (after payment of dividends on
cumulative preference shares) will be added to the reserves of
ING Groep N.V. The part of the annual profits that remains after
this addition to the reserves and after payment of dividends on
cumulative preference shares is at the disposal of the general
meeting of shareholders, which may declare dividends therefrom
and/or add
additional amounts to the reserves of ING Groep N.V. A proposal
of the Executive Board with respect thereto is submitted to the
general meeting of shareholders. See
Item 8 Financial information
Dividends in our Annual Report on
Form 20-F
for a more detailed discussion of the dividend rights of holders
of ordinary shares. Our Executive Board may also decide, with
the approval of the Supervisory Board, to declare dividends in
the currency of a country other than The Netherlands, in which
the bearer depositary receipts representing our ordinary shares
are trading.
Voting
Rights
General
Meetings of Shareholders of ING Groep N.V.
Under Dutch law, we must hold at least one annual general
meeting of shareholders, not later than six months after the end
of the fiscal year. Pursuant to our articles of association,
general meetings of shareholders may also be held as often as
the Executive Board or the Supervisory Board deems desirable. In
addition, shareholders or holders of bearer depositary receipts
representing at least one-tenth of the issued share capital may
request the Executive Board in writing to convene a general
meeting of shareholders. If the Executive Board or the
Supervisory Board has not taken measures so that the meeting can
be held within six weeks after such request has been made, the
persons who have made the request may, upon their application,
be authorized by the judge for interim provisions
(voorzieningenrechter) of the competent court to convene
such a meeting. Our articles of association specify the places
where general meetings of shareholders may be held, all of which
are located in The Netherlands. In order to attend, to address
and to vote at the general meeting of shareholders, holders of
ordinary shares (including those voting by proxy) must notify us
in writing of their intention to attend the meeting by the date
determined by the Executive Board and stated in the notice of
meeting, which date shall not be earlier than the seventh day
before the day of the meeting.
We do not directly solicit from or nominate proxies for our
shareholders and are exempt from the SECs proxy rules
under the Exchange Act; however, the Trust may solicit proxies.
Shareholders and other persons entitled to attend general
meetings of shareholders may be represented by proxies with
written authority. See Item 7 Major
shareholders and related party transactions in our Annual
Report on
Form 20-F.
Resolutions are adopted at general meetings of shareholders by
an absolute majority of the votes cast (except where a larger
majority of votes is required by the articles of association or
Dutch law) and there are generally no quorum requirements
applicable to such meetings, except as described in the
following paragraph. Each ordinary share and each cumulative
preference share presently carries one vote.
Amendment
of Articles of Association, Legal Merger,
Split-Up and
Winding-Up
of ING Groep N.V.
Resolutions to amend our articles of association or to dissolve
ING Groep N.V. may only be adopted upon a proposal by the
Executive Board that is approved by the Supervisory Board. Such
resolution must generally be approved by a majority of at least
two-thirds of the votes cast at a general meeting of
shareholders at which at least two-thirds of the issued share
capital is represented. By operation of law, the same rules
apply for resolutions with respect to legal merger
(juridische fusie) and
split-up
(splitsing) as defined in the Dutch Civil Code. In
addition to such resolution of the general meeting of
shareholders, a prior or simultaneous resolution by shareholders
of the same class whose rights are affected by the merger or
split-up
must approve the merger or
split-up.
31
Adoption
of Annual Accounts
As provided by Dutch law and by our articles of association, the
Executive Board submits ING Groep N.V.s annual Dutch
statutory accounts, together with a certificate of the audit in
respect thereof, to the general meeting of shareholders for
adoption.
Liquidation
Rights
In the event of the dissolution and liquidation of ING Groep
N.V., the assets remaining after payment of all debts and
liquidation expenses are first to be distributed to the holders
of cumulative preference shares to the extent of the nominal
amount paid up on the cumulative preference shares plus accrued
dividends. Any remainder will be distributed to holders of the
ordinary shares in proportion to their number of shares.
Pre-emptive
Rights
Except in cases provided by Dutch law, each holder of ordinary
shares shall have a pre-emptive right to issues of ordinary
shares. Pre-emptive rights may be restricted or excluded by
resolution of the general meeting of shareholders or a body
thereunto duly authorized by the general meeting of
shareholders, which resolution shall require a majority of at
least two-thirds of the votes cast if less than half of the
issued share capital is represented.
Acquisition
and Cancellation of Ordinary Shares
We may acquire ordinary shares
and/or
bearer depositary receipts representing our ordinary shares,
subject to compliance with certain Dutch law requirements
(including that the aggregate nominal value of all ordinary
shares, cumulative preference shares
and/or
bearer depositary receipts held by ING Groep N.V. and any of its
subsidiaries at any one time amounts to no more than 50% of our
issued share capital). Shares owned by us may not be voted or
counted for quorum purposes. Any such acquisitions are subject
to the decision of the Executive Board, the approval of the
Supervisory Board and the authorization of shareholders at the
general meeting of shareholders of ING Groep N.V. Shares
and/or
bearer depositary receipts representing our ordinary shares held
by us may be resold without triggering preemptive rights.
The general meeting of shareholders has the power to decide to
cancel any of our shares we acquire. Any such proposal is
subject to general requirements of Dutch law with respect to
reduction of capital.
Furthermore, the general meeting of shareholders may decide to
reduce the nominal amount of the shares in our share capital.
Any such proposal is subject to general requirements of Dutch
law with respect to reduction of capital as well as the relevant
provisions of our articles of association.
Limitations
on Right to Hold or Vote the Ordinary Shares
There are no limitations imposed by Dutch law or by our articles
of association on the right of non-resident owners to hold or
vote the ordinary shares solely by reason of such non-residence.
DESCRIPTION
OF THE TRUST AND THE BEARER DEPOSITARY RECEIPTS
The following is a description of the material provisions of the
Trust Agreement and the applicable provisions of Dutch law.
This description does not purport to be complete and is
qualified in its entirety by reference to the
Trust Agreement and the applicable provisions of Dutch law
referred to in such description.
General
Bearer depositary receipts, which are negotiable instruments
under Dutch law, are issuable by the Stichting ING
Aandelen, which we refer to as the Trust, pursuant to the
terms of the Trusts articles of association
(Statuten) and the related conditions of administration
(Administratievoorwaarden) (which, when read together,
are the Trust Agreement). The Trust Agreement governs
the rights of the holders of bearer depositary receipts relative
to the Trust. Each bearer depositary receipt underlying our
ordinary shares represents an interest in one ING ordinary
share, nominal value EUR 0.24, held by the Trust. As of
September 30, 2009, the Trust held
2,062,220,263 ordinary
32
shares of ING, which represents approximately 99.9% of the ING
ordinary shares outstanding. The bearer depositary receipts
representing our ordinary shares are traded on Euronext
Amsterdam by NYSE Euronext, the principal trading market for the
bearer depositary receipts representing our ordinary shares. The
bearer depositary receipts representing our ordinary shares are
also listed on Euronext Brussels. There are no limitations under
Dutch law on the rights of non-residents or non-citizens to hold
or vote the bearer depositary receipts representing ordinary
shares, other than the general limitations described below.
The ING Groep N.V. articles of association and the
Trust Agreement, together with English translations
thereof, are incorporated by reference in the registration
statement of which this prospectus forms a part.
As of September 30, 2009, no person is known to us to be
the owner of more than 10% of the ordinary shares or bearer
depositary receipts representing our ordinary shares (other than
the Trust).
Dividends
Holders of bearer depositary receipts are entitled to receive
the dividends and other distributions corresponding to the
ordinary shares underlying such bearer depositary receipts
within one week of the time when the Trust receives the
corresponding dividends or other distributions to shareholders.
The Trust will distribute cash dividends and other cash
distributions received by it in respect of the ordinary shares
held by the Trust to the holders of the bearer depositary
receipts in proportion to their respective holdings, in each
case in the same currency in which they were received. Cash
dividends and other cash distributions in respect of bearer
depositary receipts representing our ordinary shares and for
which ADSs have been issued will be distributed in
U.S. dollars in accordance with the deposit agreement.
If we declare a dividend in, or free distribution of, ordinary
shares, such ordinary shares will be acquired by the Trust, and
the Trust will distribute to the holders of the outstanding
bearer depositary receipts, in proportion to their holdings,
additional bearer depositary receipts issued for the ordinary
shares received by the trust as such dividend or distribution.
In the event the Trust receives any distribution with respect to
ordinary shares held by the Trust other than in the form of cash
or additional ordinary shares, the Trust will adopt such method
as it may deem legal, equitable and practicable to effect such
distribution.
If the Trust has the option to receive such distribution either
in cash or shares, the Trust will give notice of such option by
advertisement and give holders of bearer depositary receipts the
opportunity, to the extent possible, to choose between cash and
bearer depositary receipts for shares until the fourth day
before the day on which the Trust must have made such choice. If
no such choice by the holders of bearer depositary receipts has
been timely communicated to the Trust, the Trust shall make the
choice as it sees fit in the interests of the holders of the
bearer depositary receipts concerned. Distributions to the
shareholders in the form of bonus shares,
writing-up
shares, stock dividends and the like shall as far as possible be
made available by the Trust to the holders of bearer depositary
receipts in the form of bearer depositary receipts or by writing
up the bearer depositary receipts.
Dividends, whether in cash or shares, may be payable out of our
annual profits, as reflected in the annual accounts adopted by
the general meeting of shareholders. At its discretion, but
subject to statutory provisions, the Executive Board may, with
the prior approval of the Supervisory Board, distribute one or
more interim dividends, whether in cash, or shares, before the
annual accounts for any financial year have been adopted by the
general meeting of shareholders. The Executive Board, with the
approval of the Supervisory Board, may decide that all or part
of our profits after the distribution of dividends to the
holders of cumulative preference shares should be retained and
not be made available for distribution to holders of ordinary
shares. Those profits that are not retained may be distributed
to the shareholders pursuant to a resolution of the general
meeting of shareholders, provided that the distribution does not
occur at a moment that ING Groep N.V.s shareholders
equity is, and does not reduce ING Groep N.V.s
shareholders equity, below the issued share capital
increased by the amount of reserves required by Dutch law. The
Executive Board determines, with the approval of the Supervisory
Board, whether the dividends on ordinary shares are payable in
cash, in shares, or at the option of the holders of ordinary
shares, in cash or in shares. Existing reserves that are
distributable in accordance with law may be made available to
the general meeting of shareholders for distribution upon
proposal by the Executive Board, subject to prior approval by
the Supervisory Board. See Item 8
Financial information Dividends in our Annual
Report on
Form 20-F
for additional discussion of the dividend rights of holders of
ordinary shares. The Executive Board may also decide, with the
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approval of the Supervisory Board, to declare dividends in the
currency of the country other than The Netherlands in which the
bearer depositary receipts are trading.
Voting
Rights
Holders of bearer depositary receipts are entitled to attend and
speak at general meetings of shareholders of ING Groep N.V. but
do not have direct voting rights. However, the Trust will,
subject to the restriction referred to below, grant a proxy to a
holder of bearer depositary receipts to the effect that such
holder may, in the name of the Trust, exercise the voting rights
attached to the number of its shares that corresponds to the
number of bearer depositary receipts held by such holder of
bearer depositary receipts. On the basis of such a proxy, the
holder of bearer depositary receipts may vote according to his
own discretion. Under current law, only those holders of bearer
depositary receipts representing our ordinary shares on the
books of the Trust 30 calendar days prior to the meeting
may vote via proxy at such meeting. The restriction under which
the Trust will grant a voting proxy to holders of bearer
depositary receipts is that the relevant holder of bearer
depositary receipts must have announced his intention to attend
the general meeting of shareholders, observing the provisions
laid down in the articles of association of ING Groep N.V. The
relevant holder of bearer depositary receipts may delegate the
powers conferred upon him by means of the voting proxy, provided
that the relevant holder of bearer depositary receipts has
announced his intention to do so to the Trust, observing a term
before the commencement of the general meeting of shareholders,
which term will be determined by the Trust.
Holders of bearer depositary receipts may also issue voting
instructions to the Trust, in respect of each general meeting of
shareholders of ING Groep N.V., as to the way in which the Trust
is to exercise voting rights at the general meeting of
shareholders in respect of the shares for which the bearer
depositary receipt holder concerned holds the bearer depositary
receipts, and the Trust will comply with such instructions. See
Item 7 Major shareholders and related
party transactions in our Annual Report on
Form 20-F.
DESCRIPTION
OF AMERICAN DEPOSITARY SHARES WE MAY OFFER
This section and your prospectus supplement will summarize all
of the material provisions of the Amended and Restated Deposit
Agreement, dated as of March 6, 2004, pursuant to which the
American depositary receipts (which we refer to as ADRs) are to
be issued among ING Groep N.V., the Trust, JPMorgan Chase Bank,
as depositary, and the holders from time to time of ADRs. We
refer to this agreement as the deposit agreement. We
do not, however, describe every aspect of the deposit agreement,
which has been filed as an exhibit to the registration statement
of which this prospectus is a part. You should read the deposit
agreement for a more detailed description of the terms of the
ADRs. Additional copies of the deposit agreement are available
for inspection at the offices of the depositary in New York,
which is presently located at 60 Wall Street, New York, New York
10260 and at the offices of the agents of the depositary
currently located at ING Bank N.V., Amstelveenseweg 500, 1081 KL
Amsterdam, P.O. Box 810, 1000 AV Amsterdam, The
Netherlands. The depositarys principal office is located
at 60 Wall Street, New York, New York 10260.
General
The depositary will issue ADRs evidencing ADSs (which we refer
to as ADSs) pursuant to the deposit agreement. Each ADS will
represent one bearer depositary receipt for an ordinary share or
evidence the right to receive one bearer depositary receipt
representing one of our ordinary shares. Only persons in whose
names ADRs are registered on the books of the depositary will be
treated by the depositary and us as holders of ADRs.
Pursuant to the terms of the deposit agreement, holders, owners
and beneficial owners of ADRs will be subject to any applicable
disclosure requirements regarding acquisition and ownership of
ordinary shares or bearer depositary receipts representing our
ordinary shares as are applicable pursuant to the terms of our
articles of association or Dutch laws, as each may be amended
from time to time. See Item 10 Additional
information Obligations of shareholders to disclose
holdings in our Annual Report on
Form 20-F
for a description of such disclosure requirements applicable to
ordinary shares and the consequences of noncompliance as of the
date of this prospectus. The depositary has agreed, subject to
the terms and conditions of the deposit agreement, to use its
reasonable efforts to comply with INGs instructions as to
such requirements.
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Deposit,
Transfer and Withdrawal
The depositary has agreed that upon delivery of bearer
depositary receipts representing our ordinary shares (or
evidence of rights to receive bearer depositary receipts
representing our ordinary shares) to their custodian, which is
currently ING Bank N.V., and in accordance with the procedures
set forth in the deposit agreement, the depositary will execute
and deliver at its office to, or upon the written order of, the
person or persons named in the notice of the custodian delivered
to the depositary or requested by the person or persons who
delivered such bearer depositary receipts to the custodian for
deposit with the depositary, an ADR or ADRs registered in the
name or names of such person or persons and evidencing the
number of ADSs to which such person or persons are entitled.
Upon surrender at the office of the depositary of an ADR for the
purpose of withdrawal of the deposited securities represented by
the ADSs evidenced by such ADR, and upon payment of the fees,
governmental charges and taxes provided in the deposit
agreement, and subject to the terms and conditions of the
deposit agreement, the articles of association of ING Groep N.V.
and the deposited securities, the holder of such ADR will be
entitled to delivery without unreasonable delay to such holder
or upon such holders order, as permitted by applicable
law, of the amount of deposited securities at the time
represented by the ADS evidenced by such ADR. The custodian
shall ordinarily deliver such deposited securities at its
office; the forwarding for delivery at the office of the
depositary or at any other place specified by the holder of
cash, other property and documents of title for such delivery
will be at the risk and expense of the holder.
The depositary may issue ADRs against rights to receive bearer
depositary receipts representing our ordinary shares from us, or
any registrar, transfer agent, clearing agency or the entity
recording bearer depositary receipt ownership or transactions
for us. The depositary may issue ADRs against other rights to
receive bearer depositary receipts representing our ordinary
shares (until such bearer depositary receipts are actually
deposited, pre-released ADRs); only if (x) such
pre-released ADRs are fully collateralized (marked to market
daily) with cash or U.S. government securities held by the
depositary for the benefit of holders (but such collateral shall
not constitute deposited securities); (y) each recipient of
such pre-released ADRs represents and agrees in writing with the
depositary that such recipient or its customer
(i) beneficially owns such bearer depositary receipts,
(ii) assigns all beneficial right, title and interest
therein to the depositary for the benefit of the holders,
(iii) holds such bearer depositary receipts for the account
of the depositary and (iv) will deliver such bearer
depositary receipts to the custodian as soon as practicable and
promptly upon demand therefor but in no event more than five
days after demand therefor; and (z) all pre-released ADRs
evidence not more than 20% of all ADSs (excluding those
evidenced by pre-released ADRs). Such collateral, but not the
earnings thereon, shall be held for the benefit of the holders.
The depositary may retain for its own account any compensation
for the issuance of ADRs against such other rights to receive
bearer depositary receipts representing our ordinary shares,
including without limitation earnings on the collateral securing
such rights.
Dividends,
Other Distributions and Rights
Unless it is prohibited or restricted by applicable law,
regulations or applicable permits, the depositary will convert
or cause to be converted into U.S. dollars, to the extent
it can transfer the resulting U.S. dollars to the United
States, all cash dividends and other cash distributions
denominated in a currency other than U.S. dollars,
including euro, that it receives in respect of the deposited
securities and to distribute the resulting dollar amount (net of
reasonable and customary expenses incurred by the depositary and
any taxes the depositary is required to withhold) to you in
proportion to the number of ADRs representing such deposited
securities you hold. See Taxation Material Tax
Consequences of Owning Bearer Depositary Receipts Representing
Our Ordinary Shares or American Depositary Shares
Netherlands Taxation Withholding Tax. If any
foreign currency received by the depositary cannot be so
converted and transferred, or if any approval or license of any
government or agency thereof which is required for such
conversion is denied, or in the opinion of the depositary cannot
be obtained at a reasonable cost or within a reasonable time,
the depositary shall in its discretion either distribute such
foreign currency to each holder or hold such foreign currency
not so distributed uninvested and without liability for interest
thereon for the respective accounts of the holders entitled to
receive the same. If any such conversion of foreign currency, in
whole or in part, can be effected for distribution to some of
the holders entitled thereto, the depositary may in its
discretion make such conversion and distribution in
U.S. dollars to the extent permissible to the holders
35
entitled thereto, distribute foreign currency received by it to
each holder requesting such distribution entitled thereto or
hold the balance uninvested for the respective accounts of the
holders entitled thereto.
If we declare a dividend in, or free distribution of, ordinary
shares which are evidenced by bearer depositary receipts, the
depositary may with our approval, and shall if we so request,
distribute to you, in proportion to the number of ADRs you hold,
additional ADRs evidencing an aggregate number of ADSs that
represents the amount of ordinary shares evidenced by bearer
depositary receipts received as such dividend or free
distribution, subject to the terms and conditions of the deposit
agreement, including the withholding of any tax or other
governmental charge and the payment of fees of the depositary.
In lieu of delivering ADRs for fractional ADSs in the event of
any such dividend or free distribution, the depositary shall
sell the amount of bearer depositary receipts representing our
ordinary shares represented by the aggregate of such fractions
and distribute the net proceeds. If additional ADRs are not so
distributed, each ADS shall thenceforth also represent its
proportionate interest in the additional bearer depositary
receipts distributed upon the deposited securities represented
thereby.
If we offer or cause to be offered to you any rights to
subscribe for additional bearer depositary receipts representing
our ordinary shares or any rights of any other nature, the
depositary will have discretion as to the procedure to be
followed in making such rights available to you or in disposing
of such rights for you and making the net proceeds available to
you in accordance with the deposit agreement or, if for any
reason, the depositary may not either make such rights available
to you or dispose of such rights and make the net proceeds
available to you, then the depositary shall allow the rights to
lapse; provided, however, that if at the time of such
offering the depositary determines that it is lawful and
feasible to make such rights available to you or to certain
holders but not to other holders, the depositary may, and at the
request of the Group will, distribute to any holder to whom it
determines the distribution to be lawful and feasible, in
proportion to the number of ADSs held by such holder, warrants
or other instruments therefor in such form as it deems
appropriate. If the depositary determines that it is neither
lawful nor feasible to make such rights available to all or
certain holders, or if the rights represented by such warrants
or other instruments are not exercised and appear to be about to
lapse, it may, and at our request will, sell the rights,
warrants or other instruments in proportion to the number of
ADSs held by the holders to whom it has determined it may not
lawfully or feasibly make such rights available, allocate the
proceeds of such sales for the accounts of, and distribute the
net proceeds so allocated to, any holders otherwise entitled to
such rights, warrants or other instruments, upon an averaged or
other practicable basis without regard to any distinctions among
such holders because of exchange restrictions or the date of
delivery of any ADR or ADRs, or otherwise.
The depositary will not offer rights to holders having an
address in the U.S. unless both the rights and the
securities to which such rights relate are either exempt from
registration under the Securities Act with respect to a
distribution to all holders or are registered under the
provisions of the Securities Act. Notwithstanding any terms of
the deposit agreement to the contrary, we shall have no
obligation to prepare and file a registration statement in
respect of any such rights.
Whenever the depositary shall receive any distribution other
than cash, bearer depositary receipts representing ordinary
shares or rights in respect of the deposited securities, the
depositary shall, with our consent, cause the securities or
property received by it to be distributed to the holders
entitled thereto in proportion to their holdings, respectively,
in any manner that the depositary may reasonably deem equitable
and practicable for accomplishing such distribution;
provided, however, that if in the opinion of the
depositary such distribution cannot be made proportionately
among the holders entitled thereto, or if for any other reason
(including any requirement that we or the depositary withhold an
amount on account of taxes or other governmental charges or that
such securities must be registered under the Securities Act in
order to be distributed) the depositary deems such distribution
not to be feasible, the depositary may adopt such method as it
may deem equitable and practicable for the purpose of effecting
such distribution, including the sale (at public or private
sale) of the securities or property thus received, or any part
thereof, and the net proceeds of any such sale will be
distributed by the depositary to the holders entitled thereto as
provided for in the deposit agreement in the case of a
distribution received in cash. The holders alone shall be
responsible for the payment of any taxes or other governmental
charges due as a result of such sales or transfers.
If the depositary determines that any distribution of property
other than cash (including bearer depositary receipts and rights
to subscribe therefor) is subject to any tax which the
depositary is obligated to withhold, the depositary may dispose
of all or a portion of such property in such amounts and in such
manner as the depositary
36
deems necessary and practicable to pay such taxes or charges, by
public or private sale, and the depositary will distribute the
net proceeds of any such sale after deduction of such taxes to
the holders entitled thereto in proportion to the number of ADRs
held by them, respectively.
Upon any change in nominal or par value,
split-up,
consolidation, cancellation or any other reclassification of
deposited securities, or upon any recapitalization,
reorganization, merger or consolidation or sale of assets
affecting the Group or to which we are a party, any securities
that shall be received by the depositary replacement or
otherwise, in exchange for, in conversion or replacement of, or
otherwise in respect of, deposited securities will be treated as
new deposited securities under the deposit agreement, and the
ADRs shall thenceforth represent, in addition to the existing
deposited securities, the right to receive the new deposited
securities so received in exchange, conversion, replacement or
otherwise, unless additional ADRs are delivered pursuant to the
following sentence. In any such case the depositary may with our
approval, and will if we so request, execute and deliver
additional ADRs as in the case of a distribution in bearer
depositary receipts representing our ordinary shares, or call
for the surrender of outstanding ADRs to be exchanged for new
ADRs specifically describing such securities.
Record
Dates
Whenever any cash dividend or other cash distribution becomes
payable with respect to the ADRs, or whenever there is any
meeting of holders of ordinary shares, or whenever the
depositary shall find it necessary or convenient, the depositary
will fix a record date (which shall be as near as practicable to
any corresponding record date set by us with respect to the
ordinary shares), for the determination of the holders who shall
be entitled to (i) receive such dividend, distribution or
rights, or the net proceeds of the sale thereof; or
(ii) give instructions for the exercise of voting rights at
any such meeting, all subject to the provisions of the deposit
agreement.
Voting of
Deposited Securities
The Trust is the holder of all ordinary shares represented by
bearer depositary receipts and has sole power to vote such
ordinary shares other than any ordinary shares with respect to
which the Trust has granted a proxy as described in
Description of the Trust and the bearer depositary
receipts Voting Rights. Before exercising its
voting rights with respect to the ordinary shares, the Trust may
solicit voting instructions from each holder of bearer
depositary receipts representing our ordin