Providing a payments infrastructure is also at the core of our business. Specifically for businesses, we facilitate payment transactions, but we also service companies’ other operational needs such as liquidity management and protecting international trade transactions.
How we earn our income › The lion’s share of our revenue is generated from interest income › We earn the difference between loan interest received and the interest we pay on our savings and borrowings
Effective from 2015, ING intends to pay a minimum of 40 percent of ING Group’s annual net profits by way of dividend, consisting of both an interim and a final dividend. Furthermore, the Board will recommend whether to return additional capital to shareholders at the end of each financial year. Such decisions will reflect considerations including expected future capital requirements, growth opportunities available to the Group, the net earnings of the Group, and regulatory approvals as appropriate. The Board proposes to pay a final 2014 dividend of EUR 470 million, or EUR 0.12 per (depositary receipt for an) ordinary share, subject to the approval of shareholders at the Annual General Meeting in May 2015.
How do we ensure shareholder dividends are sustained in our plans for the future? Profitable businesses seek to generate a proper return for risk capital providers – for shareholders that includes dividends. We suspended dividend payments in 2008. In the years since, we have focused on rebuilding the Bank and repaying the capital support received from the Dutch State through an extensive restructuring programme and by strengthening our capital base. We have now repaid the Dutch State in full and, with our divestment programme almost completed, we are nearing the end of restructuring.
Sustainability Annex 2014 for more information about our approach to stakeholder engagement and disclosure of organisations in which we are involved (partnerships, memberships & endorsements).
A digital wallet stores all the information in your physical wallet, including debit and credit cards, loyalty cards from your favourite merchants, your driving licence and ID. It can also store money. We introduced digital wallets in Poland, Spain, Italy (pilot) and Turkey in 2014.
In 2014, Mid Corporate Clients and Private Banking/ Private Wealth & Asset Management joined forces to provide a new service to a particular group of customer: the family businesses with their founders, managing directors and their families. The goal is to provide them with an integrated approach, a “onestop ” shop for both business and private matters.
Since 2009, we have been continuously screening our products and services according to five golden customer rules. They are an integral part of our Product Approval and Review Process. The rules test whether products and services meet our requirements for doing business and help to ensure that we provide customers with the right products and services at the right price, at the right time and in the right way.
In 2014, ING employees volunteered more than 1,850 hours of their time. EUR 785,000 was donated to support financial empowerment-related activities and organisations.
In addition, up to 10 percent of ING Groenbank’s balance sheet is used for financial inclusion activities, including microfinance. These activities are supported by community
As a foundation to our plans, we initiated a four-year transformation programme in 2012, to simplify and standardise our operating model, supporting the delivery of our Customer Promise – ‘clear and easy, anytime, anywhere, empower and keep getting better’. This programme is on track, achieving client service improvements and cost efficiencies in line with targets and enables us to offer products and services in an integrated manner, across regions and business lines. This integrated client approach helps us to deliver solutions to our clients. We can only be successful if we add value for them.
(2) Renewable energy 2013 and 2012 amounts are slightly changed due to a deal reclassification.
Measuring client satisfaction We conduct regular surveys to assess client satisfaction. The Net Promoter Score (NPS) methodology uses direct client feedback to measure client loyalty. The NPS methodology highlights the drivers underpinning client recommendations, any areas of dissatisfaction and, where applicable, what we need to do to turn ‘passives’ and ‘detractors’ into ING supporters and promoters.
Conclusion 2014 was a good year for Commercial Banking. We performed well and are executing on the strategic priorities of the Bank.
We have also developed our functional leaders with the help of the IT Business Leadership Academy and Finance Leadership Academy programmes.
We have launched a programme for standardising quality measurement of learning initiatives. In 2014, 25 percent of the learning volume was measured in a consistent way. We want this to increase to better understand where investing in learning and training really contributes to the performance of employees within ING.
Local country HR units organise their own priorities based on local context and needs. However, in countries where labour laws are weaker, our Human Rights policy, developed according to the International Labour Organisation convention, applies.
The new private cloud is being prepared for implementation in the Netherlands during 2015, after which a global roll out will be planned. Cloud computing should radically simplify and streamline the bank. It is intended to increase the availability and reliability of crucial IT services, and to make an important contribution to the agility, efficiency and customer-centricity pillars of our IT strategy.
2014 developments Despite some signs of recovery, the uncertainty in the macroeconomic environment persisted through 2014. Against this background, ING’s balance sheet showed its resilience.
A systematic and automated ESR assessment process improves the consistency and accessibility of information throughout the organisation. For our clients, automation provides a more transparent and streamlined assessment process within existing Know Your Customer procedures.
Monetising capital by reducing non-core shareholdings ING Group executed several transactions to bring down its stake in Voya Financial, Inc (Voya). ING Group sold shares of Voya in March 2014, September 2014 and November 2014 for a total consideration of EUR 2.9 billion. ING retained a stake in Voya of approximately 19% at year-end 2014. In March 2015, we completed the divestment of Voya shares.
Score: 82 (out of 100) Position: Industry Leader Included in World Index and Europe Index
This was an important moment for ING. The repayment felt like the final reward after years of hard work by many employees. It symbolises ING’s evolution since the crisis towards a new era in which we can really look forward.
Internal Supervisory Board meetings During the internal meetings of the Supervisory Board (which were joined by the CEO, except when the annual evaluation of the Supervisory Board was tabled or matters concerning the CEO were discussed), the Executive Board 2013 performance assessments and the Executive Board performance objectives for 2014 were approved. All decisions regarding the variable remuneration proposals over 2013 were discussed and decided on and the Supervisory Board agreed to table the adjusted Board pension schemes for the 2014 AGM. The remuneration proposals for Voya were ratified by the Supervisory Board.
Legislative and regulatory developments In 2014, the Capital Requirements Directive IV (“CRD IV”) has been implemented in Dutch law. CRD IV sets requirements a.o. for the corporate governance of banks. CRD IV and its Dutch implementation act apply to ING Bank N.V. and its subsidiaries within the European Union with a banking license but not to ING Group.
ING Group’s depositary-receipts structure was evaluated by the Executive Board and the Supervisory Board in 2010 and discussed in the 2010 Annual General Meeting. On the basis of this evaluation, the Executive Board and the Supervisory Board concluded that it would be premature to change or abolish ING Group’s depositary-receipts structure in 2010 and that it would be appropriate to reconsider this as part of a re-evaluation of ING Group’s entire governance structure following the current restructuring of ING Group and the completion of the divestments approved by the 2009 extraordinary General Meeting.
General Meetings are convened by public notice via the website of ING Group ( ) no later than on the 42nd day before the day of the General Meeting. As of the date of convening a General Meeting, all information relevant for shareholders and holders of depositary receipts is made available to them on this website and at the ING Group head office.
The Audit Committee assists the Supervisory Board in monitoring the integrity of the financial statements of ING Group, NN Group N.V. and ING Bank N.V., in monitoring the compliance with legal and regulatory requirements and in monitoring the independence and performance of ING Group’s internal and external auditors. On 31 December 2014, the members of the Audit Committee were: Hermann-Josef Lamberti (chairman), Eric Boyer de la Giroday, Isabel Martín Castellá, Carin Gorter and Robert Reibestein. The Supervisory Board has determined that Carin Gorter, in succession to Joost Kuiper, is a financial expert as referred to in the Corporate Governance Code, due to her relevant knowledge and experience. Carin Gorter was appointed as a member of the Supervisory Board on 13 May 2013.
The Risk Committee assists and advises the Supervisory Board in monitoring the risk profile of ING as a whole as well as the structure and operation of the internal risk management and control systems. On 31 December 2014, the members of the Risk Committee were: Robert Reibestein (chairman), Eric Boyer de la Giroday, Carin Gorter, Hermann-Josef Lamberti and Jeroen van der Veer.
Changes in the composition In May 2014, the General Meeting appointed Eric Boyer de la Giroday to the Supervisory Board, while Tineke Bahlmann, Peter Elverding and Luc Vandewalle stepped down from the Supervisory Board. In connection with the stock listing of a first tranche of shares of NN Group N.V., also Jan Holsboer and Yvonne van Rooy stepped down from the Supervisory Board.
Meetings with ING Group During the 2014 reporting year, the Board had four meetings with the chairmen of the Executive Board and the Supervisory Board of ING Group.
The increase came about as follows: add: conversion of shares into depositary receipts 17,994,914 less: conversion of depositary receipts into shares 325
Classification and measurement The classification and measurement of financial assets will depend on the entity’s business model for their management and their contractual cash flow characteristics and result in financial assets being recognised at amortised cost, fair value through Other Comprehensive Income (‘FVOCI’) or fair value through profit and loss. In many instances, the classification and measurement outcomes will be similar to IAS 39, although certain differences will arise. The classification of financial liabilities is essentially the same. Except for certain liabilities measured at fair value, gains or losses relating to changes in the entity’s own credit risk are to be included in OCI.
No individual loan or advance has terms and conditions that significantly affect the amount, timing or certainty of the consolidated cash flows of the Group. For details on significant concentrations see ‘Risk management’ section.
Included in Amounts due from banks 59 73 Included in Loans and advances to customers 11,785 13,675
CBRE Retail Property Fund Central and Eastern Europe 21 51 688 439 47 55
The fair values of the non-financial assets carried at fair value were determined as follows: Methods applied in determining fair values of non-financial assets – Held for sale – NN Group 2014 Level 1 Level 2 Level 3 Total
Depositary receipts for ordinary shares held by ING Group (Treasury shares) As at 31 December 2014, 4.3 million (2013: 4.0 million; 2012: 30.1 million) depositary receipts for ordinary shares ING Groep N.V. with a par value of EUR 0.24 are held by ING Groep N.V. or its subsidiaries. The obligations with regard to the existing stock option plan and the share plans will be funded either by cash or by newly issued shares at the discretion of ING Group.
In 2014, ING changed the presentation of the components within the Other reserves in equity. The items previously presented in Other within the Other reserves, with the exception of the Net defined benefit asset/liability measurement reserve for the defined benefit plans, are now being presented in the component Retained earnings. The new presentation improves transparency. The 2013 comparatives were restated accordingly.
Subordinated loans of group companies 889 158 702 9,118 10,867 Preference shares of group companies 430 430
Investment contracts for risk of company 810 810 Investment contracts for risk of policyholders 1,588 1,588 Total provisions for investment contracts 2,398 2,398
In 2014, for the Banking operations, Valuation results on assets and liabilities designated as at fair value through profit and loss (excluding trading) includes fair value adjustments on own issued notes amounting to EUR 632 million negative (2013: EUR 136 million negative), of which DVA adjustment on own issued notes in 2014 amounted to EUR 98 million negative (2013: EUR 129 million negative).
Continuing operations - average number of employees at full time equivalent basis (1) 15,209 16,155 18,072 40,736 48,218 48,807 55,945 64,373 66,879 Discontinued operations - average number of employees at full time equivalent basis 6,851 7,202 6,868 5,635 12,309 18,825 12,486 19,511 25,693 Total average number of employees at full time equivalent basis 22,060 23,357 24,940 46,371 60,527 67,632 68,431 83,884 92,572
Stock option and share plans ING Groep N.V. has granted option rights on ING Groep N.V. shares and conditional rights on depositary receipts (share awards) for ING shares to a number of senior executives (members of the Executive Board, general managers and other officers nominated by the Executive Board), and to a considerable number of employees of ING Group. The purpose of the option and share schemes, apart from promoting a lasting growth of ING Group, is to attract, retain and motivate senior executives and staff.
(1) These figures exclude Group’s auditors fees for entities presented as held for sale and discontinued operations. Total Group’s auditors fees for 2014 amounted to EUR 32 million (2013: EUR 40 million; 2012: EUR 52 million).
Transfers out of Level 3 –64 –3,676 –8 –3,748 Exchange rate differences –3 –372 3 –372 Changes in the composition of the group and other changes –1,245 –4 –1,249
Less than 1 month (1) 1–3 months 3–12 months 1–5 years Over 5 years
In December 2005, Interadvies N.V., at the time a subsidiary of ING Bank N.V., sold Arenda Holding B.V. and five subsidiaries (together ‘Arenda’) to Amodo Europe N.V. (‘Amodo’). In November 2006, Amodo instituted legal proceedings against ING. Amodo claimed that ING informed it incorrectly of the current and future financial status of Arenda at the time of the sale. This claim was rejected by the Court on 1 September 2010 but Amodo lodged an appeal against that Court decision. On 6 November 2012, the Court of Appeal partly awarded the claim of Amodo in an interlocutory judgement. In the interlocutory judgement, the Court of Appeal also instructed both ING and Amodo to submit a calculation of the damages involved to the Court of Appeal in order to make a final judgement. Parties have reached a full and final agreement in August 2014, and the court case has been cancelled.
ING’s activities involving structured entities are explained below in the following categories: 1. Consolidated ING originated Credit management securitisation programmes; 2. Consolidated ING originated Liquidity management securitisation programmes (Lions); 3. Consolidated ING originated Covered bond programme (CBC); 4. Consolidated ING sponsored Securitisation programme (Mont Blanc); 5. Unconsolidated Securitisation programme; 6. Investments – ING managed Investment funds; 7. Investments – Third party managed structured entities; and 8. Other structured entities.
The structured entity issues securitised notes (‘traditional securitisations’) which are eligible collateral for central bank liquidity purposes. In most programmes ING Group acts as investor of the securitised notes. As there are limited transfer of risks and rewards, ING Group continues to consolidate these structured entities.
ING Group supports the commercial paper programmes by providing the SPE with short-term liquidity facilities. These liquidity facilities primarily cover temporary disruptions in the commercial paper market. Once drawn these facilities bear normal credit risk. A number of programmes are supported by granting structured liquidity facilities to the SPE, in which ING Group covers at least some of the credit risk incorporated in these programmes itself (in addition to normal liquidity facilities), and might suffer credit losses as a consequence. Furthermore, under a Programme Wide Credit Enhancement ING Group guarantees to a limited amount all remaining losses incorporated in the SPE to the commercial paper investors.
In addition, in connection with the initial public offering, of NN Group N.V., ING Groep N.V. entered into several other agreements with NN Group N.V. such as a transitional intellectual property license agreement, a joinder agreement, an equity administration agreement and an indemnification and allocation agreement.
– Lending, – Debt capital, – Payments and cash management – Structured Finance, – Commercial Finance, – Equity Markets, – Financial Markets.
As explained in the risk governance, the risk function is at all levels independent from the commercial departments which allow its criteria and opinions to be heard and taken into account. At the Bank level, it is represented by the CRO in the MBB, which ensures sufficient countervailing power in the decision-making processes to prevent excessive risks.
ING uses iRisk, an application supporting operational risk functions for incident reporting, action tracking, risk assessments, business impacts assessments and key control testing.
The solvency risk appetite is closely aligned to capital management activities and policies. ING Bank has expressed tolerances for its riskweighted solvency position (CET1 ratio), for non-risk-weighted solvency (leverage ratio) and for more value based solvency (economic capital). The solvency risk appetite statement is not only compared to the actual reported level, but also includes the potential impact of a standardised and pre-determined 1-in-10-year stress event (i.e. at a 90% confidence level with a 1-year horizon). Based on this mild stress scenario, the impact on ING Bank’s earnings, revaluation reserve and risk-weighted assets (RWA) is calculated (which are labelled as earnings-at-risk, revaluation reserve-at-risk and RWA-at-risk). These stressed figures are used as input for a two year simulation which depicts the developments of ING Bank’s solvency level versus its risk appetite.
Engagement CRM, as a Top Employer, finds it is important to engage staff, and link with society. CRM organises annually a strategy project in which a large deal of interaction between (senior) manager and employees takes place. Regular Town Hall meetings are organised which bring employees and senior management closer. Topics usually include a reflection on the quarterly results of ING but also touch upon HR, ethics, compliance and other subjects. Also, CRM whole heartedly embraces the Winning Performance Culture scan, in which the employee satisfaction is measured and monitored. CRM also promotes support of charity funds like Chances for Children.
ING Bank performs periodical stress tests based on a standardised and pre-determined 1-in-10 year-stress event (i.e. at 90% confidence level and 1 year horizon) which is similar to the one applied in the solvency risk appetite. Based on this confidence level, a through the cycle rating migration for the entire portfolio is simulated. For this simulated portfolio, provisions, RWA and EC are recalculated to assess what the combined impact of such a year would be. The additional CRWA that ING should allocate in such an event is named CRWA-at-Risk. These stress test results are submitted to CPC on a periodical basis, in which the results are explained and discussed. If needed actions are formulated.
Next to different risk profiles, which accounts for the largest RWA deviation when comparing RWA levels between financial institutions, risk based drivers, practice based drivers and regulatory environment (e.g. Advanced Internal Rating Based approach or the Standardised Approach) can have a substantial impact on the regulatory capital / RWA of a financial institution. These factors make it challenging to compare capital levels across banks. ING Bank continues to work with industry groups including EDTF to improve the transparent reporting of our capital calculations.
For exposures from 1 year and longer: PD values represent the PD for 12 months. Shorter than 1 year: except for lending to clients rated 11 and worse (1 year PD floor), all PD’s are floored at 1 month. So an exposure with a remaining tenor of 6 months will have a PD value based on 6 months.
The investment portfolio grew in 2014, mainly to support liquidity requirements which will be enforced by the introduction of the Liquidity Coverage Ratio, and is mainly concentrated to European central governments and central banks. The maturity of ING Bank originated securitisation BEL-SME 2006 in March 2014 means that the securitisation portfolio now comprises of only Investor (90.9%) and Sponsor (9.1%) securitisations.
Due to the continuous economic pressure the restructuring of files has become more complicated in the crisis. However, after stabilisation in 2013, the average turnaround time of the files at GCR is reducing again in 2014 indicating a further improvement.
6) Restructuring: The restructuring status applies to those Borrowers, where there are serious concerns over creditworthiness. The asset may still be performing under all its financial obligations and towards all of its creditors, but to address the deterioration specific and significant action by ING Bank is required. Borrowers with a restructuring status can be rated anywhere in the 1-19 ranges, but typically carry a risk rating 18 or 19. Strategic management responsibility for a Restructuring file will move to Global Credit Restructuring, but Front Office remains fully involved, also as asset owner.
7) Non-performing loans: Non-performing loans are accounts, which are considered unlikely to service their obligations to ING Bank in full. A successful turnaround is unlikely to happen, without a financial loss for the bank. Legal remedies for recovery are being considered and liquidation of Collateral may become the primary source of repayment. The assessment of unlikelihood to pay in full, results in an IFRS impairment and these accounts hold risk rating 20. Also included in the Non-performing loan portfolio are accounts that go into liquidation phase, and from liquidation ING expects to incur no credit loss (rating 21) or a credit loss if there is insufficient collateral (rating 22). All files that are more than 90 days past due are part of the Non-performing loan portfolio.
Furthermore, the deconsolidation of ING Vysya Bank decreased forborne assets by EUR 0.2 billion.
(1) Including loans to ING Group and NN Group. (2) Excluding intercompany positions (3) More information on the credit risk mitigants of the Pre-settlement exposure can be found in the Pre-settlement section.
Total Investment and Money Market 118,198 16 298 3,454 16 112,647 6 5,117 135 of which Non-performing 104 6 11 6
Market risk Introduction Market risk is the risk that movements in market variables, such as interest rates, equity prices, foreign exchange rates, credit spreads and real estate prices, negatively impact the bank’s earnings, capital, market value or liquidity position. Market risk either arises through positions in banking books or trading books. The banking book positions are intended to be held in the long-term (or until maturity) or for the purpose of hedging other banking book positions, while the trading book positions are typically held with a short-term intent.
By business Commercial Banking 183 –120 57 –30 Retail Banking Benelux –109 –130 –184 –209 Retail Banking International –285 –29 30 236 Corporate Line 377 –1,439 1,519 –1,506
Market Risk in trading books Within the trading portfolios, positions are maintained in the professional financial markets. These positions are often the result of transactions with clients and may serve to benefit from short-term price movements. Market risk arises in the trading portfolios through the exposure to various market risk factors, including interest rates, equity prices, foreign exchange rates and credit spreads.
Objectives ING Group Capital Management (Capital Management) is responsible for the adequate capitalisation of ING Group and ING Bank entities at all times in order to manage the risk associated with ING’s business activities. This involves not only the management, planning and allocation of capital within ING Group and ING Bank, but also the necessary capital market transactions, term (capital) funding and risk management transactions. ING takes an integrated approach to assessing the adequacy of its capital position in relation to its risk profile and its operating environment. This implies taking into account the interests of its various stakeholders. Capital Management takes into account the metrics and requirements of regulators, rating agencies and internal metrics such as Economic Capital (EC).
In 2014, Voya was deconsolidated following the loss of control. ING’s remaining interest of 18.9% is included as an available-for-sale equity investment in Other assets.
Share capital 925 921 Share premium 16,046 16,038 Non-voting equity securities 1,500 Share of associates and joint ventures reserve 11,853 7,144 Currency translation reserve 3 –1,430 Other reserves 21,597 23,103
Fair values of financial assets and liabilities (see page 197) Fair value measurement and associated valuation adjustments can be a subjective area and more so for areas of the market reliant on model based valuation or with weak liquidity and price discovery. Valuation techniques can be subjective in nature and involve various assumptions regarding pricing factors. The use of different valuation techniques and assumptions could produce significantly different estimates of fair value. Associated risk management disclosure is complex and dependent on high quality data. Specific areas of focus include the valuation of level two, and level three assets where observable market prices or market parameters are not available.
The default of a major market participant could disrupt the markets. Within the financial services industry, the severe distress or default of any one institution (including sovereigns) could lead to defaults by, or the severe distress of, other market participants. Such distress of, or default by, an influential financial institution could disrupt securities markets or clearance and settlement systems and lead to a chain of defaults by other financial institutions because the commercial and financial soundness of many financial institutions may be closely related as a result of credit, trading, clearing or other relationships. Even the perceived lack of creditworthiness of a sovereign or financial institution (or a default by any such entity) may lead to market-wide liquidity problems and losses or defaults by us or by other institutions. This risk is sometimes referred to as ‘systemic risk’ and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges with whom we interact on a daily basis and financial instruments of sovereigns in which we invest. Systemic risk could have a material adverse effect on our ability to raise new funding and on our business, financial condition, results of operations, liquidity, solvency position and/or prospects. In addition, such distress or failure could impact future product sales as a potential result of reduced confidence in the financial services industry.
Foreign Account Tax Compliance Act Under the Foreign Account Tax Compliance Act (‘FATCA’), U.S. federal tax legislation passed in 2010, a 30% withholding tax will be imposed on ‘withholdable payments’ made to non-U.S. financial institutions (including non-U.S. investment funds and certain other non-U.S. financial entities) that fail (or, in some cases, that have 50% affiliates which are also non-U.S. financial institutions that fail) to provide certain information regarding their U.S. accountholders and/or certain U.S. investors (such U.S. accountholders and U.S. investors, ‘U.S. accountholders’) to the U.S. Internal Revenue Service (‘IRS’). For non-U.S. financial institutions that fail to comply, this withholding will generally apply without regard to whether the beneficial owner of a withholdable payment is a U.S. person or would otherwise be entitled to an exemption from U.S. federal withholding tax. ‘Withholdable payments’ generally include, among other items, payments of U.S.-source interest and dividends and the gross proceeds from the sale or other disposition of property that may produce U.S.-source interest and dividends. Furthermore, FATCA may also impose withholding on non-U.S. source payments by non-U.S. financial institutions that comply with FATCA to non-U.S. financial institutions that fail to comply with FATCA. Withholding pursuant to FATCA will take effect on a ‘phased’ schedule, which started in July 2014 with respect to U.S.-source payments and will start no earlier than January 2017 with respect to non-U.S. source payments by non-U.S. financial institutions. In general, non-publicly traded debt and equity interests in investment vehicles will be treated as ‘accounts’ and subject to these reporting requirements. In addition, certain insurance policies and annuities are considered accounts for these purposes.
The costs associated with potential future ex-ante contributions are today unknown and will depend on the methodology used to calculate risk-weighting, but, given our size, may be significant. See also ‘—We operate in highly regulated industries. Changes in laws and/or regulations governing financial services or financial institutions or the application of such laws and/or regulations governing our business may reduce our profitability — Bank Recovery and Resolution Regimes’.
remaining part of our insurance and investment management business in the public markets. A further divestment may also release less regulatory capital than we would otherwise expect. Any failure to complete the divestments on favourable terms could have a material adverse impact on our assets, profitability, capital adequacy and business operations. If we are unable to complete the announced divestments in a timely manner, we would be required to find alternative ways to reduce our leverage, and we could be subject to enforcement actions or proceedings by the EC.
– Residential mortgages 3,939 49,233 – Other retail 1,347 16,839 Total portfolios subject to AIRB approach 16,399 204,990
De-risking –0.5 Model updates (3) –2.2 9.7 Methodology and policy (4) 3.4 –0.6 Foreign exchange movements 5.1 –4.1 Other –1.6 0.6 Total movement 4.5 12.4
AIRB models per exposure class Within ING Bank internal Basel models are used to determine the PD, EAD and LGD for regulatory and economic capital. Bank wide, ING Bank has implemented around 80 models, including various sub models for specific portfolios. A model may be applicable for a various exposure classes. In the table below, the number of PD, EAD, and LGD models per exposure class are shown.
Regulatory retail portfolios 9,184 9,184 Secured by residential property 4,832 932 5,764 Secured by commercial real estate 2,074 1,304 3,378
Overall past due outstandings decreased over the year mainly due to new forbearance policy resulting in a shift from performing loans to non-performing loans, due to better collection of arrears and due to an overall improvement seen in the economic conditions. The de-consolidation of ING Vysya Bank decreased the past due loans with EUR 0.5 billion mainly in the Private Individuals portfolio.
Credit derivatives used for hedging purposes – credit protection bought 70 238 – credit protection sold
There are two notable exceptions mainly: 1) an increase in the Netherlands driven by an NN Bank Originated RMBS position where ING Bank participated in the primary offering; and 2) an increase in Asset Backed Securities as explained in the section below on Investor securitisations.
Fair value The price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the balance sheet date (‘exit price’).
Gross premiums written Total premiums (whether or not earned) for insurance contracts written or assumed during a specific period, without deduction of premiums ceded.
› Liability (tort) towards third parties due to an act or omission attributable to ING (potentially) resulting in impairment of ING’s integrity, leading to damage to ING’s reputation, legal or regulatory sanctions, or financial loss.
Minimum Capital Requirement (MCR) Is defined in the Solvency II legislation and represents the absolute minimum regulatory required capital for insurance companies.
Phased-in CET 1 ratio The CRR/CRD IV Common Equity Tier 1 ratio calculated according to the rules applicable at the reporting date taking the transitional rules into account
Reinsurance The practice whereby one party, called the reinsurer, in consideration for a premium paid to him/her, agrees to indemnify another party, called the reinsured or ceded party, for part or all of the liability assumed by the reinsured under a contract or contracts of insurance which the reinsured has issued. The reinsured may also be referred to as the original or primary insurer, the direct writing company, or the ceding company.
Sustainable engagement score The extent to which employees are motivated, enabled and energised to perform at their best and help ING to succeed.