This report contains information about our financial and non-financial capital inputs, outputs and impacts that our stakeholders can use to assess how we create value. We disclose our results, strategy and management approach in the context of external developments, as well as risks and opportunities. Our ambition is to continue to improve the integration of our financial and non-financial disclosures year by year. The reporting organisation is ING Groep N.V. and its subsidiaries. The last time we published an annual report was on 5 March 2020, covering the year 2019. This report on the year 2020, was published on 11 March 2021.
In this report, ‘ING at a glance’, the sections Strategy and performance, Risk management and
We continuously listen to our stakeholders and adapt our strategy and reporting to meet their evolving expectations. For our materiality analysis we consulted key stakeholder groups in a qualitative and quantitative engagement process. Please refer to the Stakeholder engagement section in the Nonfinancial appendix. The results of this materiality analysis were used to define the content for this report, which is reviewed and approved by the Executive Board, including the materiality disclosures.
This report is intended to inform key stakeholder groups that affect, and are affected by our business.
This includes investors and shareholders, regulators, supervisors, employees, customers, government authorities and non-governmental organisations.
This report, including the Non-financial appendix, is prepared in accordance with the GRI Standards
Core option and the Dutch Accounting Standard 400. The content and quality criteria specified by the standards, including sustainability context, stakeholder inclusiveness, materiality, completeness, balance, comparability, clarity, timeliness, accuracy and reliability, are integral to our reporting process.
The report follows an annual cycle covering the period 1 January to 31 December. It is published on 11 March 2021. Data and content in this report and the Non-financial appendix aim to provide an accurate and balanced account of ING’s business performance, including economic, social and environmental impact in 2020. Our reporting scope and boundaries for each material topic and metric are detailed in the text where the topic is introduced, or by references to ing.com.
Assurance for the non-financial information in the Report of the Executive Board (the Strategy and performance and Risk management sections), as well as the accompanying Non-financial appendix, is provided by KPMG Accountants N.V. (KPMG). KPMG has reviewed, and provided a limited level of assurance, on the non-financial information in the Report of the Executive Board and in the Nonfinancial appendix for the year ended 31 December 2020. KPMG also audited, and provided a reasonable level of assurance, on ‘What matters most to our stakeholders’ in the Non-financial appendix, the data for the Net Promoter Score for Retail Banking, the feeling of financial empowerment and IT system availability. See the ‘Independent auditor’s assurance report’.
Financial ambition 2020 2019 Financial ambition 2020 2019 Financial ambition 2020 2019 Financial ambition 2020 2019 Financial ambition 2020 2019
Result before taxation of which income of which operating expenses of which addition to loan loss provision
ING recorded a 2020 net result of €2.5 billion, a decline of 48% from 2019. The net result was heavily affected by the Covid-19 pandemic. In the current environment, however, our digital business model continues to be a clear advantage as we added another 578,000 primary retail customers in 2020, while mobile interactions further increased.
ING Group's RoE was 4.8% compared to 9.4% in 2019. ING’s return on equity is calculated using
IFRS-EU shareholders' equity after excluding 'reserved profit not included in CET1 capital'. The 2020
ROE was affected by several sizeable negative incidentals in the P&L as well as IFRS 9 provisioning, other Covid-19 related effects, negative rates, regulatory impacts on RWA and a CET1 ratio well above our long-term ambition.
Risk costs increased to €2,675 million in 2020, or 43 bps of average customer lending (which is above ING's through-the-cycle average of ~25 bps). Approximately 30% of the 2020 risk costs were
Stage 1 and Stage 2, mainly due to Covid-19, reflecting IFRS 9-related provisioning based on macroeconomic scenarios, management overlays to reflect a delay in observed defaults that are still expected and close monitoring of the loan book. The quality of the loan book is strong with a Stage 3 ratio of 1.7%.
To several incidental items, including impairments and restructuring provisions, and higher regulatory costs), while income declined 3.7% (partly due to an impairment on our equity stake in TMB).
Retail Banking1 (number of countries with number one ranking, rolling average)
Our customer-centric approach helped us achieve a first-place ranking in six out of 14 countries, compared with key local peers.
Sustainable Investment services increased to €13.2 billion, from €9.3 billion in 2019.
HCROI, we monitor the results of our employee engagement and health surveys.
We strive to maintain a high level of system availability of our online payments channels.
1 Subject to reasonable assurance by KPMG. See ‘Independent auditor’s assurance report’.
Options on ING Groep N.V. ordinary shares or in the form of American depository receipts (ADRs) are traded on the Euronext Amsterdam Derivative Markets and the Chicago Board Options Exchange.
are required to provide updated information on their holdings once they reach, exceed, or fall below threshold levels of 3%, 5%, 10%, 15%, 20%, 25%, 30%, 40%, 50%, 60%, 75% and 95%. ING is not aware of shareholders, potential shareholders or investors with an interest of three percent or more other than BlackRock Inc. as at 31 December 2020.
Geographical distribution of ING ordinary shares (in%)1 1 Distribution based on December 2020 estimates of institutional share ownership provided by Q4 Inc. and includes ordinary shares represented by American depositary receipts.
ING’s short- and long-term credit ratings are shown in the table below. Each of these ratings reflects only the view of the applicable rating agency at the time the rating was issued, and any explanation of the significance of a rating may be obtained only from the rating agency. A security rating is not a recommendation to buy, sell or hold securities and each rating should be evaluated independently of any other rating. There is no assurance that any credit rating will remain in effect for any given period of time or that a rating will not be lowered, suspended or withdrawn entirely by the rating agency if, in the rating agency’s judgement, circumstances so warrant. ING, nor any of its directors, employees or advisors accepts any responsibility for the accuracy or reliability of the ratings.
ING Group’s approach to sustainability is shaped by our specific skills and expertise as a financial company, our vision of the future and the expectations of our stakeholders. Reviews of our performance by sustainability research and rating agencies help us to improve our strategy and policies. ING’s scores and rankings in key sustainability benchmarks show our progress.
Sustainalytics Position: 1st in market cap peer group, 10th percentile of global banks
For the most up-to-date list of upcoming events, including the 2021 Annual General Meeting and publication of our quarterly results, please see the Investor Relations section of our corporate website ing.com.
2020 was an unprecedented year for everyone at ING, and one in which we made further progress towards our strategic ambition to become a data-driven digital leader. CEO Steven van Rijswijk reflects on ING’s performance and developments in digitalisation, innovation and sustainability, while considering a year in which our digital model was put to the test.
Steven, let’s start with the obvious question, how do you look back on coronavirusdominated 2020?
The global pandemic indeed cast its shadow over the whole year, and it continues to do so – although we see light on the horizon with the start of mass vaccination programmes in many countries. Each and every one of us has been affected in some way by the coronavirus. It has placed all of us under a lot of pressure, both personally and professionally. Even so, there are positives I’m able to take from this situation.
We also see this crisis as an opportunity to build back a better world. It’s encouraging to see governments and businesses take ownership and define new ways of doing business that align economic recovery with positive environmental and social impact. I’m hopeful this marks a turning point for sustainable growth going forward. We have been supporting a number of projects that focus on longer-term economic recovery – by developing digital skills, promoting social entrepreneurship and providing financial health education. Financial health, together with climate action, is the focus of our sustainability direction. We want to create a healthy planet with prosperous people.
ING employees also received assistance in setting up suitable workspaces in their home ‘offices’, and online wellbeing information and tools were distributed to all. This included specific resources aimed at supporting parents with their home-schooling responsibilities.
The way our people held up during very challenging circumstances, continuing to deliver for our customers, has been fantastic. Seeing examples of our Orange Code in action every day – with colleagues supporting one another and helping each other to be successful - has been a source of pride for me and my colleagues in the Management Board Banking.
‘new normal’ of a post-Covid-19 world, with the health and safety of colleagues still our top priority.
We also announced a new capital plan and dividend policy. Our new long-term CET1 ratio ambition level of around 12.5 percent translates into an approximate 200 bps buffer over current minimum regulatory requirements, and while Covid-19-related uncertainties remain we will maintain our CET1 ratio well above this ambition level. The new dividend policy is a 50 percent pay-out ratio over resilient net profit, to be distributed in the form of cash or a combination of cash and share repurchases.
What stands out for you in terms of non-financial measures of success?
These achievements highlight the ongoing relevance of our mobile-first digital strategy, which has been given a boost by the accelerated digitalisation of society resulting from the coronavirus pandemic. To keep pace with the growing demand for mobile banking we’re now taking steps to build on the foundation we’ve laid over the past years and further improve the digital customer experience end to end.
ING has been undergoing a transformation these past few years, with the stated aim of
The increased focus on execution resulted in recent changes to the geographical footprint of our
Asia. We continue to serve the international needs of clients in those countries from our regional hubs in New York, Singapore and Hong Kong. Alongside the simplification of our footprint, we also decided to concentrate our efforts on a streamlined number of core clients.
In addition, we stopped our Maggie transformation programme (formerly Model Bank), which was launched in late 2016 to integrate the product offering and provide a standardised easy, personal and smart digital experience for customers in four of our Challenger markets. Given the coronavirus-related economic headwinds and our learnings from the complexities and costs of cross-border system and product integration, we instead decided to further develop our universal digital bank by focusing on the global use of ING’s technology foundation, the re-use where possible of already-developed mobile app components, and the rollout of global digital product offerings in the areas of insurance, investments and consumer lending.
You’ve stressed that data and digitalisation are your two main focus areas when it comes to executing the Think Forward strategy. Did we make progress in these specific areas?
And then there is how data and digitalisation contribute to a differentiating customer experience that is easy, smart and personal. In 2020, we made further progress in building out our global digital solutions in the areas of insurance and investments, with digital investment products in particular contributing to growth in fee income, especially in Germany, the Netherlands and Belgium. Another example I’d like to highlight is also in Belgium, where all private individual customers can now use our
OneWeb online banking solution and the mobile OneApp also used (and highly rated) in Germany and the Netherlands.
Increasing the pace of innovation is another one of Think Forward’s priorities. Did we succeed in speeding innovation up in 2020?
There’s another innovation-related priority as well, and that’s to ‘think beyond traditional banking’ by developing new services and business models. So yes, innovation remains a key component of our strategy, not only in improving the customer experience but also in supporting our income diversification and cost-containment goals.
Although the coronavirus did indeed consume much of our attention, we pressed on with our sustainability efforts. I believe that ING is already a sustainability leader in the financial sector, especially when it comes to climate action and the contribution to a low-carbon society. That view is confirmed by the external recognition we get for our environmental, social and corporate governance
(ESG) profile from independent research and ratings providers such as Sustainalytics, S&P Global and
I was humbled to be offered the role of CEO. I have worked for ING for most of my professional life, and it is truly an honour to lead this company now and into the future. It was of course challenging to take up the role in the midst of a global pandemic and its resulting economic crisis, but I did it knowing that
I aim to continue his good work by giving the organisation further focus so that we execute our Think
Our business is shaped by events and developments in the world around us. The biggest of these in 2020 was the coronavirus pandemic, which was an unprecedented public health challenge and which also caused devastating economic and social disruption.
ING has had to adapt to the implications this had for customers and employees, as well as to new market trends and stakeholder expectations. At the same time, our business continues to be affected by regulatory changes and the persistent low interest rate environment. Our coronavirus response aims to offer short-term relief as well as deliver long-term value for our stakeholders and society. Read more in ‘How we make a difference’.
To improve as an organisation we need to identify, understand and closely manage our performance on the most important topics for our stakeholders, balancing their interest whenever we make decisions. That’s why we engage with our internal and external stakeholders in various ways. We also constantly monitor external shifts in regulatory developments and market trends. Both of these give insight into which topics are most important for which stakeholders, and how these topics relate to our business. Our annual materiality assessment then helps us identify which economic, environmental and social topics we should focus on. These are highlighted in this report.
Covid-19 was declared a global pandemic by the World Health Organization on 11 March 2020.
In an effort to mitigate the economic consequences, governments introduced measures to protect households and companies. These included tax-payment holidays, guarantee schemes and compensation for heavily affected sectors in the economy. Still, the economic consequences had – and may continue to have – a significant impact on ING’s customers, employees, shareholders and other stakeholders.
ING also took steps to protect and provide relief for our customers, employees and communities. For example, we offered customers payment holidays and provided business clients with liquidity. Read more in ‘Our business’. We worked hard to safeguard the wellbeing of our employees. We built on our digital foundation and equipped employees with the necessary facilities to work from home without interrupting the high standards of service we offer customers. Read more in ‘Our people’. For communities, we encouraged our businesses and employees to donate time and funds to help address the initial challenges the coronavirus brought, as well as looking towards the future and how we can help build back better. Read more in ‘How we make a difference’.
Following a rapid implementation of sizeable policy support measures and after most economic activities were allowed to resume (subject to social distancing and hygiene measures), the economic environment turned more favourable during the summer. However, despite a strong economic rebound in the third quarter, the level of economic activity at the end of the year was still below yearend 2019 levels as a resurgence of new coronavirus cases necessitated the re-imposition of lockdown measures.
Helped by job retention schemes, the rise in unemployment was relatively mild and levelled off in the second half of the year. Despite the unemployment rate having increased, housing markets remained firm, helped by interest rates remaining low.
There was an asymmetric impact across the euro area, with southern countries (Spain, Italy) generally hit the hardest during the first wave of the coronavirus. This was partly due to the variation in the length and strictness of containment measures, the size of discretionary fiscal support, and differences in the economic importance of international tourism.
Climate change is one of the world’s most urgent problems. The International Monetary Fund (IMF)
We work with our clients to finance and facilitate their transition to low-carbon technologies. We’ve developed a comprehensive suite of sustainability products and services to help them, including green loans and green bonds. Read more in ‘Our business’.
With our Terra approach, we aim to align our loan book with the Paris Agreement’s well-below twodegrees Celsius goal in the nine sectors most responsible for climate change. In 2020, we released our second Terra progress report. The report includes quantitative results and targets for all of these nine sectors, fulfilling the commitment we made the previous year. One of these targets is a 19% reduction in our financing to upstream oil and gas by 2040 compared with 2019 levels. It’s important to note that this target is in line with the International Energy Association’s sustainable development scenario, and that it’s not static. If more or quicker action is needed and the scenario is adjusted, our target will adjust accordingly. For more details on our targets and exposure in these nine sectors, please see the latest Terra progress report on ing.com.
Climate Action (CCCA), now signed by 38 banks globally. This is the banking sector’s farthest-reaching commitment to climate alignment. ING is co-lead of the implementation of the CCCA. In December 2020 an overview was published of the concrete measures CCCA signatory banks took in the first 12 months to deliver on their commitment. ING is a founding signatory of the Principles for Responsible
Money laundering is a crime in and of itself. It also facilitates other crimes, such as people trafficking and drug smuggling. According to the United Nations Office on Drugs and Crime, suspicious transactions continue to reach as much as $2 trillion a year. This scale illustrates the scope of the problem – it is not something one bank can fight on its own.
To be more effective in our efforts to fight financial economic crime, we work closely with our peers, regulators and law enforcement. This includes initiatives with other Dutch and Belgian banks to jointly monitor transactions, and further professionalising our KYC organisation by means of internationally recognised certifications.
Structural solutions include interventions aimed at addressing undesirable behavioural patterns identified within the organisation and encouraging desirable behaviours that will positively influence
One of our top priorities is to keep our bank safe, secure and compliant and to retain customers’ trust.
Our customers trust us with their money and their data, a responsibility we take very seriously. This is supported by our global data protection policy (GDPP), which is aligned with the EU’s general data protection regulation. Our global and local data ethics councils guide our decisions around the use of data, based on ING’s Orange Code values. Read more in ‘How we make a difference’.
whistleblower reporting officer for advice. We take the utmost care to protect the identity of whistleblowers and the confidentiality of such reports in order to protect informants against retaliation.
Initiatives to further strengthen our compliance culture include various training modules on nonfinancial -risk-related topics, both for Risk and Compliance specialists as well as all staff. In addition, we carry out behavioural risk assessments to identify impeding behavioural patterns and develop appropriate interventions.
– or not, like coal. Throughout my career I’ve been involved in sustainability. In 2015, I joined ING’s global Sustainability team where I built up the environmental programme. I was in the right place at the right time. When the Paris Agreement was signed, it became clear to me that financing is crucial to achieving climate goals and that the financial sector needed to get more involved. Measurement is key to achieving the Terra objectives. Much of my team’s work is focused on understanding the impact of our portfolio in relation to climate goals and what data we need to analyse how our financing relates to those goals. Our influence goes beyond ING and its clients. Our financial institutions clients have come to us to say they’re really interested in learning from what we’ve done. So we’ve been working really hard on getting our peers up to speed. One example is our leading role in the UNEP FI Principles for Responsible Banking Collective Commitment to Climate Action.”
Delivering on our strategy is about living up to our customer promise to be clear and easy, anytime, anywhere, empowering and keep getting better. Digitalisation remains central to this and we’re adapting our processes and service models to make banking even safer, more personal, easier and smarter. Combined with mastering data, it’s how we can stand out as a bank that truly knows its customers and anticipates their evolving needs, finding innovative ways to add value, both within and beyond banking.
However, the pandemic made these levers less effective in 2020, resulting in a decrease of net interest income, as loan demand weakened in a number of markets due to strong direct government support, while the inflow of customer deposits accelerated and interest rates in non-eurozone countries significantly reduced. In response to the pressure on net interest income we introduced negative interest rates on deposits for retail customers in some markets and amplified our focus on income diversification through fee income growth, particularly in retail investment products.
The coronavirus crisis has accelerated the urgency of implementing end-to-end digitalisation, both to meet the growing demand for mobile banking and to enhance operational excellence. Operational excellence in particular helps to ensure that our customers are able to do their daily banking without disruption, even during global lockdowns, and makes it possible for employees to work safely and securely from home.
Building on what we’ve learnt and achieved over the past five years, we took steps in 2020 to further consolidate our business and reinforce alignment. This includes uniting all our Retail operations –
At the same time, the challenging external environment reconfirms the importance of scrutinising costs and looking for new ways to grow our fee income and diversify our revenues in areas beyond traditional banking.
We need to be flexible in dealing with these challenges, and with changing customer behaviour, continually weigh up benefits versus costs, apply our learnings and focus our activities. For Wholesale
Challengers Markets) and instead focusing on using and reusing existing apps and modular components to drive scaling and speed of delivery.
ING’s purpose is empowering people to stay a step ahead in life and in business. Our Think Forward strategy promises customers we’ll make banking clear and easy, anytime anywhere, empower them to make informed financial decisions and keep getting better. Where our purpose guides us, the strategic priorities set out in our Think Forward strategy help us to focus on the elements we need to be successful.
These strategic priorities are: earning the primary relationship, mastering data, being innovative to serve changing customer needs, and developing new services and business models beyond banking.
We achieve this by simplifying and standardising our products and processes, being operationally excellent, enhancing our performance culture and expanding our lending capabilities. These are the strategic enablers for executing on our strategy. See the graphics in this chapter for more information about our strategic priorities and enablers.
While many businesses struggled in 2020 to survive global lockdowns, many Big Tech companies thrived on society’s growing reliance on technology and the online economy. ING’s competitive landscape is also increasingly shaped by these companies, which offer an engaging digital experience on an open platform that meets a range of needs in one go-to digital ecosystem.
We believe platform providers are all about customer experience. They use data to pinpoint what customers need and partner with third parties to ensure there is always a fitting product or service to meet this. Platforms are empowering. To remain relevant, ING has to be where our (future) customers are, on the platforms they’re on, while maintaining the highest possible standard of integrity.
Netherlands, Belgium and Germany. We’re investing in independent initiatives such as Spanish finance app Fintonic, and we’re connecting to third-party platforms offering relevant products and services.
Through the Touchpoint platform, new and existing ING business initiatives have access to 25.2 million customers (around 65 percent of our customer base) in an internal and third-party ecosystem. It is enabling scalable business solutions that aim to harmonise the customer experience. And it connects
(APIs). The Amazon partnership was made possible by using Touchpoint to integrate fintech Lendico’s lending platform for small and medium-sized businesses with ING in Germany.
‘Mastering data’ below and in ‘World around us’, ‘and ‘Our business’
Material topics: customer privacy, culture, ethics and integrity, digitalisation and interconnectivity, cyber resilience
Data on customers and their transactions is also essential in the fight against money laundering and other financial economic crime. Not least, data drives innovation. It is the main ingredient for artificial intelligence and robotics solutions.
However, to make data meaningful it needs to be sorted, harmonised and put into context. The accuracy of our models relies heavily on the quality of the data that’s used to develop them. It’s essential to have one common approach for using and storing data. ING’s data management strategy includes standardised data definitions (ING Esperanto) and data models (Esperanto Warehouse Model), which contribute to the availability, quality, integrity, usability, control and governance of our data.
We acknowledge the need to protect people’s privacy and are committed to handling our data safely and being honest about how it’s used. This means we inform our customers and employees about how we use their data and respect their privacy when processing it. Read more about our approach to data privacy in ‘How we make a difference’.
Analytics Unit is responsible for coordinating these activities globally and aligning them with our business strategy, as well as building one analytics and data community. To enhance our data science capabilities – which we have identified as one of the ‘Big 6’ capabilities ING needs to succeed – we have an Analytics Academy, we’ve added an analytics track to our International Talent Programme for graduates, and we collaborate with academic institutions like Dutch Delft University of Technology (TU
Delft) on artificial intelligence research. Read more about the ‘Big 6’ capabilities in ‘Our people’.
(EWS) monitoring tool, which should ultimately help reduce risk costs. We’re also using analytics to develop acceptance models for consumer and business lending in Austria, Belgium, the Netherlands and Spain, which help lower risk costs and increase acceptance rates. New collections models for the
In addition, we stepped up our experiments and experience with chatbots and are creating value and scale. The benefits for customers include 24/7 contact, fewer human errors and a simpler user experience. In the Philippines, we launched a virtual assistant that directs customers to their needed answers. Similar initiatives have been or will be rolled out to other countries. In Germany, ING’s virtual assistant pING answered 7.3 million customer questions in 2020, recognising 94 percent of queries on current accounts (the best chatbot out of 22 tested in various industry sectors), while our Turkish chatbot INGo not only answered customers questions, but also approved 547.6 million lira worth of personal loans (89 million lira in 2019).
Innovation at ING is about creating a differentiating experience for customers. As such, it’s at the heart of our Think Forward strategy. We rely on innovation to remain relevant to our customers and live up to our purpose. Developing truly disruptive products, services and experiences is also a prerequisite for realising our platform ambitions and moving beyond banking.
So far, our innovation focus has allowed us to turn great ideas into products and services that customers really need. Smart money app Yolt now has more than 1.6 million registered users.
With the creation of ING Neo we’re aiming to increase the speed and impact of our innovation by bringing together initiatives in Wholesale Banking, Retail Banking (platforms and beyond banking activities), the Chief Innovation Office and our venture capital vehicle, ING Ventures.
Notary on Corda), the corporate finance category (CoorpID) and payments (FINN Banking of Things)
Innovation in numbers 444 Innovation Bootcamp ideas >200 fintech partnerships entrepreneurs backed by ING Ventures
In November, we hosted the first Innovation Summit for all employees. The three-day digital event explored ING’s impact on the lives of customers and employees, shed light on global digital trends and showcased our latest innovations. It was streamed to over 30 ING countries and reached approximately 1,500 unique users.
Nobody knows what the future looks like or the technologies that may emerge. We recognise we don’t have all the skills and knowledge in-house and we’re open to investing, partnering and building with others.
Fintonic (Spanish finance app), Cobase (multi-banking platform for corporate clients), Ascent
ING partners with those who look at banking from a different perspective. Companies like Scalable
Capital in Germany, a robo-advisor, which attracted a billion euros in assets under management in its first 2.5 years. Or Eigen, a natural language processing fintech that offers ING a strategic capability in the intelligent operations domain. Deployed in use cases across retail and wholesale banking, Eigen is contributing to ING’s digital transformation, creating tangible value for customers and employees by applying machine learning in areas such as corporate lending and SME banking.
In November 2020, in light of the impact of Covid-19 on the economy, which required us to reprioritise and reassess our programmes, we decided to stop our activities for Cumulus Park Studios. Part of the
Studios is a collaborative initiative with local government and educational institutions to drive innovation and co-creation around the themes of urbanisation and digital identity. We remain committed to further developing the innovation district and will continue to collaborate with our district partners on a lower ambition level.
Standardised products, systems and processes, shared services, one IT infrastructure and one Way of Working lay the foundation for the superior digital experience we strive to deliver. We believe this allows us to respond more quickly to changing customer needs and low-cost competitors by becoming more cost-effective, costefficient and agile, and by bringing new products and services to market faster.
ING promises customers we’ll keep getting better. This includes accelerating the digitalisation of end-to-end processes for a frictionless customer experience and greater efficiency. It’s also about ensuring safe and secure operations, stable IT systems and platforms and the highest standards of data security.
To deliver a differentiating customer experience globally we are streamlining our products and processes, enhancing operational excellence and harmonising our customer engagement platforms, supported by a global technology foundation. This foundation includes shared data lakes, cloud solutions and modular IT building blocks. It’s also about monitoring and executing regulatory programmes globally that aim to ensure ING is a safe, secure and compliant bank.
To accelerate the execution of our Think Forward journey, we launched a series of transformation programmes in 2016 to unite similar businesses and bring us closer to one mobile-first digital platform offering one ING experience everywhere. These included: • Unite be+nl to combine the respective strengths of the Netherlands and Belgium.
• Maggie (formerly Model Bank) to standardise the customer experience and product offering in four
Updating legacy IT systems with new technology standards and global solutions will also contribute to greater efficiency as we move towards becoming a global digital bank.
The Wholesale Target Operating Model (WTOM) programme has come to a natural conclusion as it achieved cost, risk and income benefits for the Wholesale Banking franchise globally, the result of extensive work over the last years to replace legacy systems, applications with target solutions, and create a range of shared operational services. We have now decided to end WTOM and commence with digitalisation-orientated programmes in our Transaction Services, Lending and Financial Markets businesses.
ING Group Annual Report 2020 31 foundation and OnePipeline. This last programme supports the engineering journey from idea to working code that underlies our digital services and can easily be reused by other engineers worldwide.
We changed the top structure of the Tech organisation in January 2021, to better align with ING’s digital and data-driven ambitions. This has brought all the assets belonging to the banking technology platform under one senior management line, helping to further the consumption and delivery of the features of the banking technology platform and improve impact.
Related to this, the ING Private Cloud (IPC) is the target platform standardising our IT infrastructure. It’s where we store and process data and IT services such as our mobile phone apps to give customers a consistent experience in a secure and reliable way. Unlike traditional infrastructure, cloud computing enables pay-as-you-go usage, elasticity and full management by the user. To keep up with global usage, scalability, availability and delivery speed, ING is adding public cloud computing to our infrastructure offering. By end-2020, IPC was used in 15 countries. Around a quarter of global infrastructure now runs on IPC, up from 15 percent at the end of 2019.
Data lakes serve as digital repositories for all the internal and external data we collect, making it easier to share it across the company. Having one ‘home’ for data is in line with our strategy of simplifying our banking systems. Aggregating our data allows us to exchange information and knowledge with each other more easily. To enable this data exchange we’ve created a universal data language called
ING Business Shared Services BV (IBSS) is a fully-owned service company employing around 10 percent of ING colleagues globally. Its shared service centres in Bratislava, Manila, Katowice, Warsaw and
Bucharest contribute to ING’s digital transformation and cross-border scalability by centralising operational and IT support tasks in areas such as global data management, Tech services, nonfinancial risk and compliance, KYC, data analytics and modelling.
Academy keeps engineers updated on the latest technology. We are pursuing initiatives to improve diversity in our teams. These include the ING Women in Engineering days and the Sparks community at ING in Australia, which aims to inspire and empower women in technology.
Government measures to curb the spread of Covid-19 in ING countries required us to adapt quickly to extended remote working. This accelerated certain IT programmes, such as the roll-out of cloud-based tools, enabling online collaboration and meetings. Remote working brings certain increased operational risks with respect to information security, data protection, the availability of key systems and infrastructure integrity. In 2020, ING continued to focus strongly on managing exposure to these risks and took steps to increase the efficiency and effectiveness of our IT infrastructure to ensure the continuity of our business from outside the office.
We also have preventative measures in place that continuously test our resilience against cyberattacks and attempts to gain unauthorised access to our systems. These include a dedicated cybercrime expertise and response team and ‘ethical’ hackers. Read more in ‘How we make a difference’ and ‘Risk management’.
When and how our employees return to the office remains hard to predict and largely depends on the situation in each country. When it is safe to do so, there are rotation schemes to allow a controlled return to the office. We will also pilot global principles that will guide our future way of working in the post-coronavirus world. These are based on feedback from employees and aim to balance the advantages of working from home and working from the office. We’re taking a step-by-step approach that provides a degree of flexibility for local implementation and respects local labour laws.
“We make sure ING’s systems are safe from cybercriminals” How Saina makes a difference
“My job is to prevent online threats and security incidents that could impact ING. I work in the Security
Singapore. We’re available 24 hours a day, seven days a week. A typical day for me starts with a walk along the Amsterdam canals. Before leaving home, I always lock my door to keep out unwanted visitors. The same applies online: hackers will do everything they can to gain entry into our systems.
As a bank, we have a role in promoting and supporting economic, social and environmental progress. We want to help create a healthy planet with prosperous people. Our approach is inclusive and collaborative: working with others to ultimately make a bigger impact.
We believe that no single sector, much less one bank, can solve global issues like the climate crisis, money laundering or the impact of Covid-19 on people’s lives and livelihoods. When it comes to tackling challenges like these, we’re more dependent upon united and collective action for real positive change than ever before. It’s an opportunity for governments and businesses to work together on sustainable ways to revive the economy, protect the financial system against financial and economic crime and, in addition, address the climate crisis facing our world.
ING’s biggest contribution to society is through our business: by fulfilling our function as a bank to process payments, provide loans and other financial services, and keep customers’ money and their data safe and secure. We also have an important role in helping to prevent the financial system from being misused for crimes such as fraud, money laundering and tax evasion. With the migration to digital and mobile banking, operational and cybersecurity resilience remain absolute priorities. We need to ensure our networks are safe and secure for customers and employees, especially when they’re accessed remotely. Read more in ‘Safe, secure and compliant’ below.
There are many ways a bank can create value: it can grow financial capital, focus on human capital, produce intellectual capital and through the effects on natural capital. Customers entrust us with their financial capital. By meeting their needs and growing their capital in turn yields dividends to shareholders. We try to positively grow human capital by caring for our employees and equipping them for the future workplace. At the same time, we need to be aware of potential negative value created through our actions. For instance, financing carbon-intensive sectors puts natural capital (the environment) at risk. One of the ways we can mitigate this is through our Terra approach to steer the impact of our lending portfolio to support the goals of the Paris Climate Agreement.
In living up to our purpose to empower people to stay a step ahead in life and in business, we are guided by our customer focus, while also balancing the interests of our other stakeholders – as well as our planet and its people. Now, more than ever, there is an opportunity for us to step forward and help the world build back better.
In our value creation model we show how value flows through our business and what we do, focusing on climate and financial health, as well as employees, innovation, and risk mitigation, for example. This is all brought together and underpinned by ING’s Think Forward strategy.
ING worked with other banks to develop the open-source methodology used to measure progress in each of the nine sectors most responsible for climate change. We want this to become an industrywide standard as we believe it will increase the impact of the financial sector. We also work closely with our clients to support their transitions with products, finance and insights. Read more about our
We are also here to mitigate and manage climate risks. ING recently published its first climate risk report. Gaining a better understanding of the impact of climate risk on our business will make us more resilient and prepare us to deal with what may be ahead. Read more in ‘Risk Management’.
Under the prosperous people pillar we also include human rights. Every person, everywhere has the right to be treated with dignity and have their interests considered equally. ING and its clients have the potential to impact human rights through their operations, not only as employers but also through their supply chains. We work to influence and support our business partners to respect human rights in multiple ways. Our environmental and social risk (ESR) framework includes an overarching policy on human rights to guide us when assessing the clients and transactions we finance.
Through our approach to sustainability in the areas of climate action and financial health, and through the clients and projects we finance, we contribute to the following Sustainable Development Goals
Safe, secure & compliant keeping ING safe, secure and compliant by countering financial economic crime and cybercrime
••connected our global pre-transaction screening tool to all countries in scope
••joined four other banks to collectively monitor payment transactions (Transaction Monitoring Netherlands)
Prosperous people promote respect for human rights and develop products, tools and research to improve people’s financial health
Employees provide a differentiating experience that keeps employees motivated and engaged
••human capital return on investment score of 2.12 1 Subject to reasonable assurance by KPMG
ING serves over 39.3 million individual customers, as well as small and mediumsized businesses up to multinational corporations and financial institutions
In the first phase, at the start of the outbreak in February, ING mobilised resources in 25 countries to help local organisations with relief efforts in their communities. The primary focus of these projects was to provide emergency support for hospitals, health organisations and organisations addressing food security for people impacted by the crisis. This included hardest-hit Spain and Italy, where we supported healthcare workers and the delivery and distribution of medical supplies to hospitals and first responders. We raised and contributed over €8 million to projects in the 25 countries during this initial phase.
UNICEF’s Power for Youth has empowered over 500,000 adolescents with financial skills
The ING Nederland Fonds supports ~25 projects including debt relief training for freelancers and financial coaching for young people
Netherlands, ING is supporting Humanitas ‘Get a Grip,’ which aims to help young people aged 16 to 27 stay on top of their finances, offering mentors and debt counselling if needed. In Madrid, where 46 percent of families suffered a drop in income as a result of the coronavirus, ING is partnering with the Nantik Lum Foundation on an initiative to increase the financial health knowledge of social workers so they can advise people seeking help. It’s aim is to reach more than 25 percent of the city’s social service centres, which could have a positive impact on up to 100,000 people.
• Digital skills training to help unemployed people into sustainable jobs in Poland, UK, Netherlands,
Italy and Belgium. One initiative is a partnership with the King Baudouin Foundation in Belgium to upskill disadvantaged Belgians. Run by an organisation called BeCode, it expects to train nearly 1,000 candidates and support them with job placements in 2021.
• Incubators and accelerator programmes for sustainable and social enterprises in Bulgaria,
In addition to the projects we supported in response to the pandemic, we believe we can make the biggest impact on improving financial health in three ways: information, innovation and involvement.
To promote people’s financial health, we focus on giving them knowledge and tools to make informed decisions and gain more control over their finances. Read more about innovative ways we’re empowering people to save and invest their money in ‘Our business’.
• Almost 1,000 colleagues in the Netherlands participated in a training programme offered by Nibud, the national institute for family finance information, to learn how to identify signs of financial distress among friends and family and help them find the right support. They can also train to mentor youth with financial difficulties.
In the European Union, 42% of households – approximately 215 million people – are not financially empowered and struggle to make ends meet. The Think Forward Initiative (TFI) aims to empower people to make sound financial decisions. It is an open source collaboration between ING, Deloitte, Dell
Technologies, Amazon Web Services, IBM and the Centre for Economic Policy Research, supported by a network of 1,900 individuals from a broad range of organisations. It focuses on adding value through its three hubs.
• Pirkx, which offers a benefits package for self-employed and contract workers (pirkx.com)
During the year, the Research Hub published several academic research reports on topics such as ‘how convoluted language affects the way consumers understand and purchase financial products’,
‘financial literacy and attitudes to cryptocurrencies’ and ‘how financial distress relates to mental health’.
Through TFI, ING aims to provide value to both our customers and our communities. In 2020, we reached 38.5 million people in 13 European countries by sharing TFI research insights and solutions with our business units and the start-ups participating in the Growth Track programme. TFI’s vision is ultimately to empower 100 million people to make better financial decisions.
As we operate in a dynamic and challenging environment, we are continuously learning and improving while getting to a more sustainable and mature level in exercising our role as a gatekeeper that fights financial economic crime.
According to the United Nations Office on Drugs and Crime, around $2 trillion in criminal money is laundered through the international banking system each year. They use schemes such as shell companies, smurfing (when large transactions are broken up into small amounts to avoid detection) or fake invoices. The scope of the problem was illustrated in media reports in September, in which several banks, including ING, were mentioned in respect of ‘suspicious activity reports’ filed some years ago.
Preventing money laundering and maintaining the integrity of the financial system is challenging for all banks, given the constantly changing environment and pace at which criminal activities evolve. We can be more effective in our efforts to identify and combat threats if we work with other banks, law enforcement, regulators and government bodies to collectively fight financial crime, and by sharing intelligence at a national and international level.
(TMNL). In the future, TMNL aims to jointly monitor the combined payment transactions of all five banks – currently an estimated total of 12 billion transactions a year, or 33 million a day in the
Criminals are harnessing technologies like artificial intelligence and machine learning to become ever more sophisticated. These technologies can also help us to counter this threat. For example, Hunter is an AI-powered anti-money laundering tool that has the predictive capability to detect (emerging)
documentation in a secure way. Similarly, the ING Lab in Singapore is working on a tool to help banks that serve other financial institutions eradicate the duplication of KYC documentation.
KYC is a crucial element of being a safe and compliant bank. It aims to ensure we only engage with and do business with people and companies that meet regulatory requirements and are within our risk appetite. This includes carrying out customer due diligence checks and monitoring transactions for unusual activities, as well as assessing the environmental and social impact of the companies and projects we finance (see the Credit risk chapter for more information). At year-end, we had more than 4,000 people working on KYC globally.
We’re constantly working to strengthen our KYC implementation. One of the ways we do this is through the global KYC enhancement programme. It consists of enhancing customer due diligence files
To provide wider, more holistic coverage on sanctions, transaction monitoring and screening we are bringing together all regulatory developments and activities related to financial economic crime within our regular controls frameworks aimed at ensuring we comply with sanctions while preventing money laundering, terrorism financing, tax fraud, bribery and corruption.
For more information about developments in 2020, please see ‘Know your customer’ in the Compliance risk chapter.
Within the KYC process we carry out behavioural risk assessments to identify impeding behavioural patterns and their drivers. When necessary, we design interventions to mitigate the risks. These include senior leadership workshops and employee ‘nudge’ labs, which aim to design subtle triggers that steer behaviour in the desired direction and can positively improve KYC execution. Read more in
Conduct that builds on the ING values and behaviours in our Orange Code, which puts integrity above all.
As banking becomes more and more digital, customers expect to have round-the-clock access; their tolerance for technical failures is low. Reputation starts with satisfied customers, so we have to ensure our systems are available whenever our customers need them. At the same time, the demands on our network are growing as our employees now also rely on being able to connect to their digital workplace safely and securely at all times. The steps we took in 2019 to increase the efficiency and effectiveness of our IT infrastructure, as well as continuously managing IT risk, meant that in combination with some extra effort from our IT infrastructure teams, we were able to facilitate the switch to working from home for the majority of employees within days. We will continue our efforts aimed to ensure we meet the access needs of both our customers and employees as we move towards a ‘new normal’ after Covid-19.
Trends observed during the year, such as accelerated digitalisation, growing customer use of digital channels and working from home, were assessed on their additional risks and compensating measures were taken or are being initiated. The increasingly professional and automated techniques criminal networks use to gain unauthorised access to people’s money and their data continue to give cause for concern. To counter this, ING has preventative measures in place to retain customers’ trust.
Cybercrimes like hacking, phishing and spoofing can lead to fraud, which can affect our business and our customers. In the Netherlands, customers of several banks became the target of a spoofing scam in 2020 that tricked them into transferring money from their accounts. ING was one of the banks that reached an agreement with the Dutch Ministry of Finance to compensate these victims for their financial losses.
Cybersecurity has been identified as one of the ‘Big 6’ capabilities ING needs to stay a step ahead in the digital environment. (Read more about the ‘Big 6’ in ‘Our people’). Focused training and awareness of all our employees contributes to making ING a safe, secure and compliant bank and helps us maintain the trust of our customers. In 2020, we ran an internal campaign to highlight the threat of phishing and rolled out a cybersecurity e-learning for all employees. For specific employee roles there is a security curriculum that is regularly adjusted to stay up to date with developments.
Cybercrime crosses sectors and borders and we therefore encourage a common, cross-industry response in collaboration with other companies and government authorities. We maintain a strong global cybercrime alliance with the financial industry and recognise the value of an effective regulatory framework. We value cybersecurity led by actual threats rather than rule-based compliance.
ING is bound by global and local data protection laws, which can differ from country to country, and we are transparent about what we do with the personal data of customers, employees, suppliers and business partners. Our approach can be summarised as ‘the right people use the right data for the right purpose’. In line with the EU’s general data protection regulation (GDPR), we only process personal data for legitimate business purposes. More information can be found in the Privacy Statement on our websites.
IHD is raising funds to help people with limited or no income at this time.”
These included contactless payments, more flexibility on loan and mortgage repayments, financial advice and partnering with business clients big and small to support them in the most appropriate way. We also strived to provide uninterrupted access to our banking services. In 2020, weighted system availability1 for Retail Banking customers in the Netherlands and Belgium was 99.6 percent and for Wholesale Banking clients worldwide system availability was 99.9 percent.
Reduced economic activity during the year meant demand for consumer and business loans was lower in a number of markets, and the ongoing low/negative interest rate environment pushed our net interest income down. Yet our results remained resilient throughout the year. Demand for mortgages remained healthy and we were able to grow our fee income as considerably more customers chose
At the same time, to provide our 39.3 million customers with a differentiating and engaging experience everywhere and to move closer to becoming a universal data-driven digital leader, we aligned our
We also centralised innovation, introduced ‘do your thing’ - ING’s first global tagline – and harmonised our activities for small and medium enterprises (SMEs) and mid-corporate clients in seven countries in a new Business Banking segment.
In Wholesale Banking we deepened our focus on core clients, supported by steps to build differentiating value propositions to meet their needs. This also supports our strategy to diversify income by generating more fee-based business. We continued to focus on digitalising our processes and streamlining our organisation to deliver faster and better to clients. As part of the focus on core clients, we announced measures to simplify our geographical footprint, withdrawing from South
America and selected Asia markets while continuing to serve the needs of clients in those markets from our regional hubs.
Our Retail Banking business line offers private individuals a full range of products and services covering payments, savings, insurance, investments and secured and unsecured lending. This segment also includes self-employed entrepreneurs, micro businesses, small-to-medium enterprises (SMEs) and midcorporate companies who are served by our Business Banking proposition in several European countries. These business customers earn revenues of up to €250 million and our goal is to help them manage and accelerate their business. Wholesale Banking offers corporate clients advisory value propositions such as specialised lending, tailored corporate finance, green structuring and debt and equity-market solutions. It also serves their daily banking needs with payments and cash management, trade and treasury services.
• Sector-focused client business in lending, capital structuring and advisory, transaction services and financial markets.
In the Netherlands, 85 percent of all card payments in 2020 were contactless via plastic cards and third-party services like Apple Pay, as well as our own Android solution in the banking app, which is now also available in Australia, Poland, Romania, Germany, France, the UK (via Yolt), Italy and Spain.
Driven by accelerating digital behaviour of our customers, the use of mobile payments increased rapidly against a backdrop of lockdowns and other Covid-19 measures, both as a share of total card payments and total contactless payments. Customers appreciate not having to enter their pin code on a terminal.
New mortgage customers in Australia can now validate their identity by video; video calls to advise customers on investments and other matters replaced face-to-face contact in Belgium and the
May we collected feedback from over 18,000 businesses in six countries through regular pulse checks to gain insight into their needs.
While it is impossible to predict how the pandemic will develop, additional lockdowns across Europe in the autumn and the phasing out of related payment holiday schemes and other support measures could potentially lead to more business insolvencies and unemployment. This could lead to more customers getting into financial difficulties and to higher levels of default.
More information on the impact of Covid-19 on ING as well on the related risk measures taken to address it can be found in the ‘Risk management’ section. The financial impact of the coronavirus crisis on our business can be found in ’Our performance’ and throughout the financial statements section of this report.
In times of crisis, companies need to be able to make swift decisions and want a financial partner they can trust to be there for them. For many businesses, their most urgent initial need was support with liquidity, particularly when markets are as volatile as today.
In the Netherlands, we dedicated €1.1 billion for loans to SMEs. Part of these funds will be guaranteed by the European Investment Bank and €702 million of these loans will be sold against a favourable interest rate.
ING proactively contacted Wholesale Banking and Business Banking clients to discuss ways to ease the impact on their businesses, which in some cases was significant. By monitoring the business landscape to better understand which industries are most impacted we can tailor our support and solutions to specific industries and determine who needs our help the most.
Managing money is one of the leading causes of stress for people around the world as many struggle to meet their day-to-day needs or plan for their future. This was amplified during the Covid-19 pandemic. ING offered budgeting and debt relief advice and guidance to customers in financial 1 Subject to reasonable assurance by KPMG
difficulty in partnership with organisations like the Dutch ‘Geldfit’ website, and financial counselling services in Australia and Romania. Read more in ‘How we make a difference’.
Belgium, we’ve partnered with fintech Minna to manage customer subscriptions (see ‘Platform thinking’ below).
As a result of our financial empowerment activities, 27.8 million people (71 percent of our customer base) felt financially empowered by ING in 20201. In 2019, this was 25.9 million or 67 percent. Our ambition for 2022 is for 30.2 million customers to feel financially empowered by ING.
We still have a lot to do to become the leading data-driven digital bank we aspire to be, but we also have to remain flexible in dealing with the impact of the coronavirus pandemic, changing customer behaviour, persistently low/negative interest rates and increasing regulation. That means continually weighing up benefits versus costs, consistently using what we have already developed, quickly applying learnings and best practices, and taking decisions to focus our activities to ensure we deliver on our strategic priorities.
Building on what we’ve learnt and achieved over the past years, we adapted our Retail organisation in 2020 to increase alignment around key priorities that will contribute to our ambition to become one global digital bank. Led by the new global Retail Banking management team, we will focus on rolling out global digital propositions converging towards a common engagement platform. And we are looking for new ways to be relevant to our customers and generate alternate revenue sources.
Of course, keeping our bank safe, secure and compliant remains a priority for ING. Customers trust us to protect their money and their data. That trust is our licence to operate.
In 2020, we remained focused on providing our corporate clients with relevant advice, data-driven insights and customised, integrated solutions that make their day-to-day banking more efficient and support their business ambitions. This is in line with the revised Wholesale Banking strategy we introduced in 2018 to enable us to adapt to and overcome a challenging and complex market environment, as well as increased regulatory requirements, evolving technology, greater competition and our clients’ changing needs. Addressing these challenges, amplified by the effects of Covid-19, required us to accelerate our priorities and refocus our activities to ensure we deliver to our customers faster and continuously improve the end-to-end digital experience.
We further developed our sectors strategy over the year, pairing local and global insight with sector knowledge and financial expertise, and we enhanced our client segmentation model, which helps us tailor our daily banking and advisory value propositions to clients specific needs. Based on similar considerations of aligning with our core client base and deepening our relationship, we made the decision to withdraw from a number of countries in South America and Asia. We’ll continue serving the international needs of our clients in these countries from regional hubs. We will stay focused on improving client service delivery and streamline our operating model by clustering similar activities and know-how in existing centres of expertise.
Several deals in 2020 reflect this sector focus. These included a €1.6 billion debt financing package for
Swedish sustainable battery producer Northvolt to finance Europe's first home-grown gigafactory for lithium-ion batteries. ING co-led the lending consortium. ING was also involved in the largest green loan to date in Asia-Pacific in the commercial and industrial (C&I) renewables sector, a US$75 million loan to Singapore-based Cleantech Solar.
We work with our Wholesale Banking clients to finance and facilitate their transition to low-carbon technologies. We’ve developed a comprehensive suite of sustainability products and services to help them, including green loans and green bonds. Read more below in ‘Responsible finance’.
In July, we announced that due to Brexit we will move some Financial Markets activities from London to Amsterdam. Here we already have a relatively large Financial Institutions/Financial Markets risk organisation, which can be effectively used during and after the transfer of the operations. The move does not impact our clients or client coverage.
A differentiating customer experience More and more people are discovering how easy and efficient it is to do their banking online, with the number of digital interactions growing to 5.3 billion in 2020 from 4.5 billion in 2019. Of these, 87 percent are mobile interactions, with a growing number of Retail customers only interacting with ING
via their mobile phone: 40 percent versus just 12 percent in 2016.
This digital connectivity yields data and insights that contribute to a more personalised and empowering experience, giving customers even more reasons to interact with us. This is how we can become an essential part of people’s digital lives.
To provide customers with an even more personal, easy and smart experience, we held our first fully virtual customer experience (CX) day in October 2020. More than 2,000 colleagues from Belgium and the Netherlands attended. They made small changes that can have a big impact, resulting in 291 customer experience improvements.
Netherlands to seamlessly switch between their mobile app and online banking, and we made it easier for them to block, unblock and replace their bank cards themselves. In Belgium, customers can use their bank app to manage subscriptions via third party Minna and send payment requests through
In the Philippines, ING’s newest mobile-only retail market, the ING app has been installed more than two million times since its launch in November 2018. The introduction in the Philippines of ING Pay in
November 2020 led to over 60,000 new daily accounts in its first month.
With customers looking for alternatives to savings accounts in the low/negative interest rate environment, we’re empowering them with smart digital investment tools like My Money Coach in
Spain, Coach Epargne in France and Easy Invest in the Netherlands. In 2020, our retail investment products in Germany and Spain reached €56 billion and €12.3 billion in assets under management
ING Group Annual Report 2020 49 respectively. In Germany, ING is the first bank to offer securities savings plans that allow all customers to invest small amounts (from €1) in shares, exchange traded funds (ETFs) or mutual funds. With savings plans available for more than 1,800 securities, including more than 200 funds and ETFs without purchasing costs, it’s a low-threshold entry into investing.
By rounding up every transaction and transferring the difference to the customer’s savings account, it makes saving frictionless at a time when customers may be financially vulnerable (due to the coronavirus crisis). ING in Germany launched a 'donate to Unicef' option for rounding up and ING in
Australia has a roundup option for mortgages. The next step will be investments. There are 850,000 active ERU users, of which almost half are in Poland and Australia, while users in Germany rose to
Our Yolt smart money app introduced a similar feature in 2020 called Money Jar. It too allows users to save while they spend by rounding up purchases to the nearest pound or euro and offering cashback from selected retailers. The money jar feature also offers handy tips and reminders for users to increase their savings. It's trained to recognise and save refunds, salary raises and even bonuses.
Through ING’s bancassurance partnership with AXA, customers can create their own personalised insurance cover in a clear and easy way using their ING mobile app or the ING website. For example, customers in Italy only have to answer three questions to get building and contents insurance compared to 60+ previously – something they appreciate, rating the service with a 4.5 out of five for advice and satisfaction. The bancassurance offering is now available in five countries through 11 insurance products delivering banking linked to lending and home/life protection. A further two propositions for mobility and wellness are being built to provide full lifestyle protection for customers through ING’s five billion digital engagements.
In the Business Banking segment, we are digitalising our proposition for SMEs, micro businesses, midcorporates and self-employed customers using the Touchpoint platform. This will enable us to standardise our offering for over 1.5 million businesses in Belgium, Luxembourg, the Netherlands,
Poland, Romania, Germany and Turkey, avoiding duplication and unlocking synergies between the countries.
Our call-centre platform, developed as part of the Unite be+nl programme, is providing a harmonised customer contact experience across multiple customer interaction channels in eight countries.
Because it is cloud-based, customers receive the same services everywhere and it makes it easier for
ING to share and adopt innovations and adjust to changing customer needs.
The introduction in 2020 of ING’s new global ‘do your thing’ tagline in the Netherlands, Belgium,
Romania, Poland and Wholesale Banking brings a common brand direction to the bank that will be extended to the other ING countries over time. We launched advertising campaigns that included new brand elements like a new style of photography, a sound logo and always signing off with
The tagline articulates ING’s empowering purpose and encourages people to do more of the things that move them or their business. It is about people being free to focus on what matters most to them knowing that, whether in their private or professional lives, they can make their world a little better for it.
Open banking has changed the way people pay, giving consumers more options and opening up this service to non-traditional providers. To keep up with payment trends, ING has introduced instant payments executed in real time 24/7, 365 days a year. In 2020, the service was extended, enabling payments instantly from the Netherlands to the rest of Europe. ING is also working with major retailers in the Netherlands to extend peer-to-peer payments (apps that enable users to request and receive payments instantly) so merchants can send their customers a mobile payment request on delivery of goods.
In addition, it supports multiple strong customer authentication, that allows all types of payments requiring two or more authorisations.
The power of platforms is that they are open, borderless, scalable, empowering and generate large amounts of data through frequent user interactions that can in turn be used to improve users’
ING is exploring various platform business solutions. We are building our own platforms. Some of these have evolved into stand-alone platforms. Smart money app Yolt, mobile payments app Payconiq and corporate multibank platform Cobase are three examples.
ING app, customers can keep track of and manage their subscriptions, and even cancel unused subscriptions or switch to better alternatives through an automated process, helping them save money and time.
The introduction of the European Payment Service Directive 2 (PSD2) in 2019 is reshaping the banking industry. It requires banks to rethink traditional products and services and create new customer experiences that stand out in a competitive landscape. At the same time, open banking allows us to connect to other providers and integrate products and services to add value for our customers. Our open banking platform provides the key capabilities that allow ING to open up by establishing secure, scalable, compliant and uniform connectivity with external parties via application programming interfaces (APIs).
We believe open banking and APIs are a great way to foster innovation, accelerate digitalisation and integrate and co-create with others. Open banking propositions powered by API technology include the
Yolt Technology Services (YTS), the business-to-business arm of the smart money app, facilitates open banking for businesses across Europe by providing them with access to bank APIs that connect them to users’ bank accounts to initiate payments. In 2020, YTS surpassed one billion API calls – single uses of its API. In the Netherlands, France and the UK, it offers businesses API coverage to over 90 percent of bank accounts and its API infrastructure can connect to 80 percent of bank accounts in Belgium, Italy and Spain.
We also use APIs to connect to our insurance partner AXA on ING’s first multi-country product platform.
Internally, we are working to harmonise our customer experience where it’s possible and beneficial on truly cross-border platforms, giving ING the same face in different markets and the same banking interface with the same look and feel everywhere.
Given the complexities and costs of cross-border system and product integration, and in light of coronavirus-related economic headwinds, we announced in November 2020 that we will stop the
Maggie transformation programme. Launched in 2016, Maggie aimed to integrate our product offering and provide a standardised experience for retail customers in four Challengers markets. We will instead focus on using ING’s global technology foundation – shared data lakes, cloud and modular IT building blocks – to further develop our universal digital bank and the rollout of global digital product offerings in insurance, investments and consumer lending. We will continue to focus on implementing global solutions locally as a way to harmonise and standardise the customer experience.
OneWeb banking environment shared with our Dutch customers. They also now use the same OneApp mobile environment as in the Netherlands and Germany, bringing us a step closer towards our ambition to provide customers everywhere with the same easy, smart and personal experience.
Around 1.8 million customers in Belgium are now using OneApp and OneWeb for online banking. In the
Netherlands around five million customers use the app. New features were introduced in 2020 to empower customers to take charge of their own banking affairs via their mobile phone, for example to block a lost card or change their daily withdrawal limit, cutting back on the need to contact customer service.
Thinking beyond traditional banking is crucial to find new ways to be relevant to customers and create new revenue streams for ING. It strengthens our core businesses by engaging customers early, increasing the customer lifetime value and contributing to a more sustainable banking business model.
In the know your customer (KYC) space, CoorpID provides a digital vault where corporate clients can securely store and share the KYC documentation required by multiple financial institutions. CoorpID
Interhyp offers buyers access to 400 mortgage lenders. In 2020 its market share rose to 10 percent in
Customer numbers grew in 2020, especially the number of primary customers. These are Retail customers with multiple active products, including a current account with recurrent income, such as a salary. In Wholesale Banking these are clients lending and daily banking products and at least one other product generating recurring revenues.
In 2020, the number of primary customers increased by 578,000 to 13.9 million. Across retail segments, this comprises 5.8 million for Market Leaders, 4.9 million for the Challengers Markets –
where primary customers in Germany grew by 330,000, a record 56 percent in net growth versus 2019
and detractors (those scoring ING below a 6). Our aim is to achieve a number one NPS ranking in all our retail markets, with a 10-point lead over our main competitors.
Based on a rolling average of our NPS scores in 2020, ING ranked number one in six of our 14 retail markets1: Australia, Germany, Poland, Romania, Spain and the Philippines. In four of these we are more than 10 points ahead of our nearest competitor. ING also has a top-three position in a further six markets. The introduction of current account fees in Germany in February 2020 led to a downward dip in our NPS score here, but overall we retained our number one position in Germany in all four quarters.
In France, more innovative competitors overtook ING in the number one position.
(from +12.4 in 4Q 2019), well above our competitors (-23.3), based on feedback from clients who do business with multiple banks. Clients appreciate our sector knowledge combined with regional presence, with satisfaction highest in the services, industry and transport and logistics sectors.
The NPS programme also runs in 26 Wholesale Banking markets. In addition, we introduced a transactional NPS to measure client satisfaction on service requests for daily banking. In 2020, the customer satisfaction exceeded 8.5 (scale 1-10). The overall NPS rating reached +56.3 (on a scale of -100 to +100), up from a score of +49.6 in 2019, and 13 percent ahead of the industry average of
+49.8. The response rate also increased to 60 percent compared with 50 percent in 2019, showing higher client engagement with ING. The scores are based on thousands of responses from clients representing more than 50 percent of Wholesale Banking revenue. The NPS of Platinum and Gold clients showed an even higher year-on-year increase of 33 percent and 21 percent, respectively. All sectors also registered stronger NPS, with Energy achieving an exceptionally high score of +71.3, a 26 percent increase year-on-year. The higher scores suggest that clients appreciate our approach (see
Germany while Euromoney named us the best digital bank in Central and Eastern Europe, as well as best bank in the Netherlands and in Poland.
For the 14th year, German consumers voted ING their preferred bank in €uro magazine’s annual survey. In Australia, ING was named ‘Best Bank’ by financial comparison sites Mozo and Canstar. ING
was also Canstar’s Bank of the Year and ‘Most Trusted Financial Institution’ at the Australian Banking
In Wholesale Banking, ING was recognised as Western Europe’s best bank for transaction services
(Euromoney) and the best investment bank and best trade finance provider in the Netherlands (Global
Since the introduction of direct banking in 1997, ING is still finding new ways to improve the banking experience for our customers. Many of these advances stem from twinning the latest technologies with data insights. Growing demand for digital solutions is also spurring new ideas.
At the ING Labs in Amsterdam, Brussels, London and Singapore, over 20 initiatives are currently in development to make disruptive impact in the value spaces of trade, lending, safety and compliance, financial health, and housing. Examples are Blacksmith, Loan Optics and Stemly. Blacksmith, which ING
In Wholesale Banking Advanced Analytics we’re building artificial intelligence-powered products to better understand and serve our clients. These include improved monitoring and analysis activities for client-facing departments and Hunter, a tool that accelerates the detection and investigation of money laundering schemes, reducing the workload for our KYC colleagues. Domino is a tool that gives us a ‘360 view’ of mid-corporate and corporate clients to ensure we’re having the right conversations at the right time to meet their needs. In addition, in 2020, we delivered a proof of concept to gain insight into how mid-corporate clients are dealing with the coronavirus crisis so we can help them where they need it most. It provides insights that go beyond our traditional knowledge of real-time client situations such as whether the client is receiving government support or needs support with tax payments.
When it comes to distributed ledger technology (DLT), ING is considered an industry leader. For the second consecutive year, Forbes ranked ING as one of the top $50 billion companies embracing blockchain technology. Cryptoground, a blockchain and cryptocurrency hub, named ING among the best blockchain stocks investments in 2020.
Easy Trading Connect (now Komgo.io) was one of the first to reinvent commodities trade financing in 2017. Komgo, co-owned by ING, offers products that streamline trade finance, optimise liquidity, manage risk and verify customers. It recently created a new feature, TRAKK, that uses DLT to create provenance and immutability, allowing traders to ensure the documents are genuine and are not used for pledges to other parties. New DLT initiatives currently in the execution phase include solutions for digital assets safekeeping, tokenisation and issuance of a structured finance loan for institutional investors, and an intra-bank settlements utility token, among others.
In October 2020, Contour went live. Co-founded by ING in a consortium with other major global banks,
Contour connects buyers, suppliers and banks across a decentralised digital platform to bring transparency and trust into trade financing. In its testing phase, Contour reduced the processing time for letters of credit (LCs) from an average of 10 days to under 24 hours. Another ING initiative is securities lending platform HQLAx, which uses DLT to facilitate trades in high-quality liquid assets, serving as an additional liquidity pool. It was commercially launched in December 2020.
We amplify our DLT impact by addressing how ING’s solutions can solve key problems in the finance industry. Our DLT research team is constantly producing knowledge assets that can serve and influence the wider community: from reflecting on the challenges and benefits of digital assets, to collaborating with the Global Blockchain Business Council and the World Economic Forum on the creation of blockchain standards.
For our Business Banking clients we have a number of partnerships. Funding Options helps British and
Cobase, which is making it easier and more efficient for international corporate clients to work with multiple banks from one cloud-based platform.
ING entered into several fintech partnerships this year that help our businesses execute our strategy
As a bank, we are committed to contributing to a low-carbon and financially healthy society, both through our own efforts and by helping our clients to be more sustainable. We make the most impact through our financing, via the loans we provide to clients. That’s why we are committed to steering our €600 billion lending portfolio towards meeting the well-below two-degree goal of the Paris Agreement.
ING’s power generation portfolio continues to outperform the market and both the International
Energy Agency’s sustainable development scenario (SDS) and the OECD scenario. In the 12 months measured in the Terra report, ING reduced its direct exposure to coal-fired power plants by 43 percent
(in line with our commitment to reduce it to close to zero by the end of 2025) and increased financing for renewable energy generation by €1.19 billion. Other sectors face more challenges, such as the residential mortgage sector. There we encounter a shortage of accurate data to measure progress and a general lack of homeowner action. Read the full Terra report on ing.com, and see ‘Greener homes’
below for more information about making our mortgage portfolio energy positive by 2050.
Terra’s sector-based approach respects the fact that each sector has its own transition pathway for it to contribute to a low-carbon, below-two-degree world. We therefore use the most appropriate methodology per sector. One example is PACTA for Banks, which was co-developed by ING and nonprofit think tank the 2° Investing Initiative (2DII). The methodology-specific application was further refined with more banks and published as an open-source methodology for all banks to use in 2020.
It looks at the technology shift that’s needed across certain sectors to slow global warming and then measures this against the actual technology clients are using – or plan on using in the future.
We will continue to monitor and report on our progress, engaging with clients and other stakeholders to advance on the journey to combat climate change. We conduct strategic dialogues with clients on how we can help them align their business with the Paris Agreement goals, for example by advising them on how to structure their financing and gain access to funding. We also contribute to policymaking to influence change on a larger scale. For example, we’re working with the European
ING Group Annual Report 2020 57 underscores sound corporate governance and our strengths in financing environmental impact, among others.
ING is considered a pioneer in sustainable finance, having introduced the first sustainability-linked loan and a made-to-measure sustainability improvement loan. We offer various financial instruments such as green loans, sustainability improvement loans, green bonds and advisory services.
In 2020, we saw a visible softening of lending demand due to the impact of Covid-19 on economic activity. Our climate finance portfolio decreased by 12 percent in 2020 to €16.5 billion (from €18.7 billion in 2019), mainly due to lower lending volumes in renewable energy and sustainable buildings.
In 2020, we started to link the circular economy even more closely with our green finance products.
The ZES transaction is an example of how ING is exploring circular financial business models with various partners. The circular economy offers a systematic response to the climate crisis. It’s about rethinking our use of raw materials and resources to reduce waste and emissions, shifting from ‘take, make and waste’ to ‘reduce, reuse, recycle’. Companies like ZES stimulate other use models for depleted battery packs once they are exchanged to give them a second or even third lifecycle.
ING issued 36 sustainability improvement loans and 20 green loans. Among these was the largest green loan yet in the Asia-Pacific commercial and industrial renewables sector. The $75 million financing for Cleantech Solar will support more than 500 megawatts of solar power projects across
In addition to lending, ING supported 60 mandates for clients through green, social and sustainability bonds. In September, ING was involved in Ireland’s first-ever green bond issued by AIB bank. The €1 billion will be used to finance renewable energy projects and green buildings in Ireland and Britain.
ING subsequently supported a further three issuers with Covid-19-related bonds, helping them to overcome the impact of the crisis. We acted as bookrunner in the €500 million social bond for Korea
Netherlands, for example, can check the energy profile of their homes on our website, as well as the options and financing available to improve in this area. And we provided Dutch homeowners who want to invest in upgrading their energy label with a free rating as we know how insights can help people to take the first steps towards a more sustainable home.
However, the number of homeowners taking up this offer remains low. This likely reflects the cumbersome process of gathering data for an energy label upgrade. And although an up-to-date energy label is required when selling a home, only a small percentage of properties in our portfolio are sold each year.
“I work in one of the many front-line teams helping customers impacted by Covid-19. A normal working day became vastly different when the pandemic started. Where before we’d be fielding calls about a huge range of queries, we were suddenly overwhelmed by customers’ concerns about current or potential financial difficulties in direct response to Covid-19. We saw a massive surge in the number of calls as so many people were impacted and I felt a real sense of urgency going into each shift to get to as many people as I could. I remember feeling some apprehension, not knowing how people were going to treat me, given they were in a state of anxiousness. It was quite emotionally challenging hearing about the problems many of our customers were facing at the time, but I made sure I had empathy for each one. We’re all in this together so it’s easy to put myself in their shoes. With such a huge demand for our services, working from home made it easier for our team members to jump on the phones at short notice to assist."
ING’s results remained resilient in a tough year, with a full-year net profit of €2,485 million. Performance was heavily affected by the impact of Covid-19. Reduced economic activity led to lower lending demand and the ongoing low/negative interest rate environment pushed net interest income down. Yet we further diversified our income with good fee growth, particularly for retail investment products as more customers turned to our accessible digital solutions. ING’s CET1 ratio strengthened to 15.5 percent.
Risk and capital management remain central to the stability and continuity of the bank. Maintaining our risk profile within our risk appetite and strengthening our capital base is how we grow a sustainable business and achieve our strategic objectives.
Our overall approach to capital management is to ensure that we have enough capital to cover our
(economic) risks at all levels, including the risks from the ongoing pandemic, and comply with local and global regulations, while delivering a return for our shareholders and investing in innovation to accelerate the Think Forward strategy.
Our capital position improved in 2020, despite the higher risk costs due to the Covid-19 pandemic. ING’s
CET1 ratio was 15.5 percent at the end of 2020, up from 14.6 percent at end-2019, which is well above our new CET1 ratio ambition of around 12.5 percent. The CET1 ratio at the end of the year improved primarily due lower risk-weighted assets (RWA). The decrease RWA was mainly due to lower volumes, foreign exchange movements and a better overall profile of the loan book. On the latter, downward rating adjustments were more than offset by higher and additional collateral value.
ING Group has a leverage ratio of 4.8 percent, which is temporarily higher as the European Central
Bank has authorised the exclusion of certain central bank exposures (€98.3 billion) until June 2021.
Without the exclusion, the leverage ratio was 4.4 percent at the end of 2020, which is still well above our ambition level of >4 percent.
In 2020, ING issued US$750 million and redeemed US$1.7 billion in additional Tier 1 securities.
Furthermore, a total of €1.5 billion of Tier 2 bonds were issued and US$1.2 billion of Tier 2 securities were redeemed in 2020. At year-end 2020, ING’s total capital ratio was at 20.1 percent. With an AT1 ratio of 1.9 percent and a Tier 2 ratio of 2.8 percent, we benefit fully from the CET1 relief provided by
ING’s profit generating capacity was impacted by higher risk costs due to the pandemic, higher impairments and lower net interest income. After dividend reserving in line with the new dividend policy, we included about €1.0 billion of profit to our capital base.
ING paid a cash-only interim dividend of €468 million (€0.12 per share). This amount is equal to 15 percent of adjusted net profit for 2020, in line with the ECB recommendation of 15 December 2020. The remainder of reserved profits for dividend of €2,798 million (including the amount originally reserved for the 2019 dividend) is for distribution after September 2021, subject to prevailing ECB
recommendation. See ‘Note 51 Capital management’ in the ‘Consolidated Annual Accounts’ for more information.
The result before tax declined 29.4 percent to €3,348 million. Income declined by €217 million, or 1.7 percent, including a €230 million impairment on ING’s equity stake in TMB. Excluding this impairment, income rose 0.1 percent, as higher fee income and increased Treasury-related revenues were offset by margin pressure on savings and current accounts. In 2020, total customer lending declined by €0.3 billion to €436.8 billion. Adjusted for currency impacts, Treasury and the WestlandUtrecht Bank (WUB)
salary increases and higher IT expenses, partly offset by lower marketing and travel expenses. The cost/income ratio was 61.8 percent in 2020, compared with 57.1 percent in 2019.
Total income declined by €34 million, or -0.8 percent, to €4,471 million, compared with €4,505 million in 2019. Net interest income declined 0.8 percent, mainly due to lower margins on savings and current accounts, combined with a decline in average lending volumes, which was largely offset by higher
Income declined by €69 million, or 2.8 percent, to €2,373 million from €2,442 million in 2019. Net interest income was 4.8 percent down to €1,816 million, mainly reflecting lower margins on savings and current accounts, and lower Treasury related revenues, partly offset by higher interest results from mortgages. Net core lending (excluding Treasury) decreased by €1.5 billion in 2020, evenly spread over mortgages and other lending. Net customer deposits (also excluding Treasury) grew by €4.0 billion, predominantly in current accounts. Net fee and commission income rose by €39 million, or 10.4 percent, mainly due to higher fee income on investment products and mortgages. Investment and other income declined by €16 million, mainly from Financial Markets.
The net addition to the provision for loan losses increased to €514 million, or 57 basis points of average customer lending, from €186 million, or 21 basis points, in 2019. Risk costs in 2020 included €158 million of collective provisions related to the worsened macroeconomic indicators, including provisioning related to loans subject to a payment holiday. The remaining risk costs were mainly related to business lending, including provisioning on a number of individual files.
The result before tax declined 0.7 percent to €950 million, compared with €957 million in 2019, as higher income largely offset the impact of higher risk costs (after a net release in 2019) and increased expenses.
Total income rose 6.6 percent to €2,117 million from €1,985 million in 2019. The increase was driven by €169 million higher fee income, predominantly on investment products due to higher assets under management, new account openings and a higher number of brokerage trades in volatile markets. Net interest income increased 0.5 percent to €1,587 million, as higher interest results from lending and accounting asymmetry in Treasury (with an offset in other income), was largely offset by margin pressure on savings and current accounts. In 2020, net core lending (which excludes Treasury products) increased €4.5 billion, of which €4.2 billion was in residential mortgages and €0.3 billion in consumer lending. Net customer deposits (excluding Treasury) increased by €5.8 billion, largely in current accounts. Investment and other income declined by €45 million, mainly due to the aforementioned accounting asymmetry and lower capital gains.
Operating expenses increased by €30 million, or 2.8 percent, to €1,110 million in 2020. The increase was mainly due to investments to support business growth as well as the consolidation of a subsidiary as from the first quarter of 2020, while the previous year included a €36 million restructuring provision.
The net addition to the provision for loan losses was €57 million, or 6 basis points of average customer lending, compared with a net release of €53 million in 2019, which had included model updates on mortgages. Risk costs in 2020 included €8 million of collective provisions related to the worsened macroeconomic indicators.
First bank in Germany to offer loans to businesses on Amazon’s seller portal. SMEs can also access digital loans from fintech
In Australia, ING teamed up with Uber Eats to provide free deliveries to customers and support small businesses through the crisis; used video technology to verify the identity of home loan applicants; and paused loan repayments for 15,000 customers
Retail Others’ result before tax fell to €199 million, from €935 million in 2019, mainly reflecting impairments on TMB Bank (Thailand) and the Maggie programme, as well as higher risk costs.
Operating expenses increased by €259 million, or 11.7 percent, to €2,469 million from €2,210 million in 2019, of which € 140 million related to an impairment on capitalised software following the decision to stop the Maggie programme (previously called Model Bank) and €27 million of restructuring provisions and impairments related to the project and some other countries. Excluding these incidental items, expenses increased by €92 million, or 4.2 percent, mainly due to higher regulatory costs, investments in business growth and lower capitalisation of costs following the decision to stop the Maggie programme. These increases were partly offset by lower legal provisions as well as lower marketing and travel expenses.
First bank in Poland to introduce a PSD2 aggregator service allowing customers to view accounts and make payments from multiple banks in the ING Moje app; enabled
PIN-free contactless payments in Poland; and ran a social media campaign encouraging youngsters to teach older family members how to bank online
Introduced Everyday Roundup in Romania to make saving frictionless at a time when customers are financially vulnerable
November 2020, with over 60,000 accounts created by end-Dec. ING app downloaded more than two million times in two years
Covid-19 pandemic. The net result declined to €512 million from €1,352 million in 2019. The result before tax dropped 54.8 percent to €827 million, down from €1,830 million in 2019. The decline was predominantly due to elevated risk costs and higher expenses (including impairments and restructuring provisions), partly offset by higher income.
Total income rose 1.8 percent to €5,396 million in 2020, compared with €5,298 million in 2019, reflecting higher revenues in Financial Markets and Treasury & Other, partly offset by lower income in
Operating expenses rose 9.6 percent to €3,218 million from €2,937 million in 2019, mainly due to a €260 million goodwill impairment and €124 million of restructuring provisions and impairments recorded in the fourth quarter of 2020, following the announced refocusing of activities, including an additional impairment on Payvision. Excluding the aforementioned incidental items, expenses decreased 3.5 percent, mainly due to lower regulatory costs and the impact of continued costefficiency measures as well as lower travel expenses as a result of the Covid-19 restrictions.
Covid-19 pandemic, including €192 million of collective provisions related to the worsened macroeconomic indicators.
Issued US$1 billion green bond to finance renewable energy and green buildings
Collaborated on Europe’s first Covid-19 social-covered bond: a €1 billion issue to fund healthcare in France
Asia-Pacific Commercial & Industrial renewables sector €1 billion AIB green bond issue is firstever by an Irish bank and second green
Desch Plantpak and Northvolt; equity bridge facility from Greenpower; minority stake in Zero Emissions Services
Lending posted a result before tax of €691 million, down 56.7 percent compared with €1,597 million in 2019, predominantly due to elevated risk costs. Risk costs in 2020 were primarily impacted by various large individual files, including a sizeable provision for an alleged external fraud case, as well as the economic impact of the Covid-19 pandemic. Lending income declined 3.2 percent, reflecting lower lending margins and lower syndicated deal activity. Expenses declined 3.1 percent, mainly due to lower regulatory costs.
The result before tax from Daily Banking and Trade Finance fell to €246 million from €476 million in 2019. This decline was due to lower income and higher expenses, partly offset by lower risk costs as the previous year included a sizeable provision for an external fraud case. The decline in income mainly reflects lower margins on current accounts as well as lower fee income, mainly in Trade and
Russia. Professionally, it's the fact that despite the situation we remained, and still are, absolutely committed to our customers."
Lorenzo Torti is chief information security officer / pandemic crisis manager in Milan
We are extremely grateful to all ING colleagues for their resilience and ongoing commitment in a challenging year. Our people are at the heart of our business and we rely on them to support our customers, even more so in times of crisis. With more interactions and transactions than ever now online, our workforce is evolving to keep pace with the skills and capabilities this requires. At the same time we strive to provide a differentiating employee experience that keeps people motivated and engaged.
Covid-19 has disrupted societies, and it has had a big impact on ING employees across the globe.
Since the start of the global pandemic in March our focus has been on keeping our colleagues safe, healthy and supported. We set up a global steering group and local crisis management teams at ING
For those unable to work remotely, because they’re involved in business-critical operations or work in a branch, we take every precaution to create a safe work environment. Social distancing guidelines and enhanced health and hygiene measures apply to desks, meeting rooms and common areas. We strive to uphold high health and safety standards and follow local government advice on coronavirus prevention measures.
ING believes people need to stay vital to be at their best in their job. This was even more important during the long months of working under difficult circumstances in 2020. Supporting and safeguarding the wellbeing of our employees and managers was of crucial importance.
Covid-19 highly disrupted our way of working and added urgency to the need for high adaptability and resilience. Activities were shifted to a virtual working environment, sometimes performed in isolation.
Managers were asked to set up virtual team networks to remain close to their employees and to guide and encourage them, leading to different sorts of challenges. Apart from finding new ways to collaborate, they needed to motivate and engage employees from a distance, manage their own vitality, and monitor the wellbeing of colleagues when they couldn’t see them every day. We addressed these challenges by offering a wide range of online support tools for all employees and extra coaching for leaders and managers.
Experience (TFLE) programme for people managers with five or more direct reports focusing on the topic of sustained high performance.
Wholesale Banking in 2018, 10,000 people have completed the WQ programme.
To measure the engagement and wellbeing of ING’s largely remote workforce during the Covid-19 pandemic, we created frequent, global Quick Pulse surveys. Altogether approximately 42,000 people received the survey, asking questions such as ‘How are you feeling today’, ‘What is affecting how you feel’ and ‘Have you been able to combine your work and private life well today’? The outcomes provided valuable input to sharpen the offering of supportive tools for employees and managers globally and locally.
These Quick Pulse surveys were run weekly between April and June so that local businesses could quickly address issues as they arose. The surveys continued at a lower frequency throughout the rest of the year to enable the organisation to address the challenges employees were facing. Local support varied from offering online toolkits and workshops on remote working and collaboration to providing ergonomic advice on how to sit and use home office equipment (IT, furniture), mental health support and extending communications efforts to connect managers and their teams. The Quick Pulse survey will continue in its current format in 2021.
We also measure ING’s organisational health in the more extensive Organisational Health Index (OHI)
diagnostic survey. The last full survey in September 2019 had shown that our results were declining.
Based on this, the Management Board Banking decided to focus our efforts on three priority areas: direction, leadership and innovation & learning. These global themes were the starting point for action plans at local, business and functional levels, which also covered local or business-line issues.
The May and November surveys also included some questions on engagement. The results showed that despite the challenging times, engagement at ING remains high. Comparing the November 2020 scores with those in September 2019, both job engagement (focusing on enjoyment of work) and organisational engagement (looking at pride in ING as a company) increased. Between May and
Everything we do at ING is guided by the values and behaviours that underpin our way of working. We call this our Orange Code.
In 2020, we introduced a global Code of Conduct, which outlines the 10 core principles we expect from employees. These principles build on the values and behaviours of our Orange Code and are based on
We promote diversity at ING, not just because it is the right thing to do. We promote diversity because it’s essential for delivering on our strategy. To stay a step ahead we need teams with a healthy mix of contrasting perspectives and backgrounds as they are more creative, faster to adapt and more inventive with their solutions. At ING we value inclusion and we encourage people to bring their whole self to work.
When we look at the overall global make-up of ING we see that collectively we meet the 70 percent across all three dimensions. However, within individual teams and on a country level there are different, often complex challenges in creating the mixed teams we strive for, and we are not always making progress at the speed we would like. Our starting point is fully understanding on an ongoing basis where we are at and where the challenges lie. We have detailed dashboards to help different areas of the business identify gaps and monitor progress towards building mixed teams. These dashboards monitor in real-time how the countries and business lines are doing, at different levels of the organisation. The HR teams use these in their discussions with local management teams.
To create an environment where people can truly feel free to be themselves and where people decisions are made objectively and fairly, we need to reduce our biases. In July 2020, ING launched a
Our ‘quality of hire programme’ aims to improve the quality of our hiring processes, reducing early turnover and increasing job performance. We have created an evidence-based approach, Hiring 1-2-3, that aims to help us hire the right candidates for ING, reduce biases and prejudices we all have and offer candidates a fair process. The three steps focus only on evidence, to ensure a fair and objective process for every candidate. We work with structured interviews and diverse interview panels, and we calibrate before making a decision. The approach was piloted successfully in Romania, after which it was implemented in five more countries in 2020. Global roll-out will take place in 2021.
Discrimination is when a person is treated differently or excluded, for example from a job opportunity, because of their race, gender, religion, cultural background, ethnicity, sexual orientation, disability, political opinion, family responsibility, age or social origin. It has the effect of nullifying or impairing equal opportunity. ING has measures in place to prevent discrimination towards customers and employees. These include our Global Code of Conduct, which expects all employees to create and maintain a safe working environment and to speak up and report misconduct.
In 2020, the topics of racial injustice and ethnicity and the Black Lives Matter movement were pushed into the spotlight by incidents and subsequent protests in the US and the rest of the world. To reinforce our position on discrimination, the Management Board Banking shared a global message with all employees in June, denouncing all forms of discrimination and encouraging employees to speak up if they encounter discrimination at work, or behaviour they're not comfortable with.
We have a policy that aims to ensure equal remuneration for men and women doing work of equal value. At the same time, it’s important to acknowledge the difference in average pay between genders, and the difference in pay between men and women in the same position adjusted for circumstances like experience. We take into account that the difference in average pay at ING is influenced by the (smaller) number of women in higher management roles.
When assessing performance, we always encourage managers to look broadly at an employee’s performance, considering all areas affecting their work and home life. With Covid-19 introducing difficult circumstances for many employees – for example, juggling home schooling or caring for relatives while working – this balanced view was particularly relevant this year.
ING is one of the 325 companies recognised in the 2020 Bloomberg Gender Equality Index as a company committed to a more equal and inclusive workplace.
The Individual Development Plan (IDP), introduced in February 2020, helps employees to work on their personal development needs and ambitions. Employees are encouraged to create their IDP at the beginning of the year and discuss their development on a continuous basis with their manager. Similar to performance management, two formal moments are scheduled at mid-year and year-end to check in on progress.
A total reward statement was introduced in the Netherlands and Belgium, giving employees a full, personal overview of their salary, pension and payments, as well as options available to help them improve their wellbeing and craftmanship.
Our foundational capabilities are those required to get the basics right. These keep us safe, create and maintain trust of our customers, stakeholders and our people. There are three of these: non-financial risk management, cybersecurity and operations management. Data fluency, customer experience and leadership are our three distinctive capabilities. These distinguish ING in the market and are essential for creating value.
Belgium, along with a new online learning platform – My Learning. The further roll-out of the Big 6campaign to all employees is planned for 2021.
The platform contains learning activities from ING sources as well as external content libraries, allowing employees to find everything they need in one system. My Learning offers content selected specifically for the user. The better the platform gets to know the employee, the more relevant the recommendations become. These recommendations are based on the role, interests and learning and the search behaviour of the user, as well as that of colleagues with a similar profile.
ING’s Think Forward Leadership Programme (TFLP) aims to develop greater leaders and better managers who can engage staff and enhance team performance. Introduced for senior leaders in 2017, it was extended later that year to people managers globally as the Think Forward Leadership
ING’s programme for new managers, or managers who are new to ING, was launched in 2020. The
First-Time Leader Programme (FTLP) aims to develop the skills these managers need to help themselves and their teams be successful. Themes include communication, personal development and leading a team. Over 500 people participated in the fully digital programme over the year.
The FTLP is available to managers and employees who would like to become managers in the future via the ING Learning Centre/MyLearning platform. Participants have access to a range of online resources specially created for them, including training modules, videos and an online library.
The award-winning Purpose to Impact programme, launched in 2019, helps employees in the
Netherlands and Belgium discover their personal purpose, connecting their motivation and unique strengths to the goals of ING.
Our ambition is to bring our employee experience on a par with our customer experience. A new survey called the Employee Experience Index© was piloted in four countries in 2020 to gain more insight into the touchpoints that impact employee engagement. This will be rolled out to additional countries in 2021 to become a recurring initiative offering actionable insights into the experiences of
Starting a new job is one of the crucial stages in the employee lifecycle. In 2020, we introduced a digital onboarding tool that guides new hires and their managers through the onboarding journey, helping to make new colleagues feel welcome at a time when they can’t meet their teams in person.
Overall, the speed with which the ING workforce managed to adapt to a new remote way of working in 2020 was a huge achievement. Of course, given the uncertainty around Covid-19 and how it develops, it’s hard to predict what the future holds. What is clear is that ING will have to learn from these experiences to create a ‘new normal’ in which we seek to balance the advantages of working from home and working from the office. We are taking a measured step-by-step approach to this, testing and evaluating as we progress – to make sure that we’re taking the right decisions each step of the way for employees, our stakeholders and ING as a whole.
As a starting point we’ve created a set of guiding principles that describe our global way of working.
and it’s important we look carefully at this and test initial conclusions before making final decisions and moving forward with the roll-out. In some countries, for example in Spain, Italy and Turkey, colleagues have already been given the flexibility to choose where they want to work, which provided valuable input for the global approach.
Furthermore, in November we announced we are simplifying the geographical and client footprint of our Wholesale Banking business and stopping the Maggie transformation programme. Refocusing these activities will result in a headcount reduction of approximately 1,000 full-time equivalents (FTEs)
“Don't be afraid to ask for help, talk to colleagues, friends and family, and don't forget to smile!” How Janine makes a difference
"I have five children. In March, I home-schooled my two eldest, which mostly meant helping them with homework and keeping their motivation levels up, given they are teenagers. We agreed on specific times during the day when they could ask me questions or discuss any issues they might have. My sixyear -old daughter needs more attention, so sometimes she sits with me during the day. It’s quite nice
– it feels like I have a colleague around. It took some time to adjust. I’m fortunate to have a nanny looking after my three-year-old twins. I'm busy with work calls the whole day so I try to make the most of my 'me time' early in the morning before the 'madness' begins. I listen to music, exercise, read, or simply enjoy my coffee in the garden. It helps me clear my mind and stay sane, which is a relative concept with five children under the age of 14. We are going through unprecedented circumstances and my heart and thoughts go out to those in need. We're not alone in this.”
ING has a two-tier board structure. In ING’s view this is the best way to create the proper checks and balances in the company. The Executive
Board and Management Board Banking are responsible for day-to-day management of the business and long-term strategy. The Supervisory
Board is responsible for controlling management performance and advises and challenges the Management Board.
Committee and the Supervisory Board. His areas of responsibility include strategy, innovation, legal, human resources, communications and brand experience, and corporate audit services.
Management Board Banking on 7 February 2019, and subsequently as an
Executive Board member at the AGM on 23 April 2019. He is responsible for formulating and communicating ING’s financial strategy, the integrity of ING’s accounts, reporting ING’s financial results, financing the company and tax-related policies. Related to this he ensures the communication with the Audit Committee and Supervisory Board. His areas of responsibility include treasury, tax, planning and management, investments, investor relations, procurement, economic research, and regulatory and international affairs.
Pinar Abay (43) joined the Management Board Banking on 1 January 2020.
ING’s retail and wholesale banking activities in the Netherlands, Belgium and
Management Board Banking on 1 May 2014. In addition, he was appointed as chief transformation officer on 1 October 2016. He is responsible for the bank-wide operations, IT (including standardisation), data management, transformation, know your customer (business line responsibility), information security and process management.
Isabel Fernandez (52) was appointed to the Management Board Banking on 1
September 2016 and as head of Wholesale Banking on 1 November 2016. She was responsible for ING’s wholesale banking activities globally and for sustainability.
Isabel left ING on 31 December 2020 to continue her career outside the company.
KPMG Accountants N.V., a Dutch limited liability company registered with the trade register in the Netherlands under number 33263683, is a member firm of the global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. 80
To: the Annual General Meeting of Shareholders and the Supervisory Board of ING Groep N.V.
— audited the ‘Understanding what matters most’ section on page 420, the data for the Net Promoter Score for Retail Banking, Feeling of Financial Empowerment and System Availability, as on pages 7, 15, 35, 43, 46, 52 and 420 (hereafter: ‘the Four Specific Topics’)
of ING Groep N.V. (‘ING Group’) based in Amsterdam, The Netherlands.
We performed our review on the Non-Financial Information and our audit on the Four Specific Topics in accordance with Dutch law, including Dutch Standard 3000A ‘Assurance-opdrachten anders dan opdrachten tot controle of beoordeling van historische financiële informatie (attest-opdrachten)’ (assurance engagements other than audits or reviews of historical financial information (attestation engagements)). Our responsibilities in this regard are further described in the ‘Auditor’s responsibilities’ section of our report.
We are independent of ING Group in accordance with the ‘Verordening inzake de onafhankelijkheid van accountants bij assurance-opdrachten’ (‘ViO’, Code of Ethics for Professional Accountants, a regulation with respect to independence). Furthermore, we have complied with the ‘Verordening gedrags- en beroepsregels accountants’ (‘VGBA’, Dutch Code of Ethics).
By performing our assurance procedures at country level, together with additional assurance procedures at corporate level, we have been able to obtain sufficient and appropriate assurance evidence about ING Group’s reported information to provide a conclusion about the Non-Financial Information and an opinion on the Four Specific Topics.
The Non-Financial Information and the Four Specific Topics include prospective information such as ambitions, strategy, plans, expectations and risk assessments. Inherent to prospective information, the actual future results are uncertain. We do not provide any assurance on the assumptions and achievability of prospective information in the Non-Financial Information and the Four Specific Topics.
The Executive Board of ING Group (hereafter: ‘Executive Board’) is responsible for the preparation of the Non-Financial Information and the Four Specific Topics in accordance with the reporting criteria as included in the section ‘Report content and materiality’, including the identification of stakeholders and the definition of material topics.
KPMG Accountants N.V., a Dutch limited liability company registered with the trade register in the Netherlands under number 33263683, is a member firm of the global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. 81
Procedures performed to obtain a limited level of assurance are aimed at determining the plausibility of information and vary in nature and timing from, and are less in extent than, procedures performed for a reasonable assurance engagement. The level of assurance obtained in review engagements with a limited level of assurance is therefore substantially less than the assurance obtained in audit engagements.
Misstatements can arise from fraud or errors and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the decisions of users taken on the basis of this Non-Financial Information and the Four Specific Topics. The materiality affects the nature, timing and extent of our assurance procedures and the evaluation of the effect of identified misstatements on our conclusion and opinion.
Additionally, our audit of the Four Specific Topics included, on top of the above, among others the following procedures: — identifying and assessing the risks of material misstatement of the Four Specific Topics, including being misleading or unbalanced, whether due to fraud or error, designing and performing assurance 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 for one resulting from errors, 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 of the Four Specific Topics in order to design assurance 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; — testing the design, implementation and operating effectiveness of IT relevant controls for the System Availability indicator; — evaluating the reliability of external experts in providing input data for the Net Promoter Score and Feeling of Financial Empowerment indicators.
Risk management The Covid-19 pandemic and subsequent lockdown measures have thrown the world into turmoil. The global economy shrank in 2020 as domestic demand and supply, trade and finance have been severely disrupted. This section explains ING’s approach towards risk management and how this was impacted by the Covid-19 pandemic.
ING’s financial strength and reputation by promoting the identification, measurement and control of risks at all levels of the organisation. Taking measured risks is core to ING’s business.
The risk management function supports the Executive Board in formulating the risk appetite, strategies, policies and limits. It provides review, oversight and support functions throughout ING on risk-related items. ING’s main financial risks exposures are to credit risk (including transfer risk), market risk (including interest rate, equity, real estate, credit spread, and foreign exchange risks), funding and liquidity risk, and business risk. ING is also exposed to non-financial risks such as operational, IT and compliance risks, as well as to model risks. The ING Group chief risk officer (CRO) is also the CRO of ING
This section sets out how ING manages its risks on a day-to-day basis. It explains how the risk management function is embedded within the organisation based on the ‘three lines of defence’
model. It describes the key risks that arise from ING’s business model and how these are managed by dedicated risk management departments, with various specific areas of expertise. The section provides qualitative and quantitative disclosures about solvency, credit, market, funding and liquidity, ESG, business, operational, IT, compliance and model risks.
Solvency risk, credit risk, market risk, funding and liquidity risk, ESG risk, operational risk, IT risk, compliance risk, business risk, model risk
The topics have emerged as part of the annual risk assessment that is performed as part of the Stress
The 2020 risk assessment confirmed our top and emerging risks. The top risks in 2020 are related to financial crime, cybercrime and a persistent low interest rate environment. On top of that, the Covid-19 pandemic impacted our business environment. Climate change risk remains an important risk, reflecting the impact that climate change may have for the financial position and/or reputation of ING.
In addition, governments in various countries have introduced measures aimed at mitigating the economic consequences of the outbreak. For example, the Dutch government has announced 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
ING’s customers and other counterparties. Read more in ‘Our business’, in ‘Credit risk’ and in Note 51
The Covid-19 pandemic has affected all of ING’s businesses. These effects have included increased volatility, widening of credit spreads, and credit deterioration of loans to ING’s customers. The 2020 risk costs were impacted by a combination of increased collective provisioning reflecting the worsened macroeconomic indicators and uncertainty, higher individual Stage 3 provisions, negative rating migration and manual overlays to address the risk on payment holidays and for the delay in observed defaults as a result of the Government support measures. Sectors particularly impacted by the Covid19 pandemic were Aviation (Transportation and Logistics), Hospitality and Leisure (Services and Food,
Group Consolidated financial statements and are indicated by the symbol (*). Chapters, paragraphs, graphs or tables within the risk management section that are indicated with this symbol in the respective headings or table header are considered to be an integral part of the consolidated financial statements.
IFRS standards, such as certain legal and regulatory disclosures. Not all information in this section can be reconciled back to the primary financial statements and corresponding notes, as it has been prepared using risk data that differs to the accounting basis of measurement.
Pillar III Report’, which can be found on our corporate website ing.com.
The duration of the pandemic and the impact of measures taken in response by governmental authorities, central banks and other third parties remain uncertain. Recent increases in Covid-19 infection rates amplified uncertainty and affect the recovery path. Potential economic implications for the countries and sectors where ING is active, which could have a material adverse effect on ING’s business and operations, are continuously being identified, assessed and monitored in order to execute possible mitigating actions.
The US-China relationship stands out as an important geopolitical risk, with (related) trade tensions, negatively impacting global growth. Increasing protectionism between key countries could lead to a slowdown in global production and adversely affect global trade and investments.
On 24 December 2020, the United Kingdom and the European Union agreed a post-Brexit "EU-UK
ING’s Brexit preparations were predicated on a no trade deal outcome and certain business model adaptations have been implemented to ensure the continuity of business post-Brexit. ING was well prepared with both our EU and UK post-Brexit authorisations. ECB’s authorisation decision conditions have been met or are on track for their September 2021 due dates. Pending PRA & FCA authorisation decision, UK Temporary Permissions Regime is allowing continuity of UK branch authorisation from 1
January 2021. Some FM trading activities will move from London to Amsterdam as a result of Brexit.
Knowing who we do business with helps us protect our customers, society and our bank from financial economic crimes (FEC). We believe that as gatekeepers to the financial system we have an obligation to prevent criminals from misusing it, detect misuse where it occurs and respond accordingly. We believe we can be even more effective in safeguarding the financial system if we join forces and work with other banks and with national, European and global authorities and law enforcement agencies to tackle financial economic crime. In 2020, ING continued to execute and update policies and procedures to further enhance our know your customer (KYC) activities. In addition, ING set up a special taskforce to monitor transactions for financial economic crime related to Covid-19.
Team, further enhancing the control environment to protect from, and detect and respond to, ebanking fraud, DDoS and targeted attacks. Controls and monitoring continue to be embedded in the organisation as part of the overall internal control framework and are continuously re-assessed against existing and new threats. The identification and monitoring of new threat actors and campaigns relevant to ING inform this process as does closer alignment between IT security and fraud teams. In addition, ING continues to strengthen its global cybercrime and fraud resilience through extensive collaboration with financial industry peers, law enforcement authorities, government (e.g.
ING is using a large number of systems and applications to support key business processes and operations to best focus on our customers and their needs. The reconciliation of multiple data sources and the protection of customer data are regarded as crucial processes in ING, and further spurred by its strategic focus on digital service delivery, technology and innovation. We depend on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. ING is also subject to increasing regulatory requirements including EU General Data
ING is continuing to improve data governance, execute data-quality framework controls consistently across the Bank and prioritising implementation of the target infrastructure to further simplify, standardise and modernise its activities.
The persistent low/negative interest rate environment, with central banks holding their rates at negative levels in most countries, continued to negatively impact short-term as well as long-term market rates. The Covid-19 pandemic intensified the low/negative interest rate environment and it is expected to remain at this level for some time. This is posing a challenge for bank business models that earn income from net interest income from traditional savings activities. In addition, loans are being repriced at lower rates which is putting more pressure on margins and impacting long-term profitability. ING is continuously assessing this market environment. ING has introduced negative charging and is reducing thresholds for charging negative rates. Further, ING is expanding other sources of income such as net fee and commission income.
In addition to our Climate Expert Group (CEG), in 2020 we established an internal climate risk working group to address the impacts resulting from climate change as part of a bank-wide approach. As such, climate should be considered to be included in our risk management framework and integrated into a forward-looking approach. Our Climate Risk Report 2020 details our approach and sector-specific insights.
Board (SB); and this approach is cascaded throughout ING. The MBB is composed of the Executive Board of ING Group, the heads of the business lines and the chief operating officer.
The second line of defence consists of oversight and specialised functions in risk management and compliance. They (i) have co-responsibility for risk management, through articulating and translating the risk appetite into methodologies and policies to support and monitor business management's control of risk, (ii) objectively challenge risk management execution and control processes and coordinate the reporting of risks and controls by the first line of defence, (iii) advise management on risk management and compliance and have decision-making power in relation to business activities that are judged to present unacceptable risks to ING and (iv) can set minimum requirements in terms of quality and quantity of global resourcing in the risk management and compliance functions.
ING’s risk profile versus its risk appetite to the Risk Committee, explaining changes in the risk profile.
As a member of the EB and the MBB, the CRO is responsible for ensuring that risk management issues are heard and discussed at the highest level. The CRO steers a risk organisation both at head-office and business-unit levels, which participates in commercial decision-making, bringing countervailing power to keep the risk profile within the agreed risk tolerance. The CRO reports to the SB committee on ING’s risk appetite levels and on ING’s risk profile at least quarterly. In addition, the CRO briefs them on developments in internal and external risk-related issues and seeks to ensure they understand specific risk concepts.
environmental and social risk or ESR) risks. The GCTP meets on a monthly basis. After the MBB
and the GCTP, the Credit and Trading Risk Committee (CTRC) is the highest level body authorised to discuss and approve policies, methodologies, and procedures related to credit and trading risk.
▪ Global Credit Committee – Transaction Approval (GCC(TA)) discusses and approves transactions that entail taking credit risk (including investment risk), country, legal, and environmental and social risk. The GCC(TA) meets twice a week.
▪ Asset and Liability Committee Bank (ALCO Bank) discusses and steers, on a monthly basis, the overall risk profile of all ING Bank’s balance sheet and capital management risks. ALCO Bank discusses and approves policies, methodologies and procedures regarding solvency, market risk in the banking book and funding and liquidity risks.
▪ Non-Financial Risk Committee Bank (NFRC Bank) is accountable for the design and maintenance of the Non-financial risk management framework including operational risk management, compliance and legal policies, minimum standards, procedures and guidelines, development of tools, methods, and key parameters (including major changes) for risk identification, measurement, mitigating and monitoring/ reporting. NFRC Bank meetings are held at least quarterly.
The regional and/or business unit CROs are involved in these activities. The local (regional and BU) CRO
is responsible for the analysis, monitoring and management of risks across the whole value chain
(from front to back office). The local risks are discussed in local risk committees that roll up to the key risk committees at executive level. Local Client Integrity Risk Committees (CIRCs) assess client integrity risk and they have a final decision on client acceptance or client off-boarding, from a risk-based perspective, in the areas of financial economic crime (FEC), Foreign Account Tax Compliance Act
Global policies and control standards are developed and maintained or updated within the ICF. These global documents are designed by head-office functions and are to be adhered to by all ING entities and support functions. In line with the Enterprise Risk Management approach, ownership for policies will be with the 2nd Line of Defence (2nd LoD), while control standards are to be owned by the 1st LoD.
Global policy and control standard documents are approved by relevant approval bodies (e.g.
Supervisory Board, Executive Board, Managing Banking Board and Bank Non-Financial Risk Committee).
The policies are based on the risk taxonomy, which is designed to prevent overlaps in policy control objectives. The control standard owners are responsible for defining the key controls that mitigate the significant inherent risks in the business processes. The ICF aims to achieve single key-control testing for multiple purposes, where controls mitigate more than one risk.
All policies, control standards, and procedures are published on ING’s intranet. New and updated documents are periodically communicated by means of a dedicated policy update bulletin to the country managers and senior heads of business departments.
At ING we attach great importance to a sound risk culture, which is essential for performing our role in society responsibly and to keep the bank safe, secure and compliant. Our risk culture determines the way in which employees identify, understand, discuss, and act on the risks we are confronted with and the risks we take. In 2020, we conducted a self-assessment of our risk culture and are working on developing our envisaged risk culture, built on the foundation of our Orange Code and Global Code of
To support ING’s ambition to safeguard a sound risk culture, several enhancement projects are ongoing in areas such as our approach to monitoring risk culture, our escalation behaviour and further linking non-financial risk related topics to our purpose and strategy.
As mentioned above, the Orange Code and the global Code of Conduct are the foundation of ING’s risk culture. In February 2020 ING launched a new global Code of Conduct linking the Orange Code to its main ING policies, minimum standards and guidelines. In addition to the Orange Code, it further defines the most essential conduct principles expected from ING employees in their daily activities, to create additional risk awareness and better meet expectations stated in external rules and guidelines.
Additionally, the global Code of Conduct will be linked to the employees’ performance management cycle to ensure continuous attention to the Global Code of Conduct, and dialogue on how to apply it in the daily work practice of our employees.
The Orange Code is a declaration of who we are. It describes what we can expect from each other when we turn up to work each day. It is a set of standards that we collectively value, strive to live up to, and invite others to measure us by.
represent our way to differentiate ourselves. The Orange Code is embedded in commitments we make to each other and the standards by which we will measure each other’s performance.
(new) employees to participate in e-learnings that aim to equip them to make the right decisions when faced with a dilemma or issue. In 2020, we developed and rolled out new e-learnings on the Global
We established a board to approve and monitor progress on the required learning that is taken by all staff. This will ensure improved learner engagement, bank-wide alignment, and connection between learning, business impact and management actions and also improved feedback and evidencing of outputs. The board brings together content owners, learning experts and corporate communications teams to ensure the best fit for the training need.
We also took steps to expand our learning for risk professionals, with the Risk Academy which provides focused learning for Risk staff. These take the form of various online learning modules and frameworks that support employees in developing their knowledge, skills and behaviours.
In the Netherlands, all employees of ING take the Banker’s Oath and pledge this in a meaningful ceremony. The oath came into force in the Netherlands on 1 April 2015 as part of a joint approach from all banks. The introduction of social regulations, the revision of the Dutch Banking Code, and the implementation of the Banker’s Oath (with the associated rules of conduct and disciplinary law), are a way for Dutch banks to show society what they stand for and are accountable for, both as individual banks and as a sector. In 2020, due to the Covid-19 crisis, ING NL developed a virtual Banker’s Oath ceremony via Skype/Teams– in addition to the physical one – to ensure that all new employees
Before taking the oath, its importance is discussed, as well as dilemmas employees may come across in their daily work, to ensure a careful balancing of the interests of all our stakeholders, in the decisions they make. In 2020, the whole Banker’s Oath programme was revised and updated, to keep it aligned with the current external circumstances as well as with ING’s do your thing branding.
The complexity of this type of risk is that it is less tangible compared to other risk areas because it focuses on behavioural patterns and their drivers. Patterns in how decisions are made, how people communicate and whether they can take ownership. Behaviour is driven by formal and informal mechanisms. Examples of formal drivers are the processes ING applies and how its governance is structured. Informal drivers are less tangible, such as group dynamics or underlying beliefs that influence behaviour.
Behavioural risk assessments (BRAs) identify and analyse undesired behaviours within ING and provide management with specific direction on how to change these behaviours. They focus on the effectiveness of groups rather than individuals, the role of leadership and on less visible aspects such as team dynamics and unwritten social norms. The goal is to understand and systematically assess what drives undesired habits at ING. The BRM model of behavioural risk is used as the standard across
A ‘nudge lab’ can be organised to co-create effective nudges (i.e. a gentle push in the right direction, based on behavioural insight) for solutions to issues that were identified during a BRA. The solutions that have been developed are now being scaled up globally.
ING uses a step-by-step risk management approach to identify, manage and mitigate its financial and non-financial risks. The approach consists of a cycle of five recurrent activities: risk identification, risk assessment, risk control, risk monitoring, and risk reporting. The cycle is designed to determine what the risks are, assess which of these risks can really do harm, take mitigating measures to control these risks, monitor the development of the risk to see if the measures taken are effective, and report the findings to management at all relevant levels to enable them to take action when needed.
Risk identification is a joint effort of the business and the risk management functions. Its goal is to detect potential new risks and determine changes in known risks. Regular risk identification is essential for effective risk management. Potential risks that are not identified, will not be controlled and monitored and may lead to surprises later. Known risks may have changed over time and as a consequence the existing mitigating measures and monitoring may be inadequate or obsolete.
Each identified risk is assessed qualitatively or quantitatively to determine its importance. This enables
ING to decide which of the identified risks need control measures and how strict or tolerant these measures should be. Known risks are re-assessed to detect any change in the risk level.
The RAF is focused on setting the risk appetite at the consolidated level and across the different risk categories, and provides the principles for cascading this risk appetite down into the organisation. The
RAF and underlying limit allocation are reviewed on an annual basis, or more frequently if necessary, based on their quarterly review in the EB, the MBB and the SB. It is therefore a top-down process, which bases itself on the ambition of the bank in terms of its risk profile, the regulatory environment and the economic context. The set of limits used is split according to the approval levels needed for them.
Limits that need SB approval are called boundaries and the underlying metrics supporting the boundaries which need EB and MBB approval are called instruments. Since the outbreak of the Covid19 virus, ING re-assessed its risk appetite to take into account the potential impact of the virus and the uncertainties caused by the virus.
The outcome of the risk identification and risk assessment process is used as the starting point for the review of the RAF. Within this step, the risks ING faces when executing its strategy are identified in the context of the current economic, political, regulatory and technological environment. The assessment identifies whether the potential impact is material and if it is sufficiently controlled within ING’s risk management function. It benchmarks the current risk framework against regulatory developments.
Cascading is done via a number of detailed risk appetite statements which have been defined per risk type, the combination of which ensures compliance with the overarching Solvency, Concentration and
Step 3. Cascade into statements per risk type and business unit
The bank-wide risk appetite is translated per risk type, which is further cascaded into the organisation to the lowest level. Risk appetite statements are then translated into dedicated underlying risk limits that are used for the day-to-day monitoring and management of ING’s risks. The risk appetite statements serve as inputs for the quarterly planning process as well as for the establishment of key performance indicators and targets for senior management.
In order to verify that it remains within the Risk Appetite Framework, ING reports its risk positions vis-àvis its limits on a regular basis to senior management committees. The Quarterly Risk Update reflecting the exposure of ING against the risk appetite is submitted quarterly to the EB and the MBB and to the
Furthermore, sensitivity analyses are performed, which focus on stressing one or more risk drivers; usually without an underlying scenario narrative. Finally, ING performs reverse stress tests, which aim to determine scenarios that could lead to a pre-defined severe adverse outcome.
 Scenario definition and parameterisation: Based on the outcome of the previous step, a set of scenarios is determined with the relevant scope and set of risk drivers for each scenario, as well as its severity, the key assumptions and input parameters. The output of this phase includes a quantitative description of the stress scenarios to be analysed, the relevant output metrics and, when applicable, a narrative description.
 Scenario control and management assessment: Depending on the outcomes of the stress test and the likelihood of the scenario, mitigating actions may be proposed. Mitigating actions may include, but are not limited to, sales or transfers of assets and reductions of risk limits.
On 27 June 2019, a series of measures referred to as the Banking Reform Package (including certain amendments to CRR and CRDIV commonly referred to as ‘CRR II’ and CRD V’) came into force, subject to various transitional and staged timetables. The adoption of the Banking Reform Package concluded a process that began in November 2016 and marks an important step toward the completion of the
Resolution Directive (BRRD) and the Single Resolution Mechanism Regulation (SRMR). The Banking
Basel NSFR standard but including adjustments with regard to e.g. pass-through models and covered bonds issuance, mandatory restrictions on distributions, permission for reducing own funds and eligible liabilities, macroprudential tools, a new category of ‘non-preferred’ senior debt, the minimum requirement for own funds and eligible liabilities (MREL) and the integration of the TLAC standard into
EU legislation. Further, the EBA obtained a mandate to investigate how to incorporate environmental, social, and governance (ESG) risks into the supervisory process and what the prudential treatment of assets associated with environmental or social objectives should look like.
In order to make capital levels more comparable and to reduce variability in banks’ internal models, in
to assess the reliability and comparability between banks’ models. The TRIM aims to create a level playing field by harmonising the regulatory guidance around internal models with the ultimate goal of restoring trust in European banks’ use of internal models.
The level and quality of capital is crucial for the resilience of individual banks. Banks are expected to assess the risks they face, and in a forward-looking manner ensure that all material risks are identified, managed and covered sufficiently by loss absorbing capital to ensure continuity in case of materialisation of unexpected risks in times of stress. Given the interdependencies to other financial and non-financial risks this balancing act of capital adequacy needs to be done within a sound and integrated management approach coherently linking all moving parts of the bank in line with the longterm business strategy.
ING’s Internal Capital Adequacy Assessment Processes (ICAAP) aims to ensure that capital levels are adequate to cover all material risks at all levels and to ensure compliance with regulations. ING follows an integrated approach to assess the adequacy of its capital position in relation to its business activities, underlying business strategy, market positioning risk profile and operating environment. This implies taking into account the interests of its various stakeholders such as regulators, shareholders, investors, rating agencies, clients and customers.
The outbreak of the Covid-19 stress tests resulted in several additional analyses to assess the potential impact of the virus on the actual and future solvency position. For instance, in 2020 ING performed a sequence of Covid-19 stress tests to assess potential scenarios of how the virus would develop and how it may impact society and economies. These Covid-19 stress tests were used to prepare potential mitigating actions, but also served as starting point for the review of ING’s risk appetite and of the financial and capital planning. In light of this, ING also updated the management actions in the
Once approved, the conclusions of the risk assessment feed into the annual review of the Risk Appetite
Framework, the Stress Testing Framework and the Economic Capital Framework. In addition to this annual process, ING also re-assesses its risks as part of its Capital Adequacy Statement, a quarterly process to assess ING’s capital adequacy.
As explained in the Risk Appetite Framework section in the previous chapter, ING has established overarching solvency risk boundaries. Boundaries are risk appetite statements that are essential for risk management activity, making it of paramount importance to keep these boundaries within the defined level. The SB is responsible for approving and monitoring the boundaries. These boundaries are complemented by a sequence of risk-type-specific instruments. These underlying risk appetite statements are cascaded down into the organisation to the lowest level deemed necessary and dedicated risk thresholds are set that are used for day-to-day monitoring and management of ING’s risks. ING has solvency risk appetite statements in place for the following metrics: CET1 ratio, Total capital ratio, leverage ratio, TLAC RWA/leverage ratio and economic capital utilisation.
The capital and funding plan is an integral part of the dynamic plan, ING’s financial and business planning process. Its objective is to inform and advise the management on the capital development and need of ING Group and ING Bank, under base case and adverse scenarios. It describes how ING
shall finance the expected capital constraints taking into consideration growth projections, capital and risk evolution, macro and market conditions, both under the normative and economic perspective. The capital & funding plan is updated at least twice a year, and discussed and approved by ALCO Bank.
Within these updates, ING takes into account recent market and risk developments and ensures that the capital planning adheres to the solvency risk appetite set by the SB.
The capital management buffer aims to protect the interests of key stakeholders (e.g. shareholders, investors) and plays an important role in the overall capital adequacy governance.
The rationale behind the concept of the management buffer is that it provides an additional cushion on top of the (local) regulatory minimum requirements (e.g. SREP requirements) to withstand a certain level of stress and to facilitate awareness and preparedness to take management actions. ING reviews its capital management buffer on a regular basis to determine its effectiveness and robustness, and updates it as appropriate.
ING distinguishes the following three types of stress test analyses: • Sensitivity analysis: Within these analyses, ING assess the impact of a pre-defined shock in one or more risk drivers. The key purpose of sensitivity analyses is to monitor the impact of this predefined (or standardised) shock over time to get an understanding of how the risk profile of the bank has developed.
• Scenario analysis: Scenario analyses are used to assess an integral impact of historical, statistical and/or hypothetical circumstances on the financial position of ING. These stress tests often build on a qualitative scenario narrative and reflect risk topics that are deemed relevant for ING given, for example, its business model. Scenarios can be derived from historical realisations, but also reflect e.g. potential macroeconomic, geopolitical or climate risk related events. These scenarios can be used for one-off analyses, but can also be translated into a set of regular or standardised stress tests that are assessed on a quarterly basis.
• Reverse stress testing: The purpose of reverse stress testing is to identify scenarios that could lead to a pre-defined outcome. This could for example be a pre-defined solvency level. The added value of reverse stress testing is to explore risk drivers and stress scenarios outside the existing range.
The outcomes of solvency stress test analyses are taken into account in capital planning, but also for setting risk appetite statements and the capital management buffer.
The Contingency Capital and Funding Plan (CCFP) sets out the organisation and actions in case of contingency events. The CCFP has a suite of monitoring metrics that are aligned with the risk appetite statements that are in place for managing ING’s capital, liquidity and funding position. The Recovery
Plan is designed by ING to detect and act upon possible major and unforeseen deterioration of its solvency position in a timely fashion. This plan has integrated several risk appetite statements to allow timely identification of possible stress on the company. Incorporating risk appetite statements into both plans ensures a seamless continuum between the ING’s business-as-usual management and its contingency or recovery management.
The CAS assesses the adequacy of ING’s capital position in relation to above-mentioned drivers and states the extent to which the capital position consequently is considered as adequate. On a quarterly basis the CAS document is prepared. Additionally each year, the management body signs and provides a comprehensive assessment of ING’s capital adequacy, supported by the ICAAP outcomes, in the form of a Capital Adequacy Statement.
ING has organised support functions at two levels: Tier 1, operational unit level, and Tier 2, head office level. Credit risk is a Tier 1 level risk function within ING and is part of the second line of defence. It is managed by regional and/or business unit CROs. The CRO Wholesale Banking (WB), CRO Challengers &
The credit risk function encompasses the following activities: ▪ Measuring, monitoring and managing credit risks in the bank’s portfolio, including the measures taken since the start of the Covid-19 crisis; ▪ Challenging and approving new and modified transactions and borrower reviews; ▪ Managing the levels of provisioning and risk costs, and advising on impairments; and
▪ Investment risk: is the credit default and risk rating migration risk that is associated with ING’s investments in bonds, commercial paper, equities, securitisations, and other similar publicly traded securities. This can be viewed as the potential loss that ING may incur as a result of holding a position in underlying securities whose issuer's credit quality deteriorates or defaults.
▪ Settlement risk: is the risk that arises when there is an exchange of value (funds or instruments) for the same value date or different value dates and receipt is not verified or expected until after ING has given irrevocable instructions to pay or has paid or delivered its side of the trade. The risk is that ING delivers but does not receive delivery from its counterparty. ING manages settlement risk in the same way as other credit risks by setting a risk limit per client. Due to the short-term nature (typically one day), ING does not hold provisions for settlement risk. Although a relatively low risk, ING increasingly uses DVP (delivery versus payment) and safe settlement payment techniques to reduce settlement risk.
Settlement risk -Financial assets at fair value through profit or loss (trading assets and non-trading derivatives) Note 4 Financial assets at fair value through profit or loss -Financial liabilities at fair value through profit or loss (trading assets and non-trading derivatives) Note 11 Other assets -Amounts to be settled Note 14 Financial liabilities at fair value through profit or loss
The credit risk appetite and concentration risk framework is designed to prevent undesired high levels of credit risk and credit concentrations within various levels of the ING portfolio. It is derived from the concepts of boundaries and instruments as described in the ING Risk Appetite Framework.
The credit risk appetite and concentration risk framework is composed of: ▪ Country risk concentration: Country risk is the risk that arises due to events in a specific country (or group of countries). In order to manage the maximum country event loss ING is willing to accept, boundaries are approved by the SB. The estimated level is correlated to the risk rating assigned to a given country. Actual country limits are set by means of country instruments, which are reviewed monthly and updated when needed. For countries with elevated levels of geopolitical or severe economic cycle risk, monitoring is performed on a more frequent basis with strict pipeline and exposure management.
▪ Single name and industry sector concentration: ING has established a credit concentration risk framework in order to identify, measure and monitor single name concentration and industry sector concentration (systemic risk). The same concept of boundaries and instruments is applicable.
▪ Scenarios and stress tests: Stress testing evaluates ING’s financial stability under severe, but plausible stress scenarios, and supports decision-making that assures ING remains a financially going concern even after a severe event occurs. In addition to the bank-wide stress testing framework described above, ING performs regularly sensitivity analyses to assess portfolio risks and concentrations. These sensitivity analyses are consistent with the stress scenario established in the Group-wide credit risk appetite framework. In light of Covid-19 ING
systems with internally developed models based on data that is either manually or automatically fed.
Under certain conditions, the outcome of a manually fed model can be challenged through a rating appeal process. Risk ratings for non-performing loans (NPL) (20-22) are set by the global or regional credit restructuring department. For securitisation portfolios, the external ratings of the tranche in which ING has invested are leading.
The last major credit risk source involves pre-settlement (PS) exposures which arise from trading activities, including derivatives, repurchase transactions and securities lending/borrowing transactions.
The prior period outstandings by economic sector (industry) have been updated reflecting improved classification of clients. This is applicable to all following tables in the sections credit risk portfolio, credit risk mitigation and credit quality that includes outstandings by economic sectors with prior period comparatives.
Outstandings per line of business (*)1, 2, 3, 4 in EUR million Wholesale Banking Retail Benelux Retail Challengers &
Outstandings per line of business (*) - continued1, 2, 3 in EUR million Wholesale Banking Retail Benelux Retail Challengers &
During 2020, ING’s portfolio size increased by €33.5 billion (+3.93%) to €887.5 billion outstandings. The net volume growth was concentrated in the Money Market and Lending risk categories and was mainly due to growth in exposures to Central Banks relating to participation in TLTRO III. Excluding Central
Banks, the portfolio size decreased by €14.0 billion, driven by a reduction in Lending exposures and FX
With respect to the rating distribution within the business lines, in Wholesale Banking AAA and AA
rated assets increased driven by Central Banks exposures, mainly due to the transfer of the reserve deposit with the Dutch central bank (DNB) from Corporate Line Bank to Wholesale Banking. Further decrease in BBB rating class for Wholesale Banking was seen with Commercial Banks’ exposures, while for BB rating the outstanding decreased primarily in natural resources and transportation and logistics industries.
The rating distribution for Retail Benelux improved mostly because of Dutch residential mortgages, shifting from rating class BB to ratings A and BBB, driven by continuing increase of the NVM house price index and improving LTVs, despite Covid-19. Additionally, a trend of early repayments was visible in the
Dutch mortgage portfolio, further reducing the share of BB rating class. Residential mortgages in
Belgium also improved in rating distribution, reducing concentration in BB and B ratings, while increasing in AA, A and BBB. On the other hand, the retail mid-corporates portfolio showed a worsening of rating distribution both in Belgium and the Netherlands, shifting volumes from BBB to B rating.
A and BBB, with Poland and Spain also contributing to the growth of A-rated residential mortgages.
In C&G, apart from mortgage volumes growth, an increased outstanding was seen in Lower Public
Lower Public Administration (Germany and France), while overall exposure decreased in Food,
Non-food retail (Retail): exposure slightly reduced and amounted to €10.8 billion (1.22% of total portfolio). Rating distribution remained relatively stable, with concentration reducing in BBB, BB and B
Outstandings by economic sectors and geographical area (*)1, 2 in EUR million Region Total
The portfolio analysis per geographical area re-emphasises the international distribution of the ING
portfolio. The share of the Netherlands in the overall portfolio remained stable at 25%.
The most noticeable trend in the Netherlands was the increase in exposure with the central bank.
In terms of rating distribution, the share of investment grade increased in both the Netherlands and
Belgium (due to central banks), while non-investment grade reduced, mainly seen with private individuals (mortgages shifting to investment grade). For both countries substandard grade remained relatively stable (little below 1%). For the Netherlands, the NPL grade decreased to 1.2% from 1.4%, while for Belgium it increased to 3.1% from 2.5%.
For Rest of Europe, the exposure decreased due to lower exposure with the central bank of the Czech
Republic, lower outstanding in Turkey, mainly due to FX impact and a reduction of exposure in
The lower exposure in the Americas was mainly driven by FX impact and decreased volumes of term loans to US Corporates, mainly in Natural Resources, partly offset by higher outstanding to US Non-
Bank FIs. A similar reduction in outstanding for Natural Resources was visible in Asia (mainly in
In Australia, outstanding increased, driven by Central Bank exposures and exposures in Real Estate, partly compensated by lower volumes of trade related transactions with Commercial Banks.
The top five countries within Rest of Europe based on outstanding were: Italy (€17,544 million),
These also require that the value of the cover is monitored on a regular basis. Covers are revalued periodically and whenever there is reason to believe that the market is subject to significant changes in conditions. The frequency of monitoring and revaluation depends on the type of cover.
The cover values are presented for the total portfolio of ING, both the performing and non-performing portfolio. Our definition of non-performing is explained in detail in ‘Credit restructuring’ (below). For additional insight, a breakdown of ING’s portfolio by industry and geography is provided.
Exposures are categorised into different value-to-loan (VTL) buckets that give insight in the level of collateralisation of ING’s portfolio. VTL is calculated as the cover value divided by the outstandings at the balance sheet date. The cover values are indexed where appropriate and exclude any cost of liquidation. Covers can either be valid for all or some of a borrower’s exposures or particular outstandings, the latter being the most common. For the purpose of aggregation, over-collateralisation is ignored in the total overview and VTL coverage of more than 100% is reported as fully covered. For
VTL coverage in the tables for Dutch mortgages, consumer lending and business lending, each cover is subsequently assigned to one of the six defined VTL buckets: no cover, >0% to 25%, >25% to 50%, >50% to 75%, >75% to <100%, and ≥ 100%.
Total Lending, Investment and Money Market 841,367 771,536 26,761 121,811 341,039 36.9% 12.7% 50.4%
Cover values including guarantees received (*) in EUR million Cover type Value to Loan 2019 Outstandings Mortgages
The consumer lending portfolio accounts for 37.3% of ING’s total outstanding, primarily consisting of residential mortgage loans and other consumer lending loans, which mainly comprise term loans, revolvers and personal loans to consumers. As a result, most of the collateral consists of mortgages.
The mortgage values are collected in an internal central database and in most cases external data is used to index the market value (e.g. mortgage values for the Netherlands are updated on a quarterly basis using the NVM/CBS house price index).
A significant part of ING’s residential mortgage portfolio is in the Netherlands (36.6%), followed by
WOZ (fiscal market value, determined by government authorities) or an automated model valuation
In most cases, a valuation is performed by certified valuers that are registered at one of the organisations accepted by ING. In addition, the valuer must be a member of the NVM (Nederlandse
Vereniging van Makelaars – Dutch Association of Real Estate Agents), VBO (Vereniging Bemiddeling
in EUR million Cover type Value to Loan 2020 Outstandings Mortgages
in EUR million Cover type Value to Loan 2019 Outstandings Mortgages
ING’s residential mortgage outstanding increased mainly in Germany (4.9%), Spain (7.4%) and Poland
Business lending accounts for 43.8% of ING’s total outstanding (44.3% in 2019). In line with our objective to give stakeholders insight into the portfolio, we present the business lending portfolio per industry breakdown in accordance with the NAICS definition and per region and main market. Business lending presented in this section does not include pre-settlement, investment and money market exposures, which are outlined in the next sections.
of which Total Non-performing 8,261 3,027 230 3,803 6,915 29.1% 5.2% 5.0% 8.5% 14.2% 38.1%
1 The prior period outstandings by economic sector (industry) have been updated reflecting improved classification of clients.
Cover values including guarantees received - Business lending portfolio (*) 2020 Cover type Value to Loan
Consumer lending past due but performing (1–90 days) 2,619 3,367 1 Based on lending and investment activities
Total group outstanding increased by 4% (€+33.5 billion), mainly visible in the Investment grade rating class (€+59.3 billion) partly offset by the decrease in the non-investment grade rating class outstanding (€-28 billion). Business lending past due but performing remained stable at €7.8 billion, whereas consumer lending past due but performing decreased by 22% (€-0.7 billion). The €2.0 billion non-performing outstanding increase was distributed as follows; Retail Benelux (€+1.1 billion) and
Retail Challengers & Growth Markets (€+0.9 billion). Within Retail Banking Benelux the private individuals outstanding increase accounted for €+0.7 billion, mainly driven by the introduction of the new definition of default for mortgages. while for retail business this was €+0.4 billion in Builders &
Contractors and the Services sectors. Within Retail Challengers & Growth Markets the increase was seen for private individuals. This was mainly driven by mortgages forbearance measures granted to clients in the form of payment holidays not in scope of the European Banking Association (EBA)
ING has aligned the regulatory concept of non-performing with that of the definition of default. Hence, in Wholesale Banking, obligors are classified as non-performing when a default trigger occurs: ▪ ING believes the borrower is unlikely to pay; the borrower has evidenced significant financial difficulty, to the extent that it will have a negative impact on the future cash flows of the financial asset. The following events could be seen as indicators of financial difficulty: ▪ The borrower (or third party) has started insolvency proceedings; ▪ A group company/co-borrower has NPL status; ▪ Indication of fraud (affecting the company’s ability to service its debt); ▪ There is doubt as to the borrower’s ability to generate stable and sufficient cash flows to service its debt; ▪ Restructuring of debt.
▪ The obligor has failed in the payment of principal, interest or fees, the total past due amount is above the materiality threshold and this remains the case for more than 90 consecutive days.
Ageing analysis (past due but performing): Consumer lending portfolio by geographic area, outstandings 1 (*)
Ageing analysis (past due but performing): Business lending portfolio by geographic area, outstandings (*) in EUR million 2020 2019
Total past due but performing outstanding remained stable for business loans. Although, there was a similar sized but opposite difference visible in the 1-30 days bucket (€+0.4 billion) and the 61-90 days bucket (€-0.3 billion). The largest contributors in the 1-30 days bucket were seen in America (€+1.3 billion), Bermuda (€+0.2 billion) on some larger client names. This was partially offset by the decreases witnessed in France (€-0.5 billion), Spain (€-0.3 billion) and Belgium (€-0.3 billion). The largest contributors to the decrease in the 61-90 days bucket were Sweden (€-0.1 billion) and America (€-0.1 billion).
Global Credit Restructuring (GCR) is the dedicated and independent department that deals with nonperforming loans and loans that hold a reasonable probability that ING will end up with a loss, if no specific action is taken. GCR handles accounts or portfolios requiring an active approach, which may include renegotiation of terms and conditions and business or financial restructuring. The loans are managed by GCR or by units in the various regions and business units.
ING uses three distinct statuses to categorise the management of clients with (perceived) deteriorating credit risk profiles, i.e. there is increasing doubt as to the performance and the collectability of the client’s contractual obligations: ▪ Watch List: Usually, a client is first classified as Watch List when there are concerns of any potential or material deterioration in credit risk profile that may affect the ability of the client to adhere to its debt service obligations or to refinance its existing loans. Watch List status requires more than usual attention, increased monitoring and quarterly reviews. Some clients with a Watch List status may develop into a Restructuring status or even a Recovery status.
ING reviews the performance of forborne exposures at least quarterly, either on a case-by-case
Summary Forborne portfolio by forbearance type (*)1 in EUR million 2020 2019
As per December 2020 ING’s total forborne assets increased by €10.3 billion (108.8%) against
As per December 2020, Wholesale Banking forborne assets amounted to €10.2 billion, which represented 3.2% of the total Wholesale Banking portfolio.
The main concentration of forborne assets in a single country was in the United Kingdom with 17%
Banking forborne assets and 62% of the total Wholesale Banking non-performing forborne assets. Back in 2019, the main concentration was witnessed in Natural Resources, Transportation & Logistics and
Globally, 2020 has been dominated by the Covid-19 pandemic and the distressing human and economic cost thereof. The shutdown of various businesses immediately affected banking customers and as such various measures have been and continue to be implemented in order to minimise shortand long-term economic and customer impacts. In many countries, governments have adopted economic support programs (such as tax advantages, unemployment regulations or guarantees) that we believe will assist ING clients in potential financial difficulty to manage through these extraordinary times. In addition, various initiatives have been taken by ING to grant payment holidays, (guaranteed)
Governments in almost all Retail Banking countries have adopted measures providing for payment holidays. As of end-December, in line with the European Banking Association (EBA) moratoria guidelines, approximately 196,000 customers had been granted payment holidays under schemes that were eligible under the EBA moratoria guidelines. The total exposure of loans for which a payment holiday was granted amounts to €19.4 billion, of which over 55% were for customers located in the
The payment holiday schemes offered in the various countries differ in terms of scope, benefit duration and key conditions. Generally, underlying conditions differ per country in terms of tenor, deferment of principal and interest payments. The payment holidays are applied to business lending, mortgages and consumer loans.
The modification of contractual terms of loans subject to payment holiday arrangements does not automatically result in derecognition of the financial assets. Where applicable, the carrying amount of the financial asset has been recalculated as the present value of the renegotiated or modified contractual cash flows, discounted at the original effective interest rate and a gain or loss was recognised.
The various measures by governments and ING to alleviate the impact of Covid-19 also impact the loan classification in terms of forbearance and consequently IFRS 9 staging. In light of this, the EBA has provided guidelines that expired on 30 September 2020, which defined eligibility criteria for a payment holiday arrangement offered to a large group of customers to be classified as a “general payment moratorium”. Based on the guidelines, the granting of these payment holidays did not lead to forbearance classifications. Therefore, it did not automatically trigger recognition of lifetime Expected
2 The prior period outstandings by economic sector (industry) have been updated reflecting improved classification of clients.
Non-Bank Financial 1 Economic sectors not specified in above overview are grouped in Other.
Non-performing Loans: outstandings by economic sectors and geographical area (*)1 in EUR million Region Total
Non-Bank Financial 1 The prior period outstandings by economic sector (industry) have been updated reflecting improved classification of clients.
The non-performing portfolio increased in 2020, as a result of ING’s introduction of a new definition of default (€1.0 billion) and due to developments with respect to certain large individual files. The increase is visible in all businesses and also in almost all the sectors. More specifically in Retail Benelux and in
The IFRS 9 models leverage the advanced internal rating-based (AIRB) models (PD, LGD, EAD), which include certain required conservatism. In order to include IFRS 9 requirements, such regulatory conservatism is removed from the ECL parameters (PD, LGD and EAD). The IFRS 9 models apply two types of adjustments to the ECL parameters: (1) to economic outlook and (2) for stage 2 and stage 3 assets only, to the lifetime horizon. The IFRS 9 model parameters are estimated based on statistical techniques and supported by expert judgement.
and EBA guidelines, ING updated its definition of default in the first quarter of 2020. Consequently, ING
The Stage 1 portfolio represents 91.8% (2019: 94.0%) of the total gross carrying amounts, mainly composed of investment grade, while Stage 2 makes up 6.8% (2019: 4.7%) and Stage 3 makes up 1.5%
Non-Investment grade 1 Compared to the credit risk portfolio, the differences are mainly undrawn committed amounts (€118.4 billion) not included in Credit outstandings and non-IFRS 9 eligible assets (€89.1 billion, mainly guarantees, letters of credit and pre-settlement exposures)
2 For a reference to the Notes in the consolidated financial statements, we refer to the table ‘Reconciliation between credit risk categories and financial position’.
Non-Investment grade 1 Compared to the credit risk portfolio, the differences are mainly undrawn committed amounts (€115 billion) not included in Credit outstandings and non-IFRS 9 eligible assets (€100 billion, mainly guarantees, letters of credit and pre-settlement exposures) included in Credit outstandings.
The table below provides a reconciliation by stage of the gross carrying/nominal amount and allowances for loans and advances to banks and customers, including loan commitments and financial guarantees. The transfers of financial instruments represent the impact of stage transfers upon the gross carrying/nominal amount and associated allowance for ECL. This includes the netremeasurement of ECL arising from stage transfers, for example, moving from a 12-month (stage 1) to a lifetime (stage 2) ECL measurement basis.
Please note the following comments with respect to the movements observed in the table below: ▪ Stage 3 gross carrying amount increased by €2.4 billion from €11.0 billion as per 31 December 2019 mainly as a result of ING’s introduction of a new definition of default (€1.0 billion) and due to developments with respect to certain large individual files in the first half of 2020. For further background on implementation of the new definition of default, please refer to section 1.6 of the Consolidated Financial Statements; ▪ Stage 2 gross carrying amount increased by €20.9 billion from €41.1 billion as per 31 December 2019. This is mainly caused by the Watch List trigger (€10.2 billion) and the forbearance trigger
▪ Transportation & Logistics, Services, Real Estate and Food, Beverages & Personal Care were the sectors particularly impacted by the Covid-19 pandemic, with an increase in stage 2 amounts of €4.5 billion, €3.7 billion, €3.7 billion and €2.2 billion respectively. These sectors represent 10%, 11%, 10% and 9% of the total stage 2 gross carrying amounts respectively; ▪ The net re-measurement of loan loss provisions in stage 1 and stage 2 of €109 million and €450 million respectively and the transfer into lifetime ECL not credit impaired of €651 million were significantly impacted by the worsened macroeconomic outlook, including management adjustments of €269 million to reflect the risks in payment holidays and the impact of oil price decrease on the upstream Reserve Based Lending book in the US and €394m overlays to address for the delay in observed defaults as a result of the Government support measures.
Additional information on macroeconomic scenarios is included in the section “Macro-economic scenarios and sensitivity analysis of key sources of estimation uncertainty”.
Transfer into 12-month ECL (Stage 1) 9,139 24 -8,899 -200 -240 -18 0 -194
Transfer into lifetime ECL credit impaired (Stage 3) -3,592 -30 -1,879 -163 5,471 1,518 0 1,325
2 Stage 3 Lifetime credit impaired includes €3 million Purchased or Originated Credit Impaired.
Transfer into lifetime ECL credit impaired (Stage 3) -2,210 -6 -1,753 -135 3,964 1,113 972
Gross carrying amount at 31 December of financial assets for which loss allowance has changed to 12-month measurement during the period 312 689
Macroeconomic scenarios and sensitivity analysis of key sources of estimation uncertainty (*)
where, in management's opinion, the consensus forecast does not fully capture the extent of recent credit or economic events. The macroeconomic scenarios are applicable to the whole ING portfolio in the scope of IFRS 9 ECLs.
The introduction of IFRS 9, with its inherent complexities and potential impact on the carrying amounts of our assets and liabilities, represents a key source of estimation uncertainty. In particular, ING’s reportable ECL numbers are most sensitive to the forward-looking macroeconomic forecasts used as model inputs, the probability-weights applied to each of the three scenarios, and the criteria for identifying a significant increase in credit risk. As such, these crucial components require consultation and management judgement, and are subject to extensive governance.
As a baseline for IFRS 9, ING has adopted a market-neutral view combining consensus forecasts for economic variables (GDP, unemployment) with market forwards (for interest rates, exchange rates and oil prices). The Oxford Economics’ Global Economic Model (OEGEM) is used to complement the consensus with consistent projections for variables for which there are no consensus estimates available (most notably house prices and – for some countries - unemployment), to generate alternative scenarios, to convert annual consensus information to a quarterly frequency and to ensure general consistency of the scenarios. As the baseline scenario is consistent with the consensus view it can be considered as free from any bias.
Oxford Economics runs a survey with respondents from around the world and across a broad range of industries. In this survey the respondents put forward their views of key risks. Following the survey results, the distribution of forecast errors (that is being used for determining the scenarios) may be skewed.
The December 2020 consensus anticipates global output (ING definition), after declining sharply in 2020 by 3.6%, to bounce back to 5.0% growth in 2021 and 3.8% in 2022. The consensus reflects that near-term economic weakness - resulting from a re-imposition of restrictions on mobility and firms, in order to prevent a further spread of the coronavirus – will be followed by an economic recovery underpinned by the start of a vaccination program in many parts of the world enabling a lifting of lockdowns. This could bring world real GDP back to pre-crisis levels by mid-2021. China is in the lead with the economy touching pre-crisis levels again already in the second half of 2020. But the US
The upside scenario – though technical in nature - implies a quick return of output to its precoronavirus baseline forecast and more positive medium-term prospects than envisaged in the baseline scenario. In this scenario, unemployment rates quickly fall back from their peaks in 2020. In spirit it is a scenario where medical advances allow for a more rapid easing of lockdowns. A faster restoration of confidence among business and households would result in private spending and business activity accelerating more markedly in 2021 and beyond.
In times of volatility and uncertainty where portfolio quality and the economic environment are changing rapidly, models alone may not be able to accurately predict losses. In these cases management adjustments can be applied to appropriately reflect ECL. Management adjustments can also be applied where the impact of the updated macroeconomic scenarios is over- or underestimated by the IFRS 9 models.
An overlay of €394 million was taken in December 2020 because of time lags in defaults occurring in this crisis, as a result of support programmes, while GDP growth forecasts were improving as 2020 is now over and more favourable 2021 GDP growth forecasts (and subsequent years) are now being taken into account in the models. As it is expected that additional defaults as a result of the crisis will still come in, the overlay was taken which was calculated using a scenario with a time lag between
This management adjustment has been recognised for SME and mid-corporate portfolios as these portfolios are considered to be most at risk and have the highest percentage of customers requesting payment holidays compared to other portfolios. ING has recognised a management adjustment of €85 million in the Netherlands and €131 million in Belgium as they are the largest SME portfolios and not significantly impacted by macroeconomic forecasts updates. Furthermore, a management adjustment of €28 million has been recognised in Australia for the mortgage portfolio which is also a portfolio where relative many payment holidays are granted and which is considered at risk.
The purpose of the sensitivity analysis is to enable the reader to understand the extent of the impact on model based reportable ECL from the upside and downside scenario. The table does not include any management adjustments, except for the overlay for time lag in defaults of €394 million as at 31
All assets and off-balance sheet items that are in scope of IFRS 9 impairment and which are subject to collective ECL assessment are allocated a 12-month ECL if deemed to belong in stage 1, or a lifetime
Wholesale and 250bps for SMEs, based on the characteristics of the specific portfolio. We are however in a transition phase to determine this on a portfolio level, which has been implemented for a few
Turkish and Polish models which already have deviating lifetime PD thresholds. The threshold for the relative change in lifetime PD is inversely correlated with the PD at origination; the higher the PD at origination, the lower the threshold. Despite this, the relative threshold is punitive for investment grade assets while the absolute threshold primarily affects speculative grade assets. On ING Group level, the total ECL collective-assessment for performing assets is €1,678 million (2019: €1,291 million) (without taking management adjustments into account).
The setting of PD threshold bandings requires management judgement, and is a key source of estimation uncertainty. To demonstrate the sensitivity of the ECL to these PD thresholds bandings, analysis was run on all collectively-assessed assets, which assumed all assets (stage 1 and 2) were below the threshold, and apportioned a 12-month ECL. On the same asset base, analysis was run which assumed all performing assets were above the threshold, and apportioned a lifetime ECL. This gave rise to hypothetical collective-assessment ECLs of €1,242 million (2019: €866 million) and €3,552 million (2019: €2,665 million) respectively. Please note that in this analysis all other ECL risk parameters (except for the stage) were kept equal.
It should be noted that the lifetime PD thresholds are not the only drivers of stage allocation. An asset can change stages as a result of being in arrears, being on a Watch List or being forborne, among other triggers. Refer to section 1.7.8 of Note 1 ‘Basis of preparation and accounting policies’ for an exhaustive list. Furthermore, this analysis is rudimentary in that other parameters would change when an asset changes stages.
This means that financial instruments in the trading books should be free of trade restrictions. Policies and processes are in place to monitor the inclusion of positions in either the trading or banking book as well as to monitor the transfer of risk between the trading and banking books.
ING recognises the importance of sound market risk management and bases its market risk management framework on the need to identify, assess, control and manage market risks. The approach consists of a cycle of five recurring activities: risk identification, risk assessment, risk control, risk monitoring and risk reporting.
▪ Risk identification is a joint effort of the first and second lines of defence. The goal of risk identification is to detect potential new risks and any changes in known risks. See ‘Risk
Governance’ for more on our ‘three lines of defence’ governance model; ▪ Identified risks are assessed and measured by means of various risk metrics to determine the importance of the risk to ING and subsequently to identify the control measures needed; ▪ Risk control measures used by ING include policies, procedures, minimum standards, limit frameworks, buffers and stress tests; ▪ Risk monitoring occurs to check if the implemented risk controls are executed, complied with across the organisation, and are effective; and
Several committees govern communication between the parties involved in market risk management, such as MRMC and CTRC. These committees have a functional reporting line to ALCO Bank. The Market
The FI-FM risk management framework governs the boundary between trading books and banking books. It defines the activities ING considers to be trading according to a regulatory definition and for own funds requirement purposes. Trading activity is systematically reviewed and positions are assessed against the mandates jointly by the first and second lines of defence. As specified in the framework, the transfer of risk or the transfer of positions between banking and trading books is in principle not allowed. In exceptional cases when a re-designation is deemed necessary, the redesignation should be approved by senior management.
Economic capital for market risk is calculated for exposures both in trading portfolios and banking portfolios and includes interest rate risk, credit spread risk, equity price risk, foreign exchange rate risk, customer behaviour risk, real estate risk, model risks and pension risk. Economic capital for market risk is calculated using internally developed methodologies with a 99.9% confidence level and a horizon of one year.
VaR is measured at a 99% confidence level with a one-day holding period.
As a result of this framework, ING centralises interest rate risk management from commercial books
Below the three activities are described in more detail: Group Treasury is responsible for managing the investment of own funds (core capital). Capital is invested for longer periods to keep earnings stable. The main objective is to maximise the economic value of the book and to generate adequate and stable annual earnings within the risk appetite boundaries set by ALCO Bank.
Commercial activities can result in linear interest rate risk, for example, when re-pricing causes the tenors of assets to differ from those of liabilities. Also, interest rate risk can arise from customer behaviour and/or convexity risk, depending on the nature of the underlying product characteristics.
customer behaviour risk is defined as the potential future value loss due to deviations in the actual behaviour of clients versus the modelled behaviour towards the embedded options in commercial products. General sources of customer behaviour risk, amongst others, include the state of the economy, competition, changes in regulation, legislation and tax regime, and developments in the housing market. Since these risk factors cannot be (fully) mitigated, ING holds capital to be able to absorb possible losses as a result of unforeseen customer behaviour.
▪ Savings and demand deposits are generally invested so as to hedge their value and minimise the sensitivity of the margin to market interest rates. Interest rate risk can arise when there is a lag between savings rate adjustments and the adjustments experienced through market rates or when market rate changes cannot be passed on to clients. Interest rate risk is modelled based on the stability of the deposit and the pass-through rate. This takes into account different elements, such as pricing strategies, volume developments and the level and shape of the yield curve. Savings volumes are typically assumed to be relatively stable and not sensitive to rate changes; ▪ Interest rate risk for mortgages arises through prepayment behaviour. In modelling this risk, both interest rate dependent pre-payments and constant prepayments are considered. Next to the dependence on interest rates, modelled prepayments may include other effects such as loan-to-value, seasonality and the reset date of the loan. In addition, the interest sensitivity of embedded offered rate options is considered; and
(BPV) figures provide the value perspective. Please note that corrective management actions are not taken into account in these figures although price adjustments are included in the earnings risk measure.
NII-at-Risk measures the impact of changing interest rates on net interest income (before tax) of the banking book with a time horizon of one year (expanding to a horizon of three years). This excludes credit spread sensitivity and fees. The NII-at-Risk figures in the tables below reflect a parallel interest rate shock under the assumption of the balance sheet development in line with the dynamic plan with a time horizon of one year. As well as parallel scenarios, IRRBB monitoring and management includes the impact of non-parallel scenarios and the impact over a longer horizon. NII-at-Risk asymmetry between the downward and upward ramped scenarios is primarily caused by the asymmetry between pricing behaviour of mortgages and savings products due to embedded options and pricing constraints.
The NII-at-Risk is primarily driven by the difference in sensitivity of client liabilities, mainly savings, versus the sensitivity of client assets and investments to rate changes. The investment of own funds only impacts the earnings sensitivity marginally, as only a relatively small part has to be (re)invested within the one-year horizon.
The full value impact cannot be directly linked to the financial position or profit or loss account, as fair value movements in banking books are not necessarily reported through the profit or loss account or through other comprehensive income (OCI). The value mutations are expected to materialise over time in the profit and loss account if interest rates develop according to forward rates throughout the remaining maturity of the portfolio.
NPV-at-Risk banking books per business (*) in EUR million 2020 2019 unfloored unfloored parallel ▼ parallel ▲ parallel ▼ parallel ▲
Banking. This is driven by balance sheet developments, the low interest rate environment and savings model updates for market developments mainly in ING Germany, ING Spain and ING Poland. Main sensitivity can be attributed to Corporate Line, in which core capital is represented in line with the regulations, assuming a zero duration. Corporate Line Banking has been included retroactively in the measurement of NPV-at-Risk since 2019 for better alignment with regulatory IRRBB measurements.
Financial Stability Board, a fundamental review and reform of the major interest rates benchmarks has been undertaken. For the eurozone, this led to a reform of the EURIBOR benchmark rate and development of €STR as the recommended new nearly risk-free-rate (RFR) to replace EONIA. For LIBOR
The reform of EURIBOR was completed in 2019 and consisted of a change to the underlying calculation methodology. The Belgian Financial Services and Markets Authority granted authorisation with respect to EURIBOR under the EU Benchmarks Regulation. This allows market participants to continue to use
Euro Risk-Free Rates is continuing its work on developing recommended fallback rates based on the €STR for EURIBOR contracts.
The ICE Benchmark Administration, as the administrator of LIBOR, issued a consultation with respect to its plans for the cessation for most LIBOR rates at the end of 2021, with an 18 month extended period of publication for USD LIBOR to support legacy products. ING is in the process of amending or preparing to amend contractual terms in response to this, and there is still some uncertainty over the timing and the methods of transition. ING is proactively reaching out to industry participants, counterparties and clients to create awareness and offer support on the ongoing transition.
These industry recommendations are incorporated into our contract templates used for new lending.
Public authorities have also recognised that certain LIBOR contracts do not contain any alternatives, contain inappropriate alternatives, or cannot be renegotiated or amended prior to the expected cessation of LIBOR. In response, the European Commission announced that it intends to implement legislation that gives market participants the confidence to transition these ‘tough legacy’ contracts to the recommended benchmark replacement without the fear of legal repercussions. In addition, the UK
ING Group has significant exposures to IBORs on its financial instruments that will be reformed as part of this market-wide initiative. The potential discontinuation of interest rate benchmarks, or changes in the methodology or manner of administration of any benchmark, could result in a number of risks for
As at 31 December 2020 the following financial instruments have yet to transition to alternative benchmark rates, summarised by significant benchmark rate. The table below excludes exposures that will expire before transition is required. For all rates this has been taken as 31 December 2021, despite some recent developments that indicate that USD LIBOR will be available until mid-2023. The table below also excludes off-balance sheet commitments.
Non derivative Financial instruments to transition to alternative benchmarks in EUR million Financial Assets non-derivative
Derivative Financial instruments to transition to alternative benchmarks 2020 Nominal value (in EUR mln)
The table above does not include EURIBOR exposures as the reformed EURIBOR is compliant with the
Standards Board (IASB) has undertaken a two phase project. Phase 1 addresses those issues that affect financial reporting before the replacement of an existing benchmark. Phase 1 amendments to IFRS