Germany ING DiBa A.G. Wholesale / Retail 5,059 4,639 4,625 2,545 2,484 2,421 162,935 147,924 144,911 1,065 1,374 1,309 364 465 431 409 460 368
Romania Branch of ING Bank N.V. Wholesale / Retail 3,049 2,575 2,269 456 457 403 8,526 7,424 7,112 141 221 183 20 34 25 24 34 22
Italy Branch of ING Bank N.V. Wholesale / Retail 1,025 959 911 337 269 231 13,747 15,726 16,991 44 -39 -101 24 4 -24 2 4 3
UK Branch of ING Bank N.V. Wholesale 709 692 672 546 594 505 64,676 61,088 64,016 97 214 180 15 52 44 32 40 61
France1 Branch of ING Bank N.V. Wholesale / Retail 737 659 620 266 302 323 11,570 12,053 12,063 -43 63 111 -10 33 45 9 48 25
Bulgaria Branch of ING Bank N.V. Wholesale 65 68 69 13 12 9 406 358 360 2 2 0 0 0 0 0 0 0
Portugal Branch of ING Bank N.V. Wholesale 13 12 11 16 18 18 790 899 905 11 14 13 7 4 4 4 5 2
USA ING Financial Holdings Corp. Wholesale 600 626 617 720 813 736 48,205 45,521 61,440 39 366 343 16 118 61 38 130 67
Colombia ING Capital Colombia S.A.S. Wholesale 3 3 3 1 1 1 2 2 2 0 0 0 0 0 0 0 0 0
Mexico ING Consulting, S.A. de C.V. Wholesale 7 8 8 1 1 1 2 2 2 -1 -2 -2 0 0 0 0 0 0
Asia China Branch of ING Bank N.V. Wholesale 90 89 86 26 35 37 1,598 2,031 2,107 -2 7 3 1 -1 7 -5 0 17
Philippines Branch of ING Bank N.V. Wholesale/ Retail 1,857 1,420 878 13 25 17 497 412 395 -26 -11 0 6 -5 3 2 2 1
South Korea Branch of ING Bank N.V. Wholesale 77 79 80 66 60 55 6,692 5,457 4,299 18 25 14 4 7 3 10 3 6
India Branch of ING Bank N.V. Wholesale 0 0 0 0 0 0 0 0 1 0 0 0 0 0 0 0 0 0
Turkey ING Bank A.S. Wholesale / Retail 3,724 4,074 4,709 420 677 678 7,316 9,927 11,521 125 304 245 27 66 50 25 92 11
Emirates Branch of ING Bank N.V. Wholesale 10 11 11 0 -1 0 1 0 0 -2 -2 -1 0 0 0 0 0 0
Australia Australia ING Bank (Australia) Ltd. Wholesale / Retail 1,472 1,319 1,234 740 701 647 46,014 43,482 39,673 362 400 389 40 121 118 181 177 113
The higher tax charge of 45% in the Netherlands (compared to the statutory rate of 25%) is mainly caused by the non-deductible Dutch bank tax (EUR 169 million) and the non-deductible impairments regarding goodwill (EUR 266 million) and TMB (EUR 230 million).
As at 31 December 2020 the various defined benefit plans did not hold any direct investments in ING
The pension funds have not engaged ING in any swap or derivative transactions to manage the risk of the pension funds.
No plan assets are expected to be returned to ING Group during 2021.
Although Covid-19 has had an impact on most investment markets in 2020, the effect on the fair value of ING Group’s plan assets was limited as a large majority of our plan assets is invested in liquid asset categories which mark to market frequently.
Amounts recognised directly in Other comprehensive income were as follows: Changes in the net defined benefit assets/liability remeasurement reserve
Actuarial gains and losses arising from changes in demographic assumptions -4 6
Actuarial gains and losses arising from changes in financial assumptions -190 -206
EUR -343 million (EUR -307 million after tax) as at 31 December 2020 (2019: EUR -378 million; EUR -336 million after tax).
Amounts recognised in the statement of profit or loss related to pension and other staff related benefits are as follows: Pension and other staff-related benefit costs
The key assumption in the determination of the net defined benefit asset/liability is the discount rate.
ING performs sensitivity analysis on the most significant assumptions: discount rates, mortality, expected rate of salary increase, and indexation. The sensitivity analysis has been carried out under the assumption that the changes occurred at the end of the reporting period.
Annual contributions are paid to the funds at a rate necessary to adequately finance the accrued liabilities of the plans calculated in accordance with local supervisory requirements. Plans in all countries are designed to comply with applicable local regulations governing investments and funding levels. ING Group’s subsidiaries should fund the cost of the entitlements expected to be earned on a yearly basis.
Presented in the statement of financial position as: – Deferred tax liabilities -695 -584
The above table shows netted deferred tax amounts related to right-of-use assets and lease liabilities included in the row ‘Other’ a deferred tax amount for right-of-use assets of EUR 306 million (2019: EUR
370 million) and a deferred tax amount for lease liabilities of EUR -326 million (2019: EUR -376 million).
IFRS 16 Leases (implemented per 1 January 2019) requires lessees to recognise right-of-use assets and lease liabilities on the balance sheet. The above table shows netted amounts which include in the row
Unused tax losses carried forward not recognised as a deferred tax asset 903 922
Unused tax losses carried forward recognised as a deferred tax asset 772 764
More than 1 year but less than 5 years 4 4 57 17
The above mentioned deferred tax of EUR 170 million (2019: EUR 163 million) and the related unused tax losses carried forward exclude the deferred tax liability recorded in the Netherlands with respect to the recapture of previously deducted UK tax losses in the Netherlands for the amount of EUR -107 million (2019: EUR -102 million).
The table above includes a breakdown of certain net deferred tax asset positions by jurisdiction for which the utilisation of the deferred tax asset is dependent on future taxable profits in excess of the profits arising from the reversal of existing taxable temporary differences whilst the related entities have incurred losses in either the current or the preceding year.
Impact on deferred tax from change in tax rates 10 -64 -8
The effective tax rate of 32.7% in 2020 is significantly higher than the weighted average statutory tax rate. This is mainly caused by a high amount of expenses non-deductible for tax purposes like the nondeductible bank tax and non-deductible losses with respect to goodwill impairments and impairments on associates in the Netherlands and in some other European countries.
This relatively high amount of non-deductible expenses is caused by the EUR 775 million settlement agreement reached with the Dutch Public Prosecution Service (tax amount: EUR 194 million).
Unrealised revaluations financial assets at fair value through other comprehensive income and other revaluations -3 6 86
Changes in fair value of own credit risk of financial liabilities at fair value through
Fair values of financial assets and liabilities are based on quoted prices in active market where available. When such quoted prices are not available, the fair value is determined by using valuation techniques. The fair value hierarchy consists of three levels, depending upon whether fair values were determined based on (unadjusted) quoted prices in an active market (Level 1), valuation techniques with observable inputs (Level 2) or valuation techniques that incorporate inputs which are unobservable and which have a more than insignificant impact on the fair value of the instrument
observed large volatility in the market resulting in widened spreads, markets distortion and illiquidity in some specific markets which has stressed ING’s valuation processes and movements in level classifications. The volatility in the market has stabilised in the course of 2020 and has largely returned to pre-pandemic levels. In 2020, Financial Assets and Liabilities, including Level 3, continued to be valued using agreed methodologies and ING continued to limit the unobservable input to arrive at the most appropriate Fair Market value.
The valuation control framework covers the product approval process (PARP), pricing, independent price verification (IPV), valuation adjustments including prudent valuation, and model use. Valuation processes are governed by various governance bodies, including Local Parameter Committees (LPC),
Global Price Testing and Impairment Committee (GP&IC), Market Data Committee (MDC), Trading
The Global Price Testing and Impairment Committee is responsible for the oversight and the approval of the outcome of impairments (other than loan loss provisions) and valuation processes. It oversees the quality and coherence of valuation methodologies and performance. The TMPC is responsible for the approval of validating pricing and fair value models. The MRMC is responsible for the approval of the validated prudent valuation adjustment models and the Local Parameter Committee monitor the appropriateness of (quoted) pricing, any other relevant market info, as well as the appropriateness of pricing models themselves related to the fair valued positions to which they are applied. The LPC
Financial instruments measured by internal models where one or more unobservable market inputs are significant for valuation, a difference between the transaction price and the theoretical price resulting from the internal model can occur. ING defers the Day One profit and loss relating to financial instruments reported with significant unobservable valuation parameters, including positions classified as Level 3 in the Fair Value Hierarchy and trades related to CVA with material unobservable input but not necessarily classified as Level 3 in the Fair Value Hierarchy. The Day One profit and loss is amortised over the life of the instrument or until the observability changes. The impact on the profit and loss per year end 2020 is deemed to be immaterial. No Day one Profit and loss has been reserved for prior years. The Day one Profit and loss reserve is expected to grow over the coming years when new trades requiring a Day one Profit are reported.
Model risk adjustments addresses the risk of possible financial losses resulting from the use of a misspecified, misapplied, or incorrect implementation of a model.
Credit Valuation Adjustment (CVA) is the adjustment on the fair value of a derivative trade to account for the possibility that a counterparty can go into default. In other words, it is the market value of counterparty credit risk. On the contrary, Debit Valuation Adjustment (DVA) reflects the credit risk of
(BVA). The calculation of CVA is based on the estimation of the expected exposure, the counterparties’
risk of default, and taking into account the collateral agreements as well as netting agreements. The counterparties’ risk of default is measured by probability of default and expected loss given default, which is based on market information including credit default swap (CDS) spread. Where counterparty
(Credit Support Annex) with a counterparty that the regular valuation framework does not capture.
This category includes financial instruments whose fair value is determined directly by reference to
(unadjusted) quoted prices in an active market. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer markets, brokered markets, or principal to principal markets. Those prices represent actual and regularly occurring market transactions with sufficient frequency and volume to provide pricing information on an ongoing basis. Transfers out of Level 1 into Level 2 or Level 3 occur when ING Group establishes that markets are no longer active and therefore (unadjusted) quoted prices no longer provide reliable pricing information.
Valuation: If available, the fair values of publicly traded equity securities and private equity securities are based on quoted market prices. In absence of active markets, fair values are estimated by analysing the investee’s financial position, result, risk profile, prospect, price, earnings comparisons and revenue multiples. Additionally, reference is made to valuations of peer entities where quoted prices in active markets are available. For equity securities best market practice will be applied using the most relevant valuation method. All non-listed equity investments, including investments in private equity funds, are subject to a standard review framework which ensures that valuations reflect the fair values.
Fair value hierarchy: The majority of equity securities are publicly traded and quoted prices are readily and regularly available. Hence, these securities are classified as Level 1. Equity securities which are not traded in active markets mainly include corporate investments, fund investments and other equity securities and are classified as Level 3.
Instrument description: Debt securities include government bonds, financial institutions bonds and
(OTC). Derivatives include interest rate derivatives, FX derivatives, Credit derivatives, Equity derivatives and commodity derivatives.
Valuation: The fair value of exchange-traded derivatives is determined using quoted market prices in an active market and are classified as Level 1 of the fair value hierarchy. For instruments that are not actively traded, fair values are estimated based on valuation techniques. OTC derivatives and derivatives trading in an inactive market are valued using valuation techniques. The valuation techniques and inputs depend on the type of derivatives and the nature of the underlying instruments.
The principal techniques used to value these instruments are based on (amongst others) discounted cash flows option pricing models and Monte Carlo simulations. These valuation models calculate the present value of expected future cash flows, based on ‘no-arbitrage’ principles. The models are commonly used in the financial industry and inputs to the validation models are determined from observable market data where possible. Certain inputs may not be observable in the market, but can be determined from observable prices via valuation model calibration procedures. These inputs include prices available from exchanges, dealers, brokers or providers of pricing, yield curves, credit spreads, default rates, recovery rates, dividend rates, volatility of underlying interest rates, equity prices, and foreign currency exchange rates and reference is made to quoted prices, recently executed trades, independent market quotes and consensus data, where available.
For uncollateralised OTC derivatives, ING applies Credit Valuation Adjustment to correctly reflect the counterparty credit risk in the valuation. See section DVA/BVA in section b) Valuation Adjustments for more details regarding the calculation.
Fair value hierarchy: The majority of the derivatives are classified as Level 2. Derivatives for which the input cannot be implied from observable market data are classified as Level 3.
Instrument description: Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables carried at fair value includes trading loans, being securities lending and similar agreement comparable to collateralised lending, syndicated loans, loans expected to be sold and receivables with regards to reverse repurchase transactions.
Valuation: The fair value of loans and receivables are generally based on quoted market prices. The fair value of other loans is estimated by discounting expected future cash flows using a discount rate that reflects credit risk, liquidity, and other current market conditions. The fair value of mortgage loans is estimated by taking into account prepayment behaviour.
Fair value hierarchy: The majority of the derivatives are classified as Level 2. Derivatives for which the input cannot be derived from observable market data are classified as Level 3.
No significant transfers between Level 1 and 2 and no significant changes in the valuation techniques were recorded in the reporting period 2020.
Financial assets and liabilities in Level 3 include both assets and liabilities for which the fair value was determined using (i) valuation techniques that incorporate unobservable inputs as well as (ii) quoted prices which have been adjusted to reflect that the market was not actively trading at or around the balance sheet date. Unobservable inputs are inputs which are based on ING’s own assumptions about the factors that market participants would use in pricing an asset or liability, developed based on the best information available in the circumstances. Unobservable inputs may include volatility, correlation, spreads to discount rates, default rates and recovery rates, prepayment rates, and certain credit spreads. Valuation techniques that incorporate unobservable inputs are sensitive to the inputs used.
Furthermore, Level 3 financial assets includes approximately EUR 0.9 billion (31 December 2019: EUR
1.3 billion) which relates to financial assets that are part of structures that are designed to be fully neutral in terms of market risk. Such structures include various financial assets and liabilities for which the overall sensitivity to market risk is insignificant. Whereas the fair value of individual components of these structures may be determined using different techniques and the fair value of each of the components of these structures may be sensitive to unobservable inputs, the overall sensitivity is by design not significant.
The remaining EUR 1.1 billion (31 December 2019: EUR 1.0 billion) of the fair value classified in Level 3 financial assets is established using valuation techniques that incorporates certain inputs that are unobservable.
The remaining EUR 0.2 billion (31 December 2019: EUR 0.2 billion) of the fair value classified in Level 3 financial liabilities is established using valuation techniques that incorporates certain inputs that are unobservable.
Debt securities 1,269 919 Price based Price (%) 0% 0% 107% 121%
Equity securities 137 146 1 1 Price based Price 0 0 5,475 5,475
– FX 1 Option pricing model FX volatility (bps) 6 5 10 8
– Equity 24 42 20 50 Option pricing model Equity volatility (%) 5% 4% 64% 84%
– Loans and advances 1,056 1,680 Present value techniques Prepayment rate (%) 9% 6% 9% 6%
– Equity 176 282 Present value techniques Credit spread (bps) 2 n/a 2 n/a
For securities where market prices are not available fair value is measured by comparison with observable pricing data from similar instruments. Prices of 0% are distressed to the point that no recovery is expected, while prices significantly in excess of 100% or par are expected to pay a yield above current market rates.
Correlation is a measure of dependence between two underlying references which is relevant for valuing derivatives and other instruments having more than one underlying reference. High positive correlation (close to 1) indicates strong positive (statistical) relationship, where underliers move, everything else equal, move into the same direction. The same holds for a high negative correlation.
Prepayment rate is a key input to mortgage and loan valuation. Prepayment rate is the estimated rate at which mortgage borrowers will repay their mortgages early, e.g. 5% per year. Prepayment rate and reset spread are key inputs to mortgage linked prepayment swaps valuation
Realised gain/loss recognised in the statement of profit or loss during the period 1 –61 40 –1 –21 –104 –63 –198 –6 –19 –15 –383 –66
Changes in the composition of the group and other changes 5 2 1 1 6 3 1 Net gains/losses were recorded as ‘Valuation results and net trading income’ in the statement of profit or loss. The total amounts includes EUR 312 million (2019: EUR 43 million) of unrealised gains and losses recognised in the statement of profit or loss.
In 2020, the transfer into Level 3 assets is mainly driven by debt securities that are part of a structure transferred into level 3 due to market illiquidity which decreased observability for an input.
Transfers out of Level 3 is mainly related to debt obligations due to the valuation no longer being significantly impacted by unobservable inputs.
In 2019 the amounts reported on the line reclassifications relate to syndicated loans reclassed from trading assets to financial assets mandatory at FVPL.
Realised gain/loss recognised in the statement of profit or loss during the period1 1 Net gains/losses were recorded as ‘Valuation results and net trading income’ in the statement of profit or loss. The total amount includes EUR -4 million (2019: EUR 115 million) of unrealised gains and losses recognised in the statement of profit or loss.
In 2020, the transfers into level 3 mainly consisted of structured notes, measured designated as at fair value through profit or loss, which were transferred into Level 3 due to market illiquidity as a result of the Covid-19 pandemic. This caused the valuation being significantly impacted by unobservable inputs.
In 2019 and 2020, financial liabilities mainly (long term) repurchase transactions were transferred out of Level 3 mainly due to the valuation not being significantly impacted by unobservable inputs.
(i.e. risk factors) at portfolio level across different product categories. Where the disclosure looks at individual Level 3 inputs the actual valuation adjustments may also reflect the benefits of portfolio offsets.
The valuation uncertainty in the table below is broken down by related risk class rather than by product. The possible impact of a change of unobservable inputs in the fair value o of financial instruments where unobservable inputs are significant to the valuation is as follows:
Methods applied in determining fair values of financial assets and liabilities (carried at amortised cost)
Loans and advances to customers 598,176 611,765 17,486 20,343 0 165 14,595 12,622 576,659 588,063 608,740 621,194
The following methods and assumptions were used by ING Group to estimate the fair value of the financial instruments not measured at fair value .
The fair value of publicly traded subordinated loans are based on quoted market prices when available.
Union based clearing house, which resulted in de-designation and re-designation of hedge accounting relationships.
ING Group migrated various portfolios of interest rate swaps, which were designated in both macro fair value hedges and macro cash flow hedges. For discontinued fair value hedges, the cumulative adjustment of EUR 3.2 billion arising from a hedging gain or loss on the hedged item is amortised through the statement of profit or loss over the remaining term of the original hedge.
The notional amounts of the derivative hedging instruments (in above table) provide a close approximation of the extent of the risk exposure ING manages through these hedging relationships.
Group’s approach to manage market risk, including interest rate risk, is discussed in ‘Risk management
By using derivative financial instruments to hedge exposures to changes in interest rates, ING Group also exposes itself to credit risk of the derivative counterparty, which is not offset by the hedged item.
ING Group minimises counterparty credit risk in derivative instruments by clearing most of the derivatives through Central Clearing Counterparties. In addition ING Group only enters into transactions with high-quality counterparties and requires posting collateral.
ING Group applies fair value hedge accounting on micro level in which one hedged item is hedged with one or multiple hedging instruments as well as on macro level whereby a portfolio of items is hedged with multiple hedging instruments. For these macro hedges of interest rate risk ING applies the EU
carve-out. The EU ‘carve-out’ for macro hedging enables a group of derivatives (or proportions) to be viewed in combination and jointly designated as the hedging instrument and removes some of the limitations in fair value hedge accounting relating to hedging core deposits and under-hedging strategies. In retail operations, exposure on retail funding (savings and current accounts) and retail lending (mortgages) is initially offset. The remaining exposure is hedged in a portfolio hedge, using the
EU carve-out, in which a portion of the retail lending portfolio and core deposits are designated as a hedged item for hedge accounting purposes.
ING Group uses the following derivative financial instruments in a fair value hedge accounting relationship: Gross carrying value of derivatives designated under fair value hedge accounting
For our main currencies the average fixed rate for interest rate swaps used in fair value hedge accounting are 0.57% (2019: 0.93%)for EUR and 3.76% (2019: 3.55%) for USD.
The following table shows the net notional amount of derivatives designated in fair value hedging, split into the maturity of the instruments. The net notional amounts presented in the table are a combination of payer (-) and receiver (+) swaps.
Less month months months year years years years >5 years Total
– Debt securities at fair value through other comprehensive income 20,164 n/a 552
The increase in discontinued hedges is mainly caused by the transfer of derivatives from UK based clearing houses to EU based clearing houses, reference is made to the section ‘Brexit’ for further details.
The main sources of ineffectiveness are:  differences in maturities of the hedged item(s) and hedging instrument(s);  different interest rate curves applied to discount the hedged item(s) and hedging instrument(s);  differences in timing of cash flows of the hedged item(s) and hedging instrument(s).
The amounts and timing of future cash flows, representing both principal and interest flows, are projected for each portfolio of financial assets and liabilities, based on contractual terms and other variables including estimates of prepayments. These projected cash flows form the basis for identifying the notional amount subject to interest rate risk or foreign currency exchange rate risk that is designated under cash flow hedge accounting.
ING Group uses the following derivative financial instruments in a cash flow hedge accounting relationship: Gross carrying value of derivatives used for cash flow hedge accounting
For the main currencies the average fixed rate for interest rate swaps used in cash flow hedge accounting are -0.15% (2019: 0.54%) for EUR, 1.74% (2019: 2.38%) for PLN, 2.31% (2019: 2.51%) for
The following table shows the net notional amount of derivatives designated in cash flow hedging split into the maturity of the instruments. The net notional amounts presented in the table are a combination of payer (+) and receiver (-) swaps.
Carrying amount cash flow hedge reserve at the end of the reporting period1
Interest rate risk on; Combined interest and FX rate risk on; – Discontinued hedges -26
Total combined interest and Fx -10 -28 -517 -1 475 3 1 The carrying amount is the gross amount, excluding tax adjustments.
ING Group’s policy is to hedge these exposures only when not doing so it is expected to have a significant impact on the regulatory capital ratios of ING Group and its subsidiaries.
Gains and losses on the effective portions of derivatives designated under net investment hedge accounting are recognised in Other Comprehensive Income. The balance in equity is recognised in the statement of profit or loss when the related foreign subsidiary is disposed. The gains and losses on ineffective portions are recognised immediately in the statement of profit or loss.
– FX forwards and Cross currency swaps 69 98 23 51
Assets by contractual maturity 2020 Less than 1 month 1 1-3 months 3-12 months 1-5 years Over 5 years
Loans and advances to banks 15,786 2,796 3,419 3,093 270 25,364
– Mandatorily at fair value through profit or loss 26,854 11,376 3,472 1,153 1,222 228 44,305
– Designated as at fair value through profit or loss 248 26 631 657 2,564 4,126
Loans and advances to customers 50,293 19,788 48,261 180,254 299,581 598,176
Loans and advances to banks 22,820 3,100 5,090 3,729 397 35,136
Loans and advances to customers 55,138 18,586 45,871 184,708 307,462 611,765 1 Includes assets on demand.
2 Includes other financial assets such as assets held for sale, current and deferred tax assets as presented in the consolidated statement of the financial position. Additionally, non-financial assets are included in that position where maturities are not applicable as property and equipment and investments in associates and joint ventures. Due to their nature non-financial assets consist mainly of assets expected to be recovered after more than 12 months
 Undiscounted future coupon interest on financial liabilities payable is included in a separate line and in the relevant maturity bucket.
– Designated at fair value through profit or loss 32,540 8,506 1,330 2,181 3,247 11 631 48,444
Coupon interest due on financial liabilities 229 490 1,155 3,732 3,249 292 9,147
Guarantees issued by ING Groep N.V. 292 292 1 Includes liabilities on demand.
– Designated at fair value through profit or loss 27,048 10,467 1,885 2,938 5,089 7 251 47,684
2 This column reconciles the contractual undiscounted cash flows on financial liabilities to the statement of financial position values. The adjustments mainly relate to the impact of discounting and fair value hedge adjustments, and for derivatives, to the fact that the contractual cash flows are presented on a gross basis (unless the cash flows are actually settled net).
> 42 Transfer of financial assets, assets pledged and received as collateral
ING Group Annual Report 2020 354 42 Transfer of financial assets, assets pledged and received as collateral
11,298 million), in Australia to EUR 5,572 million (2019: EUR 4,150 million) and in the United States to
EUR 1,742 million (2019: EUR 1,010 million) and the remaining amount in other countries.
Total received collateral available for sale or repledge at fair value of which sold or repledged at fair value
The majority of ING's financial assets that have been transferred, but do not qualify for derecognition are debt instruments used in securities lending or sale and repurchase transactions.
Transferred financial assets that are derecognised in their entirety are mentioned in note 48 Structured
The following tables include information about rights to offset and the related arrangements. The amounts included consist of all recognised financial instruments that are presented net in the statement of financial position under the IFRS netting criteria (legal right to offset and intention to net settle or to realise the asset and settle the liability simultaneously) and amounts presented gross in the statement of financial position but subject to enforceable master netting arrangements or similar arrangements.
Related amounts not set off in the statement of financial position include transactions where: ▪ The counterparty has an offsetting exposure and a master netting or similar arrangement is in place with a right to set off only in the event of default, insolvency or bankruptcy, or the offsetting criteria are otherwise not satisfied, and
The net amounts resulting after setoff are not intended to represent ING’s actual exposure to counterparty risk, as risk management employs a number of credit risk mitigation strategies in addition to netting and collateral arrangements. Reference is made to the Risk Management section on
2 At 31 December 2020, the total amount of ‘Loans and advances to banks’ excluding repurchase agreements is EUR 20,495 million which is not subject to offsetting.
4 Other items mainly include amounts to be settled with Central Clearing Counterparties regarding securities and derivatives transactions and is included in ‘Other Assets – Amounts to be settled’ for EUR 2,215 million in the statement of financial position of which
EUR 806 million is subject to offsetting as at 31 December 2020.
3 Other items mainly include amounts to be settled with Central Clearing Counterparties regarding securities and derivatives transactions and is included in ‘Other Assets – Amounts to be settled’ for EUR 2,835 million in the statement of financial position of which
Trading and Non-trading Derivatives 73,215 -52,626 20,589 12,521 6,742 1,326 6,777 27,366
2 At 31 December 2020, the total amount of ‘Deposits from banks’ excluding repurchase agreements is EUR 76,127 million of which EUR 2 million is subject to offsetting.
2 The ‘statement of financial position total’ is the sum of ‘Net amounts of financial assets presented in the statement of financial position’ and ’Amounts not subject to enforceable master netting arrangements’.
ING Group Annual Report 2020 360 44 Contingent liabilities and commitments
In the normal course of business, ING Group is party to activities where risks are not reflected in whole or in part in the consolidated financial statements. In response to the needs of its customers, the Group offers financial products related to loans. These products include traditional off-balance sheet creditrelated financial instruments.
As at 31 December 2020, ING Groep N.V. guarantees various US dollar debentures (that mature between 2023 and 2036) which were issued by a subsidiary of Voya Financial Inc. In the Shareholder’s agreement between ING Groep N.V. and Voya Financial Inc. it was agreed that the aggregate outstanding principal amount of the debentures shall be reduced to nil at 31 December 2019. In accordance with the Shareholder’s agreement, the net exposure of ING Groep N.V. as at 31 December 2020 was nil, as the outstanding principal amount of the US dollar debentures was fully covered with collateral of EUR 304 million (2019: EUR 331 million) pledged by Voya Financial Inc.
Berlin against any losses it might incur as result of actions taken with respect to ING Germany. The ESF
ING Group and its consolidated subsidiaries are involved in governmental, regulatory, arbitration and legal proceedings and investigations in the Netherlands and in a number of foreign jurisdictions, including the U.S., involving claims by and against them which arise in the ordinary course of their businesses, including in connection with their activities as lenders, broker-dealers, underwriters, issuers of securities and investors and their position as employers and taxpayers. In certain of such proceedings, very large or indeterminate amounts are sought, including punitive and other damages.
Settlement agreement: On 4 September 2018, ING announced that it had entered into a settlement agreement with the Dutch Public Prosecution Service relating to previously disclosed investigations regarding various requirements for client on-boarding and the prevention of money laundering and corrupt practices. Following the entry into the settlement agreement, ING has experienced heightened scrutiny from authorities in various countries. ING is also aware, including as a result of media reports, that other parties may, among other things, seek to commence legal proceedings against ING in connection with the subject matter of the settlement, have filed or may file requests for disciplinary proceedings against ING employees based on the Dutch “Banker’s oath”, and/or have filed requests with the Court of Appeal in The Netherlands to reconsider the prosecutor’s decision to enter into the settlement agreement with ING and not to prosecute ING or (former) ING employees. In December 2020, the Court of Appeal issued its final ruling. In this ruling the prosecutors' decision to enter into the settlement agreement with ING was upheld, making the settlement final. However, in a separate ruling, the Court ordered the prosecution of ING’s former CEO.
Findings regarding AML processes: As previously disclosed, after its September 2018 settlement with
February 2020 the Banca d’Italia imposed an administrative fine on ING Italy. Both amounts were already provisioned for in 2019.
Italy, imposed in March 2019 has been removed. The decision follows the comprehensive steps undertaken by ING Italy to strengthen its processes and management of KYC compliance risks.
ING continues to take steps to enhance its management of compliance risks and embed stronger awareness across the whole organisation. These steps are part of the global KYC programme and set of initiatives, which includes enhancing KYC files and working on various structural improvements in compliance policies, tooling, monitoring, governance, knowledge and behaviour.
(“SIBOR”) filed a U.S. class action complaint in the New York District Court alleging that several banks, including ING, conspired to rig the prices of derivatives tied to SIBOR and the Singapore Swap Offer Rate
Court to file a further amended complaint that names ING Bank as a defendant. In July 2019, the New
Insurance Fund (“SDIF”) prior to the acquisition of ING Bank Turkey in 2007 from OYAK. SDIF has also filed various lawsuits against ING Bank Turkey to claim compensation from ING Bank Turkey, with respect to amounts paid out to offshore account holders so far. At this moment it is not possible to assess the outcome of these procedures nor to provide an estimate of the (potential) financial effect of these claims.
As requested by the AFM, ING has reviewed a significant part of the files of clients who bought interest rate derivatives. In December 2015, the AFM concluded that Dutch banks may have to re-assess certain client files, potentially including certain derivative contracts that were terminated prior to April 2014 or other client files. As advised by the AFM, the Minister of Finance appointed a Committee of independent experts (the “Committee”) which has established a uniform recovery framework for Dutch
SME clients with interest rate derivatives. ING has adopted this recovery framework and has reassessed individual files against this framework. ING has taken an additional provision for the financial consequences of the recovery framework. In 2017, ING has informed the majority of the relevant clients whether they are in scope of the recovery framework, and thus eligible for compensation, or not. Because implementation by ING of the uniform recovery framework encountered delay, ING has previously offered advance payments to customers out of the existing provision. As of December 2018, all customers in scope of the uniform recovery framework have received an offer of compensation from ING (including offers of no compensation). In June 2020, the independent derivative dispute committee rejected all claims by the client against ING in ING’s last open file under the uniform recovery framework. The last open file has been closed at the end of June 2020.
Interest surcharges claims: ING received complaints and was involved in litigation with certain individuals in the Netherlands regarding increases in interest surcharges with respect to several credit products, including but not limited to commercial property. ING has reviewed the relevant product portfolio. The provision previously taken has been reversed for certain of these complaints. All claims are dealt with individually. Thus far, the courts have ruled in favour of ING in each case, ruling that ING
The courts in first instance have applied in their rulings different criteria regarding the reimbursement of expenses. A provision has been taken and ING Spain has filed an appeal against a number of these court decisions. Since 2018, the Spanish Supreme Court and the European Court of Justice have issued rulings setting out which party should bear notary, registration, agency, and stamp duty costs. In
Groep N.V., ING Bank Mexico S.A. and ING Financial Markets LLC (“ING”) as defendants to a complaint that had previously been filed against multiple other financial institutions. The complaint alleges that the defendants conspired to fix the prices of Mexican Government Bonds. ING is defending itself against the allegations. Currently, it is not possible to provide an estimate of the (potential) financial effect of this claim. On 30 September 2019, the relevant court dismissed the antitrust complaint, finding that the plaintiffs had failed to identify any facts that links each defendant to the alleged conspiracy. On 9
December 2019, the plaintiffs filed an amended complaint removing all ING entities as defendants on the condition that the ING entities enter into a tolling agreement for the duration of two years. The relevant ING entities subsequently entered into a tolling agreement, which provides that the statute of limitations will not be tolled for the two-year duration of the agreement. Should the plaintiffs discover any evidence of potential involvement by ING in the activities alleged in the complaint, ING could be brought back into the litigation.
In 2018 ING Bank obtained control over Payvision Holding B.V. (Payvision) by acquiring 75% of its shares. The share purchase agreement included a put option exercisable by the original shareholders and a call option exercisable by ING for the remaining 25% shares. The put and call option led to the recognition of a financial liability with initial recognition through shareholders’ equity of EUR 87 million.
In July 2019 ING completed the sale of part of the ING Lease Italy business. The settlement price amounted to EUR 1,162 million, consisted of a EUR 368 million cash settlement, a EUR 20 million
Deferred Purchase Price and a EUR 774 million Senior Loan facility for the portfolio of lease receivables.
Held for Sale as at 31 December 2018 and previously included in the business line segment Wholesale
1 The shares of the non-controlling interest stake of 25% are listed on the Warsaw Stock Exchange, for summarised financial information we refer to ‘Note 35 ‘Information on geographical areas.
ING Group enters into liquidity management securitisation programmes in order to obtain funding and improve liquidity. Within the programme ING Group sells ING originated assets to a structured entity.
In 2020, there are no non-controlling interests as part of the securitisation structured entities that are significant to ING Group. ING Group for the majority of the securitisation vehicles provides the funding for the entity except for EUR 2 billion (2019: EUR 4 billion).
issues bonds. The payment of interest and principal is guaranteed by the ING administered structured entities, ING Covered Bond Company B.V., and ING SB Covered Bond Company B.V. In order for these entities to fulfil their guarantee, ING legally transfers mainly Dutch mortgage loans originated by ING.
The liquidity facilities, provided to Mont Blanc are EUR 2,793 million (2019: EUR 1,631 million). The drawn liquidity amount is nil as at 31 December 2020 (2019: nil).
In 2013 ING transferred financial assets (mortgage loans) for an amount of approximately EUR 2 billion to a special purpose vehicle (SPV). The transaction resulted in full derecognition of the financial assets from ING’s statement of financial position. Following this transfer ING continues to have two types of on-going involvement in the transferred assets: as counterparty to the SPE of a non-standard interest rate swap and as servicer of the transferred assets. ING has an option to unwind the transaction by redeeming all notes at their principal outstanding amount, in the unlikely event of changes in accounting and/or regulatory requirements that significantly impact the transaction. The fair value of the swap held by ING at 31 December 2020 amounted to EUR -34 million (2019: EUR -45 million); fair value changes on this swap recognised in the statement of profit or loss in 2020 were EUR 11 million
(2019: EUR 12 million). Service fee income recognised, for the role as administrative agent, in the statement of profit or loss in 2020 amounted to EUR 1 million (2019: EUR 2 million). The cumulative income recognised in profit or loss since derecognition amounts to EUR 16 million (2019: EUR 15 million).
Executive Board of ING Groep N.V. were also members of the Management Board Banking.
4 One member of the Management Board Banking left ING at the end of the year. In line with applicable regulation a severance payment was granted.
3 In 2019 one member of the Executive Board left and one member joined. The table includes their compensation earned in the capacity as board member and in addition an advisor fee for the period in which the activities were transferred to the successor.
The loans and advances mentioned in the table above (1) were made in the ordinary course of business, (2) were granted on conditions that are comparable to those of loans and advances granted to all employees and (3) did not involve more than the normal risk of collectability or present other unfavourable features. Loans and advances to members of the Executive Board and Management
Czech Republic. Raiffeisenbank Czech Republic has agreed to prepare a welcome offer for ING’s retail customers in the Czech Republic.In March, customers will receive an invitation from Raiffeisenbank to move to this bank over the coming months. The ambition is for ING to stop all its retail activities in this market by the end of 2021. ING will remain active in the Czech Republic as a provider of wholesale banking products and services.The agreement with Raiffeisenbank has been secured to ensure ING’s customers in the Czech Republic can continue to meet their banking needs. ING customers will receive the option to move their savings and investments to Raiffeisenbank at preferential conditions. The agreement between ING Czech Republic and Raiffeisenbank Czech Republic is pending regulatory approval.
ING announced on 2 March 2021 that it is reviewing the strategic options for its Retail Banking operations in Austria with the aim of exiting this market by the end of 2021. The scope of the review focuses solely on ING’s retail business. ING will continue its Wholesale Banking activities in Austria.
As a first step, in June 2021, ING will discontinue its savings-only offering for customers in Austria. As it exits the local retail banking market, ING will make sure its customers are fully supported throughout.
Group Treasury (“GT”) Balance Sheet & Capital Management, is responsible for maintaining the adequate capitalisation of ING Group and ING Bank entities, to manage the risk associated with ING’s business activities. This involves not only managing, planning and allocating capital within ING Group,
ING Bank and its various entities, but also helping to execute necessary capital market transactions, term (capital) funding and risk management transactions. ING takes an integrated approach to assess the adequacy of its capital position in relation to its risk profile and operating environment. This means
 Tier 1 capital – is defined as CET1 capital plus Additional Tier 1 (hybrid) securities and other regulatory adjustments. Tier 1 capital divided by risk-weighted assets equals the Tier 1 capital ratio.
 Leverage ratio (LR) – is defined as Tier 1 capital divided by the leverage exposure.
In 2020, ING has changed its CET1 ambition from around 13.5% to around 12.5%, reflecting among others a structural reduction of capital requirements and increased visibility of expected regulatory
ING’s capital ratios at the end of the year improved compared to 2019 primarily due to lower riskweighted assets, mainly driven by lower volumes, FX movements and improved lending book quality.
On the latter, downward rating adjustments were more than offset by higher and additional collateral value. ING continues to maintain a strong and high quality capital level.
ING Groep N.V. has a Common equity Tier 1 ratio of 15.5% as at 31 December 2020 versus an overall
ING Bank N.V. has a CET1 ratio of 14.0%, versus an overall CRR II / CRD V solvency requirement
ING Group capital position according to CRR II / CRD V in EUR million 2020 2019 - Reserved profit not included in CET1 capital 1 -3,266 -1,754
1. The reserved profit not included in CET1 capital ING Group as per 31 December 2020 was EUR 3,266 million, of which EUR
1,512 million relates to the result of 2020 and EUR 1,754 million relates to the result of 2019.
3. Including EUR 9,206 million which is CRR-compliant (2019: EUR 8,789 million), and EUR 153 million to be replaced as capital recognition is subject to CRR grandfathering rules (2019: EUR 153 million).
ING Bank capital position according to CRR II / CRD V in EUR million 2020 2019 - Reserved profit not included in CET1 capital 1 -1,207 -43
1. The reserved profit not included in CET1 capital as per 31 December 2020 was EUR 1,207 million and relates to the result of 2. Including EUR 4,654 million which is CRR-compliant (2019: EUR 5,758 million) and EUR 994 million to be replaced as capital recognition is subject to CRR grandfathering rules (2019: EUR 994 million).
For 2020, the resilient net profit amounts to EUR 3,025 million of which EUR 1,512 million is reserved for distribution outside of CET1 capital. The resilient net profit includes EUR 540 million of positive P&L
TMB stake (EUR 230 million). In February 2021, ING paid a cash-only interim dividend of EUR 468 million
recommendation of 15 December 2020, which included a definition of adjusted net profit. At the end of 2020 and including the final 2019 dividend, ING has reserved EUR 3,266 million for distribution. This includes EUR 468 million of cash-only 2020 interim dividend and the remainder, subject to prevailing
GT Balance Sheet & Capital Management ensures adherence to the set limits and targets by planning and executing capital management transactions. The ongoing assessment and monitoring of capital adequacy is embedded in the capital planning process within the ICAAP framework. As part of the dynamic business planning process, ING prepares a capital and funding plan on a regular basis for all its material businesses and assesses continuously the timing, need and feasibility for capital management actions in scope of its execution strategy. Sufficient financial flexibility should be preserved to meet important financial objectives. ING’s risk appetite statements set targets and are at the foundation of the capital plan. These limits are cascaded to the different businesses in line with our risk management framework. Contingency capital measures and early warning indicators are in place in conjunction with ING’s recovery plan to support the strategy in times of stress.
The Maximum Distributable Amount (MDA) trigger level stood at 10.51% in 2020 for CET1, 12.33% for
Tier 1 Capital and 14.77% for Total Capital (after the application of Art.104a of the CRD V), based on stable Pillar II capital requirements. In the event that ING Group breaches the MDA level, ING may face restrictions on dividend payments, AT1 instruments coupons and payment of variable remuneration.
Receivables from group companies 3 45,625 44,242 Other reserves 32,784 28,052
Parent company statement of profit or loss for the years ended 31 December in EUR million 2020 2019
Realised and unrealised revaluations property in own use 49 9 58
Consolidated financial statements, reference is made to Note 1 ‘Accounting policies’ of the
A list containing the information referred to in Section 379 (1), Book 2 of the Dutch Civil Code has been filed with the office of the Commercial Register of Amsterdam, in accordance with Section 379 (5),
The total amount of equity in the Parent company financial statements equals Shareholders’ equity
(parent) in the consolidated financial statements. Certain components within equity are different as a result of the following presentation differences between the parent company accounts and consolidated accounts: ▪ Unrealised revaluations within consolidated Group companies, presented in Other reserves -
Notes to the parent company statements of financial positions 2 Investments in Group companies
Receivables from Group companies include EUR 13,273 million subordinated loans provided by ING
Changes in composition of the group and other changes 94 249
Revaluation reserve of participating interests of EUR–605 million (2019: EUR 1,146 million) and Net defined benefit asset/liability remeasurement reserve of EUR –307 million (2019: EUR–336 million).
The total amount of non-distributable reserves, in accordance with the financial reporting requirements per Part 9 of Book 2 of the Dutch Civil Code, is EUR 9,831 million (2019: EUR 8,398 million).
In April ING Groep N.V. redeemed USD 1 billion 6.000% Perpetual Additional Tier 1 Contingent
Convertible Capital Securities and USD 700 million 6.125% Perpetual Debt Securities.
Notes to the Parent company statement of profit or loss 7 Staff expenses
Board and the Supervisory Board is included in the Consolidated financial statements. Reference is made to Note 49 ‘Related parties’.
External advisory fees 5 7 9 Interest and other financial income
Reference is made to the ING Group Consolidated financial statements, Note 44 ‘Contingent liabilities and commitments’ for disclosures related to issued guarantees.
For 2020 the Executive Board has, in alignment with the ECB recommendation on distribution and with the approval of the Supervisory Board, proposed a cash dividend of EUR 0.12 per ordinary share (2019: paid EUR 0.24 per ordinary share). This dividend has been paid in February 2021 as an interim dividend.
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In our opinion: — the accompanying consolidated financial statements give a true and fair view of the financial position of ING Groep N.V. as at 31 December 2020 and of its result and its cash flows for the year then ended, in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS-EU) and with Part 9 of Book 2 of the Dutch Civil Code; — the accompanying parent company financial statements give a true and fair view of the financial position of ING Groep N.V. as at 31 December 2020 and of its result for the year then ended in accordance with Part 9 of Book 2 of the Dutch Civil Code.
The parent company financial statements comprise: 1 the parent company statement of financial position as at 31 December 2020; 2 the parent company statement of profit or loss and statement of changes in equity for 2020; and 3 the notes comprising a summary of the accounting policies and other explanatory information.
— Group materiality of EUR 250 million (2019: EUR 300 million).
— 5.7% of normalised profit before taxation from continuing operations (2019: profit before taxation from continuing operation 4.4%).
— 92% of total assets covered by audit procedures performed by component auditors (2019: 90%).
— 83% of profit before taxation from continuing operations covered by audit procedures performed by component auditors (2019: 84%).
— Risk of inappropriate access or changes to information technology systems.
ING Group is at the head of a group of components. The financial information of this group is included in the financial statements of ING Group.
Applying these scoping criteria led to a full or specific scope audit for 42 components globally, in total covering 16 countries. This resulted in a coverage performed by component auditors of 83% of profit before taxation from continuing operations and 92% of total assets. For the remaining 17% of profit before taxation from continuing operations and 8% of total assets, procedures were performed by the group audit team. The consolidation of ING Group, the disclosures in the financial statements and certain accounting topics that are performed at group level, are audited by the group audit team. Procedures that are performed by the group audit team include, but are not limited to, substantive procedures with respect to equity, goodwill, certain elements of the Expected Credit Loss provisioning process, and analytical procedures in order to corroborate our assessment that the risk of material misstatement in the residual population is less than reasonably possible and scoping remained appropriate throughout the audit.
The group audit team set component materiality levels which ranged from EUR 20 million to EUR 95 million, based on the mix of size and financial statement risk profile of the components within the group to reduce the aggregation risk to an acceptable level.
By performing the procedures mentioned above at group components, together with additional procedures at group level, we have been able to obtain sufficient and appropriate audit evidence about ING Group’s financial information to provide an opinion about the financial statements.
Profit before taxation from continuing operations 83% 17% Covered by audit procedures performed by component auditors
Our focus on the risk of fraud and non-compliance with laws and regulations
— to respond appropriately to fraud or suspected fraud identified during the audit.
The primary responsibility for the prevention and detection of fraud and non-compliance with laws and regulations lies with the Executive Board, with oversight by the Supervisory Board. We refer to section Risk Management of the Annual Report where the Executive Board included its risk assessment, and section Corporate Governance where the Supervisory Board reflects on this.
In addition, we performed procedures to obtain an understanding of the legal and regulatory frameworks that are applicable to the Company and we inquired the Executive Board and the Audit Committee of the Supervisory Board as to whether the entity is in compliance with such laws and regulations and inspected correspondence, if any, with relevant licensing and regulatory authorities DNB and ECB.
In all of our audits, we addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by management that may represent a risk of material misstatement due to fraud. We refer to the Key Audit Matters ‘Assessment of Expected Credit Losses on loans and advances to customers and banks’ and ‘Assessment of goodwill impairment’ that are examples of our approach related to areas of higher risk due to accounting estimates where management makes significant judgements.
We performed the following audit procedures (not limited) to respond to the assessed risks: — We evaluated the design and the implementation and, where considered appropriate, tested the operating effectiveness of internal controls that mitigate fraud risks.
— We performed data analysis of high-risk journal entries and evaluated key estimates and judgements for bias by the Company, including retrospective reviews of prior year’s estimates. We also performed substantive testing including testing of transactions back to source information.
— We assessed matters reported on the Company’s whistleblowing and complaints procedures with the entity and assessed, where deemed necessary, results of management’s follow-up of such matters.
— With respect to the risk of fraud in relation to management override of Expected Credit Loss provision results, we refer to the Key Audit Matter ‘Assessment of Expected Credit Losses on loans and advances to customers and banks’.
— We considered the outcome of our other audit procedures and evaluated whether any findings or misstatements were indicative of fraud or non-compliance.
— We considered the effect of actual, suspected or identified risk of non-compliance as part of our procedures on the related financial statement items.
With respect to the bank-wide Know Your Customer enhancement program (the ‘KYC enhancement program’) as disclosed in the Executive Board report in order to improve governance, systems and tools around client due diligence and transaction monitoring, we inquired senior management, ING Group legal counsel, ING Group compliance officer and Head of Internal Audit.
We do note that our audit is not primarily designed to detect fraud and non-compliance with laws and regulations and that management is responsible for such internal control as management determines is necessary to enable the preparation of the financial statements that are free from material misstatement, whether due to errors or fraud, including compliance with laws and regulations.
As discussed in the Credit Risk section of the annual report and in Note 3 and Note 7 to the consolidated financial statements, the loans and advances to customers and loans and advances to banks amounts are EUR 598 billion and EUR 25 billion, respectively, as at 31 December 2020. Management considers the uncertainties of Covid-19 in the estimate of Expected Credit Losses (‘ECL’), specifically regarding macroeconomic forecasts and behaviour of borrowers subject to payment holidays and government stimulus plans. These loans and advances are measured at amortised cost, less ECL of EUR 5.8 billion.
We identified the assessment of ECL on loans and advances to customers and banks as a Key Audit Matter. Significant and complex auditor judgement and specialised skills and knowledge were required to evaluate the following elements of the overall estimate: — The judgements used to develop the Probability of Defaults (‘PD’), the Loss Given Default (‘LGD’) and the Exposure At Default (‘EAD’), including model or manually determined expected future recovery cash flows.
— Calculation of management overlays to the ECL due to the increased uncertainty in the forecast of future economic conditions and to calculate the default ratio of borrowers with payment holidays.
— We involved economic professionals with specialised skills and knowledge who assisted in assessing the Company’s methodology to determine the macroeconomic forecasts used in the ECL. We tested the reasonableness of management’s forecasts against other external benchmarks and our own internal forecasts.
Based on our procedures performed, we found management’s overall assessment relating to the valuation of loans and advances to customers and banks within an acceptable range and adequately disclosed in Note 7 and Note 3 to the financial statements respectively.
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— We evaluated the reasonableness of the Company’s forecasts and cash flows for the individual CGUs by challenging the forecasts and comparing the assumptions to historical performance.
— We involved valuation professionals with specialised skills and knowledge who assisted in: • evaluating the mathematical accuracy of the model by recalculation of the discount rates and terminal value calculations included in the model, and assessment of the consistency of applied formulas; • assessing the reasonableness of certain assumptions applied in the model including capital ratios (by comparing with analyst consensus data for comparable entities), terminal growth rates (by comparing per country the terminal growth rates applied to long term inflation) and discount rates (by independently deriving the risk fee rate for cost of equity per country based on observable market data).
ING Group is dependent on its IT environment for the reliability and continuity of its operations and financial reporting. Inappropriate access or changes to an application or supporting infrastructure could impact an automated control and therefore compromise the reliability of financial data and continuity of ING Group’s operations.
Based on the following procedures performed, we conclude that the other information: — is consistent with the financial statements and does not contain material misstatements; and
By performing these procedures, we comply with the requirements of Part 9 of Book 2 of the Dutch Civil Code and the Dutch Standard 720. The scope of the procedures performed is less than the scope of those performed in our audit of the financial statements.
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As part of the preparation of the financial statements, the Executive Board is responsible for assessing the Company’s ability to continue as a going concern. Based on the financial reporting frameworks mentioned, the Executive Board should prepare the financial statements using the going concern basis of accounting unless the Executive Board either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. The Executive Board should disclose events and circumstances that may cast significant doubt on the Company’s ability to continue as a going concern, in the financial statements.
A further description of our responsibilities for the audit of the financial statements is included in the appendix of this auditor’s report. This description forms part of our auditor’s report.
Description of our responsibilities for the audit of the financial statements
We have exercised professional judgement and have maintained professional scepticism throughout the audit, in accordance with Dutch Standards on Auditing, ethical requirements and independence requirements. Our audit included among others: — identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than the risk resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; — obtaining an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control; — evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Executive Board; — concluding on the appropriateness of the Executive Board’s use of the going concern basis of accounting, and based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause a company to cease to continue as a going concern; — evaluating the overall presentation, structure and content of the financial statements, including the disclosures; and
• The default of a major market participant could disrupt the markets and may have an adverse effect on our business, results and financial condition.
• Continued risk of political instability and fiscal uncertainty in Europe and the United States, as well as ongoing volatility in the financial markets and the economy generally have adversely affected, and may continue to adversely affect, our business, results and financial condition.
9 may increase the risk of loans being impaired and have a negative effect on our results and financial condition.
• We are subject to additional legal and regulatory risk in certain countries where we operate with less developed or predictable legal and regulatory frameworks.
• Failure to meet minimum capital and other prudential regulatory requirements as applicable to us from time to time may have a material adverse effect on our business, results and financial condition and on our ability to make payments on certain of our securities.
• Our US commodities and derivatives business is subject to CFTC and SEC regulation under the
• We are subject to several other bank recovery and resolution regimes that include statutory write down and conversion as well as other powers, which remains subject to significant uncertainties as to scope and impact on us.
• We are subject to different tax regulations in each of the jurisdictions where we conduct business, and are exposed to changes in tax laws, and risks of non-compliance with or proceedings or investigations with respect to, tax laws.
• Because we operate in highly competitive markets, including our home market, we may not be able to increase or maintain our market share, which may have an adverse effect on our results.
• We may not always be able to protect our intellectual property developed in our products and services and may be subject to infringement claims, which could adversely impact our core business, inhibit efforts to monetize our internal innovations and restrict our ability to capitalize on future opportunities.
• An inability to retain or attract key personnel may affect our business and results.
• We depend on the capital and credit markets, as well as customer deposits, to provide the liquidity and capital required to fund our operations, and adverse conditions in the capital and credit markets, or significant withdrawals of customer deposits, may impact our liquidity, borrowing and capital positions, as well as the cost of liquidity, borrowings and capital.
• As a holding company, ING Groep N.V. is dependent for liquidity on payments from its subsidiaries, many of which are subject to regulatory and other restrictions on their ability to transact with affiliates.
• Holders of ING shares may experience dilution of their holdings.
Any of the risks described below could have a material adverse effect on the business activities, financial condition, results and prospects of ING. ING may face a number of the risks described below simultaneously and some risks described below may be interdependent. While the risk factors below have been divided into categories, some risk factors could belong in more than one category and investors should carefully consider all of the risk factors set out in this section. Additional risks of which the Company is not presently aware, or that are currently viewed as immaterial, could also affect the business operations of ING and have a material adverse effect on ING’s business activities, financial condition, results and prospects. The market price of ING shares or other securities could decline due to any of those risks including the risks described below, and investors could lose all or part of their investments.
Although the most material risk factors have been presented first within each category, the order in which the remaining risk factors are presented is not necessarily an indication of the likelihood of the
ING Group Annual Report 2020 399 risks actually materialising, of the potential significance of the risks or of the scope of any potential negative impact to our business, results, financial condition and prospects.
Our revenues and earnings are affected by the volatility and strength of the economic, business, liquidity, funding and capital markets environments of the various geographic regions in which we conduct business, as well as by changes in customer behaviour in these regions, and an adverse change in any one region could have an impact on our business, results and financial condition.
ING’s business, results and financial condition may be significantly impacted by turmoil and volatility in the worldwide financial markets or in the particular geographic areas in which we operate. In Retail
Banking, our products include savings, payments, investments, loans and mortgages in most of our
Factors such as interest rates, securities prices, credit spreads, liquidity spreads, exchange rates, consumer spending, changes in customer behaviour, business investment, real estate values and private equity valuations, government spending, inflation or deflation, the volatility and strength of the capital markets, political events and trends, terrorism, pandemics and epidemics (such as Covid-19, as described in greater detail below under the heading “– ING’s business, results and financial condition have been, and likely will continue to be adversely affected by the Covid-19 pandemic”) or other widespread health emergencies all impact the business and economic environment and, ultimately, our solvency, liquidity and the amount and profitability of business we conduct in a specific geographic region. Certain of these risks are often experienced globally as well as in specific geographic regions and are described in greater detail below under the headings “–Interest rate volatility and other interest rate changes may adversely affect our business, results and financial condition”, “–Inflation and deflation may negatively affect our business, results and financial condition”, “–Market conditions, including those observed over the past few years and the application of IFRS 9 may increase the risk of loans being impaired and have a negative effect on our results and financial condition” and “–
In case one or more of the factors mentioned above adversely affects the profitability of our business, this might also result, among other things, in the following: ▪ reserve and provisions inadequacies, which could ultimately be realised through profit and loss and shareholders’ equity; ▪ the write-down of tax assets impacting net results and/or equity; ▪ impairment expenses related to goodwill and other intangible assets, impacting net result; and/or
Banking and Wholesale Banking, and which present risks of economic downturn. Though less material, we also derive substantial revenues in the following geographic regions: Turkey, Eastern Europe
Singapore among others) and Australia which also present risks of economic downturn. In an economic downturn, we expect that higher unemployment, lower family income, lower corporate earnings, higher corporate and private debt defaults, lower business investments and lower consumer spending would adversely affect the demand for banking products, and that ING may need to increase its reserves and provisions, each of which may result in overall lower earnings. The impact of the Covid-19 pandemic, as an example of an economic downturn, as well as the substantial monetary and government measures, are still materialising and expected to continue to affect our business. For more
The Covid-19 pandemic and the related response measures introduced by various national and local governmental authorities aimed at preventing the further spread of the disease (such as bans on public events with over a certain number of attendees, closures of places where larger groups of people gather such as schools, sports facilities, bars and restaurants, lockdowns, border controls and travel and other restrictions) have disrupted the normal flow of business operations in those countries and regions where we and our customers and counterparties operate (such as, among others, Benelux,
In addition to the measures aimed at preventing the further spread of Covid-19, governments and central banks around the world have also introduced measures aimed at mitigating the economic consequences of the pandemic and related response measures, such as guarantee schemes, compensation schemes and cutting interest rates. For example, the Dutch government has implemented economic measures aimed at protecting jobs, households’ wages and companies, e.g., by way of tax payment holidays, guarantee schemes and a compensation scheme for heavily affected sectors in the economy. These announced measures and any additional measures, including any payment holidays with respect to mortgages or other loans, have had and may continue to have a significant impact on our customers and other counterparties.
Pillar 2 Guidance, capital conservation buffer and the liquidity coverage ratio, and banks are also permitted to use a portion of their capital instruments that do not qualify as CET1 capital to meet the
ECB has also issued a recommendation to the banks that it supervises that such banks should exercise extreme prudence when deciding on or paying out dividends or performing share buy-backs until
With Covid-19 infection rates having recently increased, especially in some European countries, and further lockdowns measures having been reintroduced, this may result in changes in government responses and further downside risk towards macro-economic developments, with possibly a deeper risk aversion and a delayed recovery. These developments may result in further negative impact on our business, results and financial condition.
Association (EBA) moratoria guidelines, ING has a total amount of €19.4 billion of payment holidays or 2.6% of total credit outstandings, granted to approximately 196,000 customers. While these customers are located across nearly all countries in which ING operates, over 55% of these customers are in the Netherlands and Belgium. ING also recorded €2,675 million of net additions to loan loss provisions in 2020 compared with €1,120 million in 2019. The 2020 risk costs were severely impacted by a combination of increased collective provisioning reflecting the worsened macro-economic indicators due to the Covid-19 pandemic, higher Individual Stage 3 provisions, and negative rating migration. Should these global economic conditions be prolonged or worsen, or should the pandemic lead to additional market disruptions, we may experience more customer defaults and further additions to loan loss provisions. In these circumstances, we may also experience reduced customer activity and demand for its products and services, increased utilization of lending commitments and higher credit and valuation adjustments on financial assets. In addition, persistently low interest rates for a longer period, as well as a potential further decline in interest rates might result in further decreases in net interest income. These factors and other consequences of the Covid-19 pandemic may materially adversely affect our business, results and financial condition.
As of December 31, 2020, most of our staff continue to work from home. Since May 2020, staff in various countries have started rotation schemes to return to work in the office in a controlled manner, taking into account local circumstances and any applicable government measures (including with respect to social distancing). This controlled office opening process is expected to allow for essential face-to-face meetings. However, with Covid-19 infection rates having recently increased, we expect that more staff will again work from home. Due to the uncertainties relating to the future development of the Covid-19 pandemic, it is not certain when our employees may be generally expected or permitted to return to the offices. If due to illness, technical limitations or other restrictions in connection with the pandemic, employees are unable to work or are not able to operate as effectively and efficiently as in the office, this may adversely affect our business, results and financial condition.
In addition, a situation in which most or some of our employees continue working from home may raise operational risks, including with respect to information security, data protection, availability of key systems and infrastructure integrity. There is also a risk that we will not be effective in implementing regulatory or strategic change programs in the current environment. The Covid-19 pandemic has led to new banking behaviour from customers. There has been an increase in the digital behaviour of our customers leading to reduced traffic in branches. Over 80% of our customers now interact with us via digital channels only. Criminals are also taking advantage of the Covid-19 pandemic to carry out financial fraud and exploitation scams, with examples including advertising and trafficking in counterfeit medicines, offering fraudulent investment opportunities, fundraising for fake charities and engaging in phishing schemes that prey on virus-related fears. National authorities and international bodies (including the Financial Action Task Force) warn citizens and businesses on impostor, investment and product scams. Although we have organized a Covid-19 taskforce to identify and analyse new behavioural patterns, leading to new cases of unusual transactions being reported to the relevant authorities, new banking behaviours may result in additional Know Your Customer (KYC)
risks. If any of these risks were to materialize that may adversely affect our business, results and financial condition.
The duration of the pandemic and the impact of measures taken in response by governmental authorities, central banks and other third parties, whether direct or indirect, such as by increasing sovereign debt of certain countries which may result in increased volatility and widening credit spreads, remain uncertain. Therefore, it is difficult to predict the extent to which our business, results and financial condition, as well as our ability to access capital and liquidity on financial terms acceptable for us, may be materially adversely affected.
Consequently, we may be required to reinvest the proceeds into assets at lower interest rates; ▪ lower profitability as the result of a decrease in the spread between client rates earned on assets and client rates paid on savings, current account and other liabilities; ▪ higher costs for certain derivative instruments that may be used to hedge certain of our product risks; ▪ lower profitability since we may not be able to fully track the decline in interest rates in our savings rates; ▪ lower profitability since we may not always be entitled to impose surcharges to customers to compensate for the decline in interest rates; ▪ lower profitability since we may have to pay a higher premium for the defined contribution scheme in the Netherlands for which the premium paid is dependent on interest rate developments and the Dutch Central Bank’s (“DNB’s”) methodology for determining the ultimate forward rate; ▪ lower interest rates may cause asset margins to decrease thereby lowering our results. This may for example be the consequence of increased competition for investments as result of the low rates, thereby driving margins down; and/or
Furthermore, in the event that a negative interest rate environment results in ING’s depositors being forced to pay interest to ING to hold cash deposits, some depositors may choose to withdraw their deposits rather than pay interest to ING, which would have an adverse effect on our reputation, business, results and financial condition. For example, in March 2020, the U.S. Federal Reserve has cut the benchmark U.S. interest rate in response to the Covid-19 pandemic and related impacts on the economy and financial markets. On 1 January 2021, ING announced that it will charge negative interest to customers on current and deposit accounts exceeding €250,000 (such negative interest rate will only apply to the amount by which the current or deposit account exceeds €250,000 ). Such declines in interest rates in the United States or other markets in which ING and its customers and counterparties operate may have a significant adverse effect on our business and operations.
may also be faced with additional open market risk for which hedging or mitigation strategies may not be available or effective (either by hedges eliminated by defaulting counterparties, or reduce market liquidity). Systemic risk could have a material adverse effect on our ability to raise new funding and on our business, results and financial condition. In addition, such distress or failure could impact future product sales as a potential result of reduced confidence in the financial services industry.
There is also continued uncertainty over the long-term outlook for the tax, spending and borrowing policies of the US, the future economic performance of the US within the global economy and any potential future budgetary restrictions in the US, with a potential impact on a future sovereign credit ratings downgrade of the US government, including the rating of US Treasury securities. A downgrade of US Treasury securities could also impact the ratings and perceived creditworthiness of instruments issued, insured or guaranteed by institutions, agencies or instrumentalities directly linked to the US
Financial markets have historically relied on Interbank Offered Rates (‘IBORs’) benchmarks, such as the
rates at the end of 2021, with an 18 month extension proposed for USD LIBOR, one of the most widely used LIBOR rates. EONIA will cease to be published by 1 January 2022 and the European Money
Public authorities have initiated industry working groups in various jurisdictions to develop and recommend alternative rates that could serve as replacements when such rates cease to exist or materially change. This is commonly referred to as a fallback rate. The US Federal Reserve’s Alternative
to renegotiate or amend as many contracts as possible before the relevant LIBOR ceases. In response, the European Commission has announced various legislative fixes, that most notably reduce the scope for potential conflict with the solutions proposed by other jurisdictions. However, there is no guarantee that regulators will implement measures to address such legacy contracts, or that such measures will be effective in avoiding business disruption or contractual disputes.
ING Group Annual Report 2020 405 level of financial risk, such as potential earnings volatility resulting from contract modifications and changes in hedge accounting relationships. It is not currently possible to determine the full impact of such changes on the Group, and the implementation of alternative benchmark rates may have a material adverse effect on our business, results and financial condition.
On the other hand, deflation experienced in our principal markets may also adversely affect our financial performance. In recent years, the risk of low inflation and even deflation (i.e., a continued period with negative rates of inflation) in the Eurozone has materialized. Deflation may erode collateral values and diminish the quality of loans and cause a decrease in borrowing levels, which would negatively affect our business and results.
We are exposed to the risk that our borrowers (including sovereigns) may not repay their loans according to their contractual terms and that the collateral securing the payment of these loans may be insufficient. We may see adverse changes in the credit quality of our borrowers and counterparties, for example, as a result of their inability to refinance their indebtedness, with increasing delinquencies, defaults and insolvencies across a range of sectors. This may lead to impairment charges on loans and other assets, higher costs and additions to loan loss provisions. A significant increase in the size of our provision for loan losses could have a material adverse effect on our business, results and financial condition. Also see above under the heading “–ING’s business, results and financial condition have been, and likely will continue to be adversely affected by the Covid-19 pandemic”. As set out there, we expect to be affected by the Covid-19 pandemic through its impact on, among others, the financial condition of our customers or other counterparties.
IFRS 9 ‘Financial Instruments’ became effective as per 1 January 2018 and results in loan loss provisions that may be recognized earlier, on a more forward looking basis and on a broader scope of financial instruments than was previously the case under IAS 39. ING has applied the classification, measurement, and impairment requirements retrospectively by adjusting the opening balance sheet and opening equity as at 1 January 2018. As a result of applying IFRS 9, a shift in the forward looking consensus view of economic conditions may materially impact the models used to calculate loan loss provisions under IFRS 9 and cause more volatility in, or higher levels of, loan loss provisions, any of which could adversely affect the Group’s results, financial condition or regulatory capital position.
Economic and other factors could lead to contraction in the residential mortgage and commercial lending market and to decreases in residential and commercial property prices, which could generate
ING Group Annual Report 2020 406 substantial increases in impairment losses. Additionally, continuing low oil prices could have an influence on the repayment capacity of certain corporate borrowers active in the oil and oil related services industries.
While prudential regulation is intended to minimize the risk of bank failures, in the event such a failure occurs, given our size, we may incur significant compensation payments to be made under the Dutch
Deposit Guarantee Scheme (DGS), which we may be unable to recover from the bankrupt estate, and therefore the consequences of any future failure of such a bank could be significant to ING. Such costs and the associated costs to be borne by us may have a material adverse effect on our results and financial condition. On the basis of the EU Directive on deposit guarantee schemes, ING pays quarterly risk-weighted contributions into a DGS-fund. The DGS-fund is to grow to a target size of 0.8% of all deposits guaranteed under the DGS, which is expected to be reached in July 2024. In case of failure of a Dutch bank, depositor compensation is paid from the DGS-fund. If the available financial means of the fund are insufficient, Dutch banks, including ING, may be required pay to extraordinary ex-post contributions not exceeding 0.5% of their covered deposits per calendar year. In exceptional circumstances and with the consent of the competent authority, higher contributions may be required.
(‘EDIS’), (partly) replacing or complementing national compensation schemes in two or three phases.
Proposals contain elements of (re)insurance, mutual lending and mutualisation of funds. The new model is intended to be ‘overall cost-neutral’. Discussions have continued in 2020, but it remains uncertain when EDIS will be introduced and, if introduced, what impact EDIS would have on ING’s business and operations.
In its capacity as principal prudential supervisor in the EU, the ECB has extensive supervisory and investigatory powers, including the ability to issue requests for information, to conduct regulatory investigations and on-site inspections, and to impose monetary and other sanctions. For example, under the Single Supervisory Mechanism (SSM), the regulators with jurisdiction over the Group, including the ECB, may conduct stress tests and have discretion to impose capital surcharges on financial institutions for risks that are not otherwise recognised in risk-weighted assets or other surcharges depending on the individual situation of the bank and take or require other measures, such as restrictions on or changes to the Group’s business. Competent authorities may also, if the Group fails to comply with regulatory requirements, in particular with supervisory actions, minimum capital requirements (including buffer requirements) or with liquidity requirements, or if there are shortcomings in its governance and risk management processes, prohibit the Group from making dividend payments to shareholders or distributions to holders of its regulatory capital instruments.
The regulatory consequences of the United Kingdom’s withdrawal from the European
Agreement (the “TCA”) in connection with the departure of the UK from the EU (commonly referred to as ‘Brexit’). However, the financial services provisions of the TCA are very limited and , as a result, UKbased financial services providers lost EU passporting rights as of 1 January 2021 and EU-UK financial services are now subject to unilateral equivalence decisions. EU and UK regulators have, however, taken certain measures to address overall financial stability risks, such as the temporary extension by the EU of equivalence recognition to UK-based central counterparties (UK CCPs) through to 30 June 2022. There is, however, no guarantee that such equivalence decisions will be issued by the EU or the
UK in the future, or that any extensions or renewals of temporary equivalence decisions or similar transitional arrangements will be made by the EU or the UK in the future. The absence of such equivalence decisions for financial services could have a negative impact on ING’s activities, with the absence of future UK CCPs recognition expected to increase costs for both ING and its financial markets customers. In addition, Brexit has required and will require other changes to ING’s business and operations, including requiring ING to apply for a third country branch banking licenses in the UK for which ECB conditions and PRA & FCA authorisation decisions remain pending. ING is also progressing the move of certain financial markets activities from London to Amsterdam in light of ECB’s supervisory expectations on booking models as a result of Brexit. The regulatory impact of Brexit continues to present material risks and uncertainties, particularly as to how regulations may diverge between the
ING is subject to a variety of regulations that require us to comply with minimum requirements for capital (own funds) and additional loss absorbing capacity, as well as for liquidity, and to comply with leverage restrictions. In addition, such capital, liquidity and leverage requirements and their application and interpretation may change. Any changes may require us to maintain more capital or to raise a different type of capital by disqualifying existing capital instruments from continued inclusion in regulatory capital, requiring replacement with new capital instruments that meet the new criteria.
For further discussion of the impact of minimum capital and other prudential regulatory requirements on ING, see “Item 4. Information on the Company—Regulation and Supervision—Regulatory
Our affiliate ING Capital Markets LLC is registered with the Commodity Futures Trading Commission
registration may increase ING Capital Markets LLC’s operational costs as a result of compliance, margin, capital and other requirements, and result in a substantial portion or all of ING’s security-based swap activities with U.S. persons being conducted through ING Capital Markets LLC. These registration and related requirements may also reduce trading activity, reduce market liquidity and increase volatility in the relevant markets.
We are subject to several recovery and resolution regimes, including the Single Resolution Mechanism
ING, there could be a material adverse effect on both ING and on holders of ING securities, including through a material adverse effect on credit ratings and/or the price of our securities. Investors in our securities may lose their investment if resolution measures are taken under current or future regimes.
For further discussion of the impact of bank recovery and resolution regimes on ING, see “Item 4.
We are involved in governmental, regulatory, arbitration and legal proceedings and investigations involving claims by and against us which arise in the ordinary course of our businesses, including in connection with our activities as financial services provider, employer, investor and taxpayer. As a financial institution, we are subject to specific laws and regulations governing financial services or financial institutions. See “– Changes in laws and/or regulations governing financial services or financial institutions or the application of such laws and/or regulations may increase our operating costs and limit our activities” above. Financial reporting irregularities involving other large and well-known companies, possible findings of government authorities in various jurisdictions which are investigating several rate-setting processes, notifications made by whistleblowers, increasing regulatory and law enforcement scrutiny of ‘know your customer’ anti-money laundering, tax evasion, prohibited transactions with countries or persons subject to sanctions, and bribery or other anti-corruption measures and anti-terrorist-financing procedures and their effectiveness, regulatory investigations of the banking industry, and litigation that arises from the failure or perceived failure by us to comply with legal, regulatory, tax and compliance requirements could result in adverse publicity and reputational harm, lead to increased regulatory supervision, affect our ability to attract and retain customers and maintain access to the capital markets, result in cease and desist orders, claims, enforcement actions, fines and civil and criminal penalties, other disciplinary action or have other material adverse effects on us in ways that are not predictable. Some claims and allegations may be brought by or on behalf of a class and claimants may seek large or indeterminate amounts of damages, including compensatory, liquidated, treble and punitive damages. Our reserves for litigation liabilities may prove to be inadequate. Claims and allegations, should they become public, need not be well founded, true or successful to have a negative impact on our reputation. In addition, press reports and other public statements that assert some form of wrongdoing could result in inquiries or
We are subject to different tax regulations in each of the jurisdictions where we conduct business, and are exposed to changes in tax laws, and risks of non-compliance with or proceedings or investigations with respect to, tax laws.
Changes in tax laws (including case law) could increase our taxes and our effective tax rates and could materially impact our tax receivables and liabilities as well as deferred tax assets and deferred tax liabilities, which could have a material adverse effect on our business, results and financial condition.
Changes in tax laws could also make certain ING products less attractive, which could have adverse consequences for our businesses and results. Because of the geographic spread of its business, ING
We may be subject to withholding tax if we fail to comply with the Foreign Account Tax
Due to the nature of its business, ING is subject to various provisions of US tax law. These include
and the Qualified Intermediary (“QI”) requirements, which require withholding tax on certain non USsource payments. Failure to comply with FATCA and/or QI requirements and regulations could also harm our reputation and could subject the Group to enforcement actions, fines and penalties, which could have a material adverse effect on our business, reputation, revenues, results, financial condition and prospects. For additional information with respect to specific proceedings, see Note 45 ‘Legal proceedings’ to the consolidated financial statements. For further discussion of FATCA and QI
requirements with respect to ING, see “Item 4. Information on the Company—Regulation and
Our products and services, including banking products and advice services for third-party products are exposed to claims from customers who might allege that they have received misleading advice or other information from advisers (both internal and external) as to which products were most appropriate for them, or that the terms and conditions of the products, the nature of the products or the circumstances under which the products were sold, were misrepresented to them. When new financial products are brought to the market, ING engages in a multidisciplinary product approval process in connection with the development and distribution of such products, including production of appropriate marketing and communication materials. Notwithstanding these processes, customers may make claims against ING if the products do not meet their expectations. Customer protection regulations, as well as changes in interpretation and perception by both the public at large and governmental authorities of acceptable market practices, influence customer expectations.
Products distributed through person-to-person sales forces have a higher exposure to such claims as the sales forces may provide face-to-face financial planning and advisory services. Complaints may also arise if customers feel that they have not been treated reasonably or fairly, or that the duty of care has not been complied with. While a considerable amount of time and resources have been
Forward strategy, we are consistently managing and monitoring our IT risk profile globally. ING is subject to increasing regulatory requirements including EU General Data Protection Regulation (‘GDPR’)
and EU Payment Services Directive (‘PSD2’). Failure to appropriately manage and monitor our IT risk profile could affect our ability to comply with these regulatory requirements, to securely and efficiently serve our clients or to timely, completely or accurately process, store and transmit information, and may adversely impact our reputation, business and results. For further description of the particular risks associated with cybercrime, which is a specific risk to ING as a result of its strategic focus on technology and innovation, see “–We are subject to increasing risks related to cybercrime and compliance with cybersecurity regulation” below.
Cybersecurity, customer data and data privacy have become the subject of increasing legislative and regulatory focus. The EU’s second Payment Services Directive (‘PSD2’) and GDPR are examples of such regulations. In certain locations where ING is active, there are additional local regulatory requirements and legislation on top of EU regulations that must be followed for business conducted in that jurisdiction. Some of these legislations and regulations may be conflicting due to local regulatory interpretations. We may become subject to new EU and local legislation or regulation concerning cybersecurity, security of customer data in general or the privacy of information we may store or maintain. Compliance with such new legislation or regulation could increase the Group’s compliance cost. Failure to comply with new and existing legislation or regulation could harm our reputation and could subject the Group to enforcement actions, fines and penalties.
There is substantial competition in the Netherlands and the other countries in which we do business for the types of wholesale banking, retail banking, investment banking and other products and services we provide. Customer loyalty and retention can be influenced by a number of factors, including brand recognition, reputation, relative service levels, the prices and attributes of products and services, scope of distribution, credit ratings and actions taken by existing or new competitors (including non-bank or financial technology competitors). A decline in our competitive position as to one or more of these factors could adversely impact our ability to maintain or further increase our market share, which would adversely affect our results. Such competition is most pronounced in our more mature markets of the Netherlands, Belgium, the rest of Western Europe and Australia. In recent years, however, competition in emerging markets, such as Asia and Central and Eastern Europe, has also increased as large financial services companies from more developed countries have sought to establish themselves in markets which are perceived to offer higher growth potential, and as local institutions have become more sophisticated and competitive and proceeded to form alliances, mergers or strategic relationships with our competitors. The Netherlands is our largest market. Our main competitors in the banking sector in the Netherlands are ABN AMRO Bank and Rabobank.
ING Group Annual Report 2020 413 particular, the emergence of disintermediation in the financial sector resulting from new banking, lending and payment solutions offered by rapidly evolving incumbents, challengers and new entrants, in particular with respect to payment services and products, and the introduction of disruptive technology may impede our ability to grow or retain our market share and impact our revenues and profitability.
Third parties that have an payment obligations to ING, or obligations to return money, securities or other assets, may not pay or perform under their obligations. These parties include the issuers and guarantors (including sovereigns) of securities we hold, borrowers under loans originated, reinsurers, customers, trading counterparties, securities lending and repurchase counterparties, counterparties under swaps, credit default and other derivative contracts, clearing agents, exchanges, clearing houses and other financial intermediaries. Defaults by one or more of these parties on their obligations to us due to bankruptcy, lack of liquidity, downturns in the economy or real estate values, continuing low oil or other commodity prices, operational failure or other factors, or even rumours about potential defaults by one or more of these parties or regarding a severe distress of the financial services industry generally, could have a material adverse effect on our results, financial condition and liquidity. Given the high level of interdependence between financial institutions, we are and will continue to be subject to the risk of deterioration of the commercial and financial soundness, or perceived soundness, of sovereigns and other financial services institutions. This is particularly relevant to our franchise as an important and large counterparty in equity, fixed income and foreign exchange markets, including related derivatives.
We routinely execute a high volume of transactions, such as unsecured debt instruments, derivative transactions and equity investments with counterparties and customers in the financial services industry, including brokers and dealers, commercial and investment banks, mutual and hedge funds, insurance companies, institutional clients, futures clearing merchants, swap dealers, and other
ING Group Annual Report 2020 414 institutions, resulting in large periodic settlement amounts, which may result in our having significant credit exposure to one or more of such counterparties or customers. As a result, we could face concentration risk with respect to liabilities or amounts we expect to collect from specific counterparties and customers. We are exposed to increased counterparty risk as a result of recent financial institution failures and weakness and will continue to be exposed to the risk of loss if counterparty financial institutions fail or are otherwise unable to meet their obligations. A default by, or even concerns about the creditworthiness of, one or more of these counterparties or customers or other financial services institutions could therefore have an adverse effect on our results or liquidity.
Climate change is an area of significant focus for governments and regulators, investors and ING’s customers, and developments with respect to climate change topics may expose ING to significant risks. The perception of climate change as a risk by civil society, shareholders, governments and other stakeholders continues to increase, including in relation to the financial sector’s operations and strategy, and international actions regulating or restricting CO2 emissions, such as the Paris agreement, may also result in financial institutions coming under increased pressure from such stakeholders regarding the management and disclosure of their climate risks and related lending and investment activities. For further information regarding the alignment of ING’s lending portfolio with its climate-related goals, see “Item 4. – Information on the Company – Business Overview – Responsible finance” below.
Netherlands, will continue to have an impact on existing ING Group remuneration policies and individual remuneration packages for personnel. For example, under the EU’s amended Shareholder
ING’s remuneration report annually. This may restrict our ability to offer competitive compensation compared with companies (financial and/or non-financial) that are not subject to such restrictions and it could adversely affect ING Group’s ability to retain or attract key personnel, which, in turn, may affect our business and results.
We may incur further liabilities in respect of our defined benefit retirement plans if the value of plan assets is not sufficient to cover potential obligations, including as a result of differences between actual results and underlying actuarial assumptions and models.
ING Group companies operate various defined benefit retirement plans covering the post-employment benefits of a number of our employees. The liability recognised in our consolidated balance sheet in respect of our defined benefit plans is the present value of the defined benefit obligations at the balance sheet date, less the fair value of each plan’s assets, together with adjustments for unrecognised actuarial gains and losses and unrecognised past service costs. We determine our defined benefit plan obligations based on internal and external actuarial models and calculations using the projected unit credit method. Inherent in these actuarial models are assumptions, including discount rates, rates of increase in future salary and benefit levels, mortality rates and consumer price index. These assumptions are based on available market data and are updated annually. Nevertheless, the actuarial assumptions may differ significantly from actual results due to changes in market conditions, economic and mortality trends and other assumptions. Any changes in these assumptions could have a significant impact on our present and future liabilities and costs associated with our defined benefit plans.
We use quantitative methods, systems or approaches that apply statistical, economic financial, or mathematical theories, techniques and assumptions to process input data into quantitative estimates.
Errors in the development, implementation, use or interpretation of such models, or from incomplete or incorrect data, can lead to inaccurate, noncompliant or misinterpreted model outputs, which may adversely impact our reputation and results. In addition, we use assumptions in order to model client behaviour for the risk calculations in our banking books. Assumptions are used to determine the interest rate risk profile of savings and current accounts and to estimate the embedded option risk in the mortgage and investment portfolios. Assumptions based on past client behaviour may not always be a reliable indicator of future behaviour. The realisation or use of different assumptions to determine client behaviour could have a material adverse effect on the calculated risk figures and, ultimately, our future results or reputation. Furthermore, we may be subject to risks related to changes in the laws and regulations governing the risk management practices of financial institutions. For further information, see “Risks related to the regulation and supervision of the Group – Changes in laws and/or regulations governing financial services or financial institutions or the application of such laws and/or regulations may increase our operating costs and limit our activities” above. As noted there, regulation of the industries in which we operates is becoming increasingly more extensive and complex, while also attracting supervisory scrutiny. Compliance failures may lead to changes in the laws and regulations governing the risk management practices and materially increase our operating costs.
We employ various economic hedging strategies with the objective of mitigating the market risks that are inherent in our business and operations. These risks include currency fluctuations, changes in the fair value of our investments, the impact of interest rates, equity markets and credit spread changes, the occurrence of credit defaults and changes in client behaviour. We seek to control these risks by, among other things, entering into a number of derivative instruments, such as swaps, options, futures and forward contracts, including, from time to time, macro hedges for parts of our business, either directly as a counterparty or as a credit support provider to affiliate counterparties. Developing an effective strategy for dealing with these risks is complex, and no strategy can completely insulate us from risks associated with those fluctuations. Our hedging strategies also rely on assumptions and projections regarding our assets, liabilities, general market factors and the creditworthiness of our counterparties that may prove to be incorrect or prove to be inadequate. Accordingly, our hedging activities may not have the desired beneficial impact on our results or financial condition. Poorly designed strategies or improperly executed transactions could actually increase our risks and losses.
Our hedging strategy additionally relies on the assumption that hedging counterparties remain able and willing to provide the hedges required by our strategy. Increased regulation, market shocks, worsening market conditions (whether due to the ongoing euro crisis or otherwise), and/or other factors that affect or are perceived to affect the financial condition, liquidity and creditworthiness of
ING may reduce the ability and/or willingness of such counterparties to engage in hedging contracts with us and/or other parties, affecting our overall ability to hedge our risks and adversely affecting our business, results and financial condition.
We need liquidity to fund new and recurring business, to pay our operating expenses, interest on our debt and dividends on our capital stock, maintain our securities lending activities and replace certain maturing liabilities. Without sufficient liquidity, we will be forced to curtail our operations and our business will suffer. The principal sources of our funding include a variety of short-and long-term instruments, including deposit fund, repurchase agreements, commercial paper, medium- and longterm debt, subordinated debt securities, capital securities and shareholders’ equity.
In the event that our current resources do not satisfy our needs, we may need to seek additional financing. The availability of additional financing will depend on a variety of factors, such as market conditions, the general availability of credit, the volume of trading activities, the overall availability of credit to the financial services industry, our credit ratings and credit capacity, as well as the possibility that customers or lenders could develop a negative perception of our long- or short-term financial prospects. Also see under the heading “Ratings are important to our business for a number of reasons, and a downgrade or a potential downgrade in our credit ratings could have an adverse impact on our results and net results”. Similarly, our access to funds may be limited if regulatory authorities or rating agencies take negative actions against us. If our internal sources of liquidity prove to be insufficient, there is a risk that we may not be able to successfully obtain additional financing on favourable terms, or at all. Any actions we might take to access financing may, in turn, cause rating agencies to reevaluate our ratings.
Disruptions, uncertainty or volatility in the capital and credit markets may also limit our access to capital. Such market conditions may in the future limit our ability to raise additional capital to support business growth, or to counterbalance the consequences of losses or increased regulatory capital and rating agency capital requirements. This could force us to (i) delay raising capital, (ii) reduce, cancel or postpone payment of dividends on our shares, (iii) reduce, cancel or postpone interest payments on our other securities, (iv) issue capital of different types or under different terms than we would otherwise, or (v) incur a higher cost of capital than in a more stable market environment. This would have the potential to decrease both our profitability and our financial flexibility. Our results, financial condition, cash flows, regulatory capital and rating agency capital position could be materially adversely affected by disruptions in the financial markets.
ING Groep N.V.’s ability to obtain funds to meet its obligations depends on legal and regulatory restrictions applicable to ING Groep N.V.’s subsidiaries. Many of ING Groep N.V.’s direct and indirect subsidiaries, including certain subsidiaries of ING Bank N.V., may be subject to laws that restrict dividend payments, as well as requirements with respect to capital and liquidity levels. For example, certain local governments and regulators have taken steps and may take further steps to “ring fence”
or impose minimum internal total loss-absorbing capacity on the local affiliates of a foreign financial institution in order to protect clients and creditors of such affiliates in the event of financial difficulties involving such affiliates or the broader banking group. Increased local regulation and supervision have therefore limited and may in the future further limit the ability to move capital and liquidity among affiliated entities and between ING Groep N.V. and its direct and indirect subsidiaries, limit the flexibility to structure intercompany and external activities of ING as otherwise deemed most operationally efficient, and increase in the overall level of capital and liquidity required by ING on a consolidated basis.
ING Groep N.V. has also in the past and may in the future continue to guarantee the payment obligations of some of its subsidiaries, including ING Bank N.V. Any such guarantees may require ING
Groep N.V. to provide substantial funds or assets to its subsidiaries or the creditors or counterparties of these subsidiaries at a time when the guaranteed subsidiary is in need of liquidity to fund their own obligations.
Finally, ING Groep N.V., as the resolution entity of ING, has an obligation to remove impediments to resolution and to improve resolvability. Regulatory authorities have required and may continue to require ING to increase capital or liquidity levels at the level of the resolution entity or at particular subsidiaries. This may result in, among other things, the issuance of additional long-term debt issuance at the level of ING Groep N.V. or particular subsidiaries.
Netherlands unless the underlying claim is re-litigated before a Dutch court. However, under current practice, the courts of the Netherlands may be expected to render a judgment in accordance with the judgment of the relevant U.S. court, provided that such judgment (i) is a final judgment and has been rendered by a court which has established its jurisdiction on the basis of internationally accepted grounds of jurisdictions, (ii) has not been rendered in violation of elementary principles of fair trial, (iii)
Our annual report integrates financial and non-financial performance data. We report on areas of our business and operations where we can have a material impact both inside and outside our organisation.
MBB’s overall responsibility for social and environmental risks and opportunities is formalised in the
Reporting Initiative (GRI) and the International Integrated Reporting Council (IIRC), resulting in a list of material topics. The 2019 materiality analysis outcomes served as the basis for our 2020 analysis.
The core of this year’s process was a validation using internal and external data sources while ensuring the principles of completeness, accuracy and relevance. The process included the following inputs: ▪ Internal and external stakeholder perspectives; ▪ The results of an internal risk assessment conducted in 2020; ▪ ING’s Think Forward strategy; ▪ Industry trend reports from think-tanks and thought leaders; ▪ Regulatory developments.
The process received reasonable assurance from audit firm KPMG. We introduce the 2020 material topics in the ‘World around us’ chapter and link them to chapters of this report in ‘Our strategy’.
The tables below provide a breakdown of our direct lending for environmental and social activities as
We will align our business strategy to be consistent with and contribute to individuals’ needs and society’s goals, as expressed in the Sustainable Development Goals, the Paris Climate Agreement and relevant national and regional frameworks.
1.1 Describe (high-level) your bank's business model, including the main customer segments served, types of products and services provided, the main sectors and types of activities, and where relevant the technologies financed across the main geographies in which your bank has operations or provides products and services.
▪ ING.COM->About Us->Profile->ING at a Glance; ▪ ING.COM->About Us->Profile->Purpose & Strategy; ▪ ING.COM->Sustainability->Our Stance->Transparency->Portfolio overview (NACE 2); ▪ ING Group 2020 Annual Report->Consolidated Financial
Development Goals (SDGs), the Paris Climate Agreement, and relevant national and regional frameworks.
ING aims to improve people’s financial health through information, innovation and involvement. And we’re working on making a positive contribution to human rights as financier, employer, taxpayer and driver of progress and prosperity.
Our climate action and financial health programmes support targets under the UN SDGs 8, 12 and 13.
Direction; ▪ ING.COM->Sustainability->Sustainability Direction->Climate action; ▪ ING.COM->Sustainability->Sustainability Direction->Sustainable business->Terra approach; ▪ ING.COM->Sustainability->The world around us->Reporting->2020
▪ ING.COM->Sustainability->Sustainability Direction->Financial health; ▪ ING.COM->Sustainability->The world around us->Sustainable development goals; ▪ ING.COM->Sustainability->Our Stance; ▪ ING.COM->Sustainability->Sustainability Direction->Sustainable business->Environmental and social risk policies; ▪ ING.COM->Sustainability->The world around us->Reporting->2020
b) Scale of Exposure: In identifying its areas of most significant impact the bank has considered where its core business/its major activities lie in terms of industries, technologies and geographies.
d) Scale and intensity/salience of impact: In identifying its areas of most significant impact, the bank has considered the scale and intensity/salience of the (potential) social, economic and environmental impacts resulting from the bank’s activities and provision of products and services.
(your bank should have engaged with relevant stakeholders to help inform your analysis under elements c) and d))
• Identified strategic business opportunities in relation to the increase of positive impacts / reduction of negative impacts
Our SDG focus areas are informed by our exposure and impact opportunities. Our 2020 materiality analysis in line with the IIRC
principles and GRI Standards, and covered by reasonable assurance. ING has identified sensitive issues and activities across our portfolio (see Our Stance).
Show that the bank has set and published a minimum of two Specific,
Measurable (can be qualitative or quantitative), Achievable, Relevant and Time-bound (SMART) targets, which address at least two of the identified ‘areas of most significant impact’, resulting from the bank’s activities and provision of products and services.
ING targets a year-over-year increase in the number of customers who feel financially empowered (SDG 8).
We will continue to monitor and report our progress towards aligning our portfolio with the well-below two degree goals of the
Our 2020 Climate risk report (p.31) describes the next steps in implementing the TCFD recommendations.
▪ ING.COM->Sustainability->The world around us- >Reporting->2020 Terra progress report; ▪ ING.COM->Sustainability->The world around us- >Reporting->2020 Climate risk report; ▪ ING.COM->Sustainability->The world around us- >Reporting->2020 Human rights update; Please provide your bank’s conclusion/statement if it has fulfilled the requirements regarding Plans for Target Implementation and Monitoring.
In 2020, we met our targeted increase in the number of customers who felt financially empowered.
Sector-specific progress is disclosed in our 2020 Terra progress report (p.15).
Terra is an engagement-driven approach supporting existing clients’ transition pathways. ING can engage business clients using the Terra Climate Alignment Dashboards (CAD).
Our ESR policy outlines minimum requirements for new clients and improvement targets for existing clients.
ING engages Wholesale Banking clients in sectors with material impacts on the environment and society. An overview of these sectors is available in our ESR framework.
ING Group Annual Report 2020 428 4.1 Describe which stakeholders (or groups/types of stakeholders) your bank has consulted, engaged, collaborated or partnered with for the purpose of implementing these Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders and what issues were addressed/results achieved.
▪ ING.COM->Sustainability->The world around us-> How we engage; ▪ ING.COM->Sustainability->The world around us- >Memberships; ▪ ING.COM->Sustainability->The world around us->UN
ING has signed the Collective Commitment to Climate Action whose implementation is covered by the same governance structure.
Principles over the last 12 months (up to 18 months in your first reporting after becoming a signatory) in addition to the setting and implementation of targets in minimum two areas (see 2.1-2.4).
Show that your bank has considered existing and emerging international/regional good practices relevant for the implementation of the six Principles for Responsible Banking. Based on this, it has defined priorities and ambitions to align with good practice.
Over the past year, ING published our second Terra progress report, which for the first time outlines our climate alignment methodology and targets for all nine of the loan-book sectors in the Terra scope. We also published a stand-alone climate risk report which provides an update on our progress toward implementing the TCFD recommendations. Both reports outline next steps for the coming 12 months.
In the past year, ING conducted client engagements on our salient human rights issues following the UNGP framework. Key results and learnings are reported in our 2020 Human rights update.
▪ ING.COM->Sustainability->The world around us- >Reporting->2020 Terra progress report; ▪ ING.COM->Sustainability->The world around us- >Reporting->2020 Climate risk report; ▪ ING.COM->Sustainability->The world around us- >Reporting->2020 Human rights update; ▪ ING Group 2020 Annual Report->How we make a difference.
Our Human Capital Return on Investment (HCROI) provides an indication of ING’s profitability in relation to total employee costs. In 2020, we saw a decrease in HCROI to 2.12 from 2.38 in 2019 as our total operating and employee-related expenses grew, whereas our revenues declined, both heavily affected by the impact of Covid-19.
EUR million Per FTE EUR million Per FTE EUR million Per FTE
▪ We will reduce our scope 3 CO2e emissions from business travel by airplane and car by 25 percent by year-end 2022 (base year 2014).
▪ We will reduce energy consumption by 65 percent by year-end 2030 (new target, base year
▪ We will maintain a standard for transparency about our progress by disclosing material environmental performance indicators in our annual report.
Our progress: ▪ Our extrapolated CO2e emissions of Scope 1 & 2 decreased by 76 percent in 2020 relative to our base year of 2014.
▪ Our extrapolated CO2e emissions of Scope 3 decreased by 73 percent in 2020 relative to our base year of 2014.
▪ Our residual waste decreased by 52 percent in 2020 relative to our base year.
We offset 100 percent of our operational carbon emissions through the purchase of Voluntary
Carbon Units (VCUs), with the majority originating from a high impact Acre Amazonian Rainforest
By granting land tenure and providing agricultural training to local communities, trees are kept standing, drawing down carbon from the atmosphere and protecting the area’s rich biodiversity. The portfolio is verified and validated to the Verified Carbon Standard (VCS), and has achieved Gold Level status under the Climate Community and Biodiversity (CCB) Standard.
2 The Total energy is the sum of all energy types used. The total can deviate from the sum of all categories due to roundingup to megawatt hours.
2 Scope 1 emissions comprises emissions from our use of natural gas and fuel oil, and Scope 2 comprises emissions from our use of electricity, renewable electricity and district heating. Data collated in scope 1 and 2 only comprises the energy used in buildings where ING has management control and includes office buildings, data centers and retail branches. For electricity generation and heating oil the 2020 International Energy Agency emissions factors are used. For natural gas, district heat and transmission losses, we employ emissions factors from DEFRA 2020.
3 Our Scope 3 emissions comprise emissions from business travel by air and car. Emissions through our lending and investments (Scope 3, category 15) are reported using carbon intensity metrics in annual Terra progress reports, available for download at ing.com. For air travel, we gather information on short, medium and long-haul flights. When hauls are unknown, an average is used. For air travel we employ emissions factors from DEFRA 2020. For car travel data is derived from business travel of lease cars, rentals and declared kms when private vehicles are used for business travel. As lease cars are also utilized by employees for private purposes, we assume that 30% of all kms driven in lease cars are for business purposes. This is the reported number unless a different threshold is applied locally. Car emissions factors for business and logistics from the Netherlands, Belgium, Poland, Germany, France, Luxembourg, Spain, Italy and the United Kingdom have been updated using a bespoke emissions factor. This factor is based on local country data from our car lease supplier on the respective average fuel efficiency of a country’s vehicle fleet. We also apply a 34% uplift to these figures in line with DEFRA
guidelines. For countries where local data is not available on vehicle efficiency we apply the standard 2020 DEFRA emission factor for road vehicles.
Activity data is gathered through an online Data Management System (DMS) and is initiated and overseen by the global ING
(UNEP FI). We seek external direction and validation of our sustainability priorities by endorsing international frameworks such as the UN Global Compact, the OECD Guidelines for Multinational
In January 2020, stakeholders expressed their concern over alleged human rights violations relating to an ING-financed project off the coast of Angola’s capital Luanda.
Angola. We ensured the loan was exclusively intended for dredging and that no finance reached the consortium partner. All payments under the loan were made directly to Van Oord.
ING had conducted thorough due diligence based on an Environmental and Social Impact
ING condemns the practice of forced evictions. Resettlement of communities is only to take place in exceptional cases and only with due care and in accordance with best practice. Fair compensation and preferably livelihood restauration should be provided by the party performing the resettlement.
Arctic. We have limited indirect exposure to certain activities in the Artic through our clients. These may include equipment supplies for oil and gas companies and the transportation of goods and supplies for oil and gas companies.
In August 2020, NGOs World Animal Protection and Fair Finance Guide Netherlands, relying on data from civil society research provider Profundo, published the report Funding destruction of the Amazon and the Cerrado savannah. The report draws links between deforestation from cattle ranching and soy production in Brazil and soft commodity producers and traders. The report accuses Dutch pension funds and banks of complicity in deforestation.
Profundo, released a report accusing Dutch banks of insufficient gender equality due diligence of their clients and among their own workforce. The report, From glass ceilings to factory floors: Dutch banks' actions on gender, considers the banks’ credit exposure to the construction, mining, electronics, paper and forestry and apparel sectors to be a proxy for financing gender inequality. The report also assesses women representation at the board level and concludes this to be insufficient in the Dutch banking sector.
Bloomberg Gender Equality Index. The Index features companies committed to an equal and inclusive workplace.
In October 2020, a civil society organisation representing a local community, surrounding a mine in
In August 2020, NGOs Stand.Earth and Amazon Watch released the report European Banks Financing
Trade of Controversial Amazon Oil to the U.S. The report describes how much of the oil production in
ING does not finance the exploration or production of oil and gas in the Amazon in Ecuador. ING does finances the trade of commodities, including Ecuadorian oil. In response to concerns expressed by local indigenous people, considering the risks to people in isolation in times of the pandemic, and the potential impact of oil exploration on the surrounding ecosystem, ING decided to conduct a review of its indirect exposure via Ecuadorian oil trade. While this review takes place ING will not enter into new contractual agreements for the financing of oil and gas trade flows from Ecuador.
As part of its Asia Sustainable Finance Initiative, WWF released an update to its Sustainable Banking
This Annual Report contains the Reports of the Executive Board and Supervisory Board as well as the
prudential supervision and regulations, including in relation to stress tests and regulatory restrictions on dividends and distributions, (also among members of the group) (15) regulatory consequences of the United Kingdom’s withdrawal from the European Union, including authorizations and equivalence decisions (16) ING’s ability to meet minimum capital and other prudential regulatory requirements (17)
application of bank recovery and resolution regimes, including write-down and conversion powers in relation to our securities (19) outcome of current and future litigation, enforcement proceedings, investigations or other regulatory actions, including claims by customers who feel mislead and other conduct issues (20) changes in tax laws and regulations and risks of non-compliance or investigation in connection with tax laws, including FATCA (21) operational risks, such as system disruptions or failures, breaches of security, cyber-attacks, human error, changes in operational practices or inadequate controls including in respect of third parties with which we do business (22) risks and challenges related to cybercrime including the effects of cyber-attacks and changes in legislation and regulation related to cybersecurity and data privacy (23) changes in general competitive factors, including ability to increase or maintain market share (24) the inability to protect our intellectual property and infringement claims by third parties (25) inability of counterparties to meet financial obligations or ability to enforce rights against such counterparties (26) changes in credit ratings (27) business, operational, regulatory, reputation and other risks and challenges in connection with climate change