Brussels rejects state guarantee for ING

European competition commissioner Neelie Kroes has rejected the Dutch government’s decision to give financial services group ING a €22bn guarantee for its risky US mortgage portfolio, the Volkskrant said on Tuesday.

And if finance minister Wouter Bos is unable to convince her that the bail-out was justified, ING will have to pay a far higher bill for the financial help it has received, the paper says.
In January the government agreed to guarantee some 80% of ING’s US mortgage portfolio, which totals around €27.7bn.
The European Commission said in March it would look into the deal which could constitute unfair state support. The bank had already had a direct capital injection of €10bn.
According to the Volkskrant, external experts brought in by Kroes say Bos over-estimated the value of ING’s US mortgages and has been too optimistic about the chance of repayments. This means ING has been given too much money, which gives it an unfair competitive advantage, the commission’s experts say.
In addition, officials in Brussels are irritated at the ‘arrogance’ displayed by finance ministry staff, the paper claims. That charge is denied by Dutch diplomats.
Kroes has now given Bos a last chance to convince her of the need for the bail-out, the paper says. Insiders suggest that if he fails to do so, the European Commission’s decision will cost ING hundreds of millions of euros, or possibly billions, in extra charges.

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