Dutch finance groups plan debt repayments

ING plans to repay some of its debt owed to the Dutch government since it was bailed during the financial crisis in May this year, while ABN AMRO has given support to the finance ministry’s plans for a sell-off in 2014 following a quarterly net loss. Insurer Aegon will meanwhile be the first to rebuild by paying back all of its debt this year.

ING Group plans to repay a further Eur2bn of debt owed to the Dutch finance ministry on 13 May 2011, bringing it a step closer to returning its outstanding Eur5bn of debt since its bailout in October 2008.

The Dutch bancassurer will repurchase Eur2bn of core Tier securities, paying a total amount of Eur3bn to the government after an additional 50% repurchase premium, or penalty.

It plans to fund the purchase out of its retained earnings, made possible by an improved performance in the Group’s banking business during 2010.

An accelerated repayment plan means ING hopes to see the full stake the Dutch government holds in the Group repaid by May 2012. Reportedly, ING had originally hoped to make that repayment this year, in 2011.

“We never gave any fixed date and always had an ambition to repay as it was financially feasible and doable for all stakeholders.

“This is the first time we gave an indication, it was not a fixed timetable,” a spokesperson said.

The Group could pursue a conversion option, allowing it to repay on 11 November this year.

Due to the need to convert into shares however, the move would be helped by the Dutch government and go against the independence the Group hopes to achieve through its repayment.

“It wouldn’t inherently achieve our goal, and would mean a dilution for shareholders,” said the spokesperson.

The Group had not ruled out any option, though a share conversion was not preferable, he added.

Of the latest repayment plans, he said: “Both are just intentions, you never know what is going to happen between now and this May, and now and next May.”

ING will owe a remaining Eur3bn after the latest repurchase move.

ABN AMRO, the bailed-out Group that took on what was formerly known as Fortis with almost fatal consequences, meanwhile reaffirmed the Dutch government’s plans for a likely sale of its business through an IPO in 2014.

“The Dutch State has announced that we can start preparations for an exit in 2013, probably leading to a stock exchange listing in 2014. We welcome this view,” said chairman of ABN AMRO Group Gerrit Zalm, following the release of its latest quarterly results.

Over 2010, the Group reported a net loss of Eur214m as the integration of ABN and Fortis continued to take its toll, including legal cases launched against both businesses.

Net profit in Q4 during 2010 was also hit by one-off legal costs, dropping from Eur341m in the previous quarter to Eur213m.

More positively for the bank, its underlying profit improved to Eur1.1bn for 2010, up from Eur142m in 2009.

Insurer Aegon meanwhile will be the first to bounce back from government bailout, as it recently announced plans to repay all of its debt this year.

“Aegon reiterates its intention to repurchase all outstanding core capital provided by the Dutch State before the end of June 2011,” it said in a statement.

A 10% equity issue was completed by the insurer on 24 February 2011, giving it Eur903m as part of book-building plans.

The recent issue goes toward funding an outstanding Eur1.5bn plus an additional Eur1bn in penalty owed to the Dutch government, a total of Eur2.5bn.

 

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