OREANDA-NEWS.  ING Bank announces exchange offers into CRD-IV eligible Tier 2 securities for seven series of lower Tier 2 debt totalling approximately EUR 4.7 billion
Additionally, ING Bank announces it will call USD 2 billion 8.5% Tier 1 hybrid per call date 15 December 2013 to lower cost of capital
Liability management actions will further optimise capital structure of ING Bank ahead of implementation of CRD-IV legislation and have been approved by European Commission (EC) and Dutch Central Bank
ING Bank announced today a number of liability management actions. ING will offer bondholders an opportunity to exchange seven series of subordinated debt into CRD-IV eligible Tier 2 securities. This enables ING to proactively optimise the Bank’s capital structure in anticipation of the upcoming CRD-IV implementation. In addition ING Bank will call USD 2 billion of hybrid Tier 1 securities which will lower its funding costs. The European Commission has authorized the transactions.

The contribution of the subordinated debt that is currently included as lower Tier 2 in the Bank’s total capital ratio will gradually diminish following the implementation date of CRD-IV on 1 January 2014. The exchange of the seven series of lower Tier 2 debt securities with a total nominal value of EUR 4.7 billion at current exchange rates into two CRD-IV eligible Tier 2 securities will further optimise the capital structure of ING Bank while maintaining its strong capital position.

In addition, ING Bank announced its intention to call a USD 2 billion 8.5% Hybrid Tier 1 as the capital contribution of non CRD-IV eligible Hybrid securities to the Bank’s Tier 1 capital will diminish by approximately the same amount from 1 January 2014 based on CRD-IV. The successful issuance in September 2013 of the USD 2.0 billion 5.8% CRD-IV eligible Tier 2 security replaces the USD 2 billion 8.5% Tier 1 Hybrid in the total capital structure. The transaction will reduce the cost of capital and will contribute to future earnings.

The transactions are not expected to have a material impact on ING Bank’s results. However, as agreed with the EC, the net present value of the financial benefits realised through these transactions will be used to increase the next repayment of core Tier 1 securities to the Dutch State, scheduled for March 2014, whereas the final payment scheduled for May 2015 will be lowered by the same amount. The total amount of the repayment to the Dutch State remains unchanged.

Any future decisions by ING as to whether it will exercise (or cause to be exercised) calls in respect of the debt securities that are not exchanged pursuant to the relevant exchange offer will be made on an economic basis, taking into account the interests of all stakeholders. Other factors that ING will consider include prevailing market conditions, regulatory approval and capital requirements as well as authorisation from the European Commission. Based on the EC Restructuring Agreement as announced in November 2012, ING requires authorization from the EC to execute liability management actions until 18 November 2014, or when the State aid is repaid in full, whichever comes first.