Dutch banking group ING has announced it will be getting a €10billion bail-out from the Dutch Government after it revealed its first ever quarterly loss last week.
ING's share price plunged 27 per cent after it revealed it expects to make losses of €500million for the third quarter; it will receive the €10billion as part of the Dutch Government's €20billion pledge, made earlier this month, to make capital available to financial enterprises that are fundamentally sound and viable, to boost confidence and stability in the Dutch economy.
Michel Tilmant, CEO of ING, stressed that the injection of cash is to strengthen the capital position of the bank, and not because it is in serious trouble. "Our capital position was in line with previously targeted levels and regulatory requirements." Mr Tilmant said.
"However, market conditions have changed dramatically in recent weeks and have led to an internationally recognised belief that going forward, in this market environment, capital requirements for financial institutions should be higher."
With 85 million private, corporate, and institutional clients in more than 50 countries, ING is the Netherlands' biggest bank and one of the world's top 20 banks. Its UK savings arm, ING Direct, is set to take on the savings account
customers of collapsed Icelandic banks Kaupthing Edge and Heritable Bank.
There are about one million customers in the UK with ING Direct savings accounts
, which often top 'best buy' tables with their competitive interest rates.
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ING's capital boost is one of many similar actions being taken around the world as governments try to shore up increasing financial instability and restore confidence to the money markets.
"We feel that at this time it is prudent to raise our core capital to reinforce our strong competitive position in this changing landscape." Mr Tilmant added.
Wouter Bos, the Netherlands' Finance Minister, said the ING deal was necessary given the recent volatility of global markets. ING is "a healthy financial institution," he said at a news conference held at the offices of the country's central bank in Amsterdam.
The government will not take voting rights in the bank, but it will take two of the supervisory seats on the groups' board.
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