ING shares rise as state puts in €10bn

Monday 20 October 2008

Shares in financial services group ING were up 20% by mid Monday afternoon following the government's decision to give the group a €10bn capital injection. MPs will probably debate the move on Wednesday, reports press agency Novum.

Announcing the deal on Sunday evening, finance minister Wouter Bos said ING is a healthy financial institution. ‘But the situation in the market is so unpredictable at this point... and the expectations of the market are such that it is in the interests of ING to strengthen its capital by €10bn,’ Bos said.

ING is the first Dutch financial institution to get a capital injection from the government's €20bn aid fund set up on October 9 to help fundamentally healthy firms. Fortis and ABN Amro were fully nationalised on October 3.

Financial institutions reacted cautiously to the news on Monday. The cooperative Rabobank is reported to have said that it does not need state assistance.

Other banks

But insurance group Aegon has not ruled out that it may require the government’s financial support at some point, reports ANP news service.

An Aegon spokesman stressed that the company does not have liquidity problems but declined to comment specifically on the ING bail-out. ‘Every government move to strengthen consumer confidence is welcome,’ a spokesman told news agency ANP.

In return for the capital injection in ING, the government will get the equivalent of €10bn worth of shares in the bank and will be able to appoint two members of its supervisory board who will have the right of veto on important decisions.

The deal also means that ING executives will not receive their 2008 bonuses.

The move was widely expected following a statement from ING on Friday that it will book a €500m loss in the third quarter of this year. ING's share price plunged 27% on Friday.

A parliamentary debate on the agreement made by European leaders in Brussels last week on a coordinated effort to tackle the financial crisis is already scheduled for Wednesday.

© DutchNews.nl

Readers' comments

Comments have been closed for this article.