76 Recent developments 77 ING’s governance 79 - Information on members of the
ING to further strengthen its capital base. This additional capital will serve as a risk buffer for swings in asset values as well as support organic growth.
See also the chapter on corporate governance as of page 76.
“the transparent lay-out and creative design create an open and innovative mindset and stimulate new ways of thinking about our business strategy.”
Malaysia and it is a fastgrowing niche player in Japan’s crowded market. In New
India’s fifth largest private bank, a life insurance joint venture and a mutual funds business in India, ING is wellpositioned in the two largest
F I NA N C I A L H I G H L I G H T S
In anticipation of a further strengthening of the euro versus the US dollar, ING has also hedged the expected profits of the US insurance operations for the years 2003 and 2004 at a
Asia/Pacific was strongly higher at EUR 618 million (+97.4%). The result included a gain of
Return on equity The operational net return on equity increased from 18.4% in 2001 to 21.6% in 2002 reflecting the decrease in shareholders’ equity. The return on equity of the insurance operations was 24.6% against 16.9% in 2001. The risk-adjusted return on capital (RAROC) of ING’s banking operations was 13.3% compared to 13.5% for 2001 (pre-tax and excluding ING Direct). Also excluding the restructuring provision for international wholesale banking, RAROC was 14.2%.
ING will seek to enter into joint ventures with local partners.
From the start, ING has chosen integrated financial services as the heart of its strategy. The power of the integrated financial services concept is in the multi-channel/multi-product approach. Clients appreciate a full range of products and they expect to be served via the distribution channel of their choice. That choice may depend on the type of product: the internet for simple products such as savings deposits, a call centre for applying for an insurance policy or a credit card and a professional intermediary for advice on a tailor-made retirement plan. In mature markets, ING Direct has proven to be an effective, cost-efficient and profitable entry strategy for retail markets, responding to current demands. In developing markets, the greenfields that ING started from scratch have matured.
ING serves more than 10 million retail clients. In the home markets of the Netherlands, Belgium and Poland, ING is pursuing the click–call–face approach of interlocking distribution channels and product platforms. This enables ING Europe to deliver its products and services efficiently to the various client segments. In the large mature markets in Europe, ING is building up its retail position around ING Direct (see pp. 46-47). In
The retail business held up well in last year’s difficult market environment and succeeded in sharply improving its result by 20% to EUR 1,967 million. The excellent performance can be attributed to the broad diversification of the retail platform in terms of products, client segments, markets and distribution channels.
Central Europe is increasingly important to ING as a source of value creation. ING is the number one life insurance and pension funds provider in the region. It is particularly strong in the upper-middle and top retail segments.
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Americas, Asia and the UK will focus on core countries. The Investment Banking business line will support Corporate Financial Services, mainly in the field of M&A advisory.
organisational changes that generate efficiencies and economies of scale. The fourth is leveraging global capabilities by nurturing synergies and taking advantage of best practices from the rest of ING Group. Examples are taking product ideas and distribution methods that have done well in other countries and introducing them in the
In Chile, ING is the number-one provider of life insurance and number two in health. In Brazil,
ING led the way in the US in introducing principal protection in mutual funds, offering retail investors a mutual fund with guaranteed principal for a five-year period. The product proved appealing to investors concerned about losing their retirement assets during the uncertain economic environment.
There will also be a greater focus on improving operational efficiency, particularly in the IT area.
ReliaStar and optimising the operations/IT infrastructure. Over the last few years, ING Americas has been involved in a sweeping integration effort in the area of operations/IT aimed at streamlining the complex and highly fragmented back office organisation it inherited. These projects are almost complete and will position ING
In Australia, ING is well-positioned, with an excellent size and 1.5 million retail clients. ING
Australia: joint venture with ANZ Bank in life insurance and asset management
In India, ING took a major step forward in its goal to build a solid IFS platform. ING increased its share ownership in Vysya Bank to 44% and the company has been re-branded to ING Vysya
Furman Selz Asset Management and Aeltus, completed in 2001). In order to improve alignment with the distribution channels, ING Investment
In 2002, ING Real Estate integrated the wholesale real estate financing businesses of
Alternative assets With the exception of European buy-outs, the private equity markets showed dismal, sometimes negative, returns in 2002. Parcom, ING’s captive private equity unit, fortunately only suffered limited damage in the wake of the dot com collapse.
European Workers Council for social policy and labour management in Europe
Human Resources Management is undergoing major changes in its organisation as well as in its
Branding is an important tool for recruitment of new talent. In the past the internet has proven to be a very successful tool for recruitment. The
Employee representation ING and the Dutch Central Workers Council concluded an agreement about the change in the Dutch structure regime (legal large company regime) as part of ING’s proposals to modernise its corporate governance. The agreement followed on ING’s intention to abandon the voluntary structure regime at
Credit risk ING Bank Credit risk is the risk of loss from the default by a debtor or counterparty. Credit risks arise in lending and investment activities, as well as in trading activities. Risk management is supported by general information systems and debtor and counterparty internal rating methodologies. The internal risk rating models were converted from a ten-risk class scale to a twenty-two risk class scale to provide better granularity and to meet the future requirements of the new Basel II
(corporate and counterparty), trading and investment activities. All transactions and trading positions generated by ING Bank have a country risk. Country risk is further divided into economic and transfer risk. Economic risk is the concentration risk relating to any event in the risk country that may affect transactions and other exposure in that country, regardless of the currency. Transfer risk is the risk incurred through the inability of ING or its counterparties to meet their respective foreign currency obligations due to a specific country event.
ING Insurance’s actuarial and underwriting risks are controlled at ING Group level, with the
Report of the Executive Board quality of the system of internal controls and procedures of business units and recommends actions to solve any identified weaknesses.
The ratio of available capital versus required capital of ING Verzekeringen N.V. decreased from 169% at 31 December 2002 to approximately 157% at 10 March 2003; still well above the regulatory required capital.
Other components of comprehensive net profit: Net profit not recognised in the consolidated profit and loss account -4 ,384 -2 ,533
From this amount, EUR 247 million has been used for financing acquisitions and has therefore been accounted for as non-operational profit. The remainder of EUR 222 million has been recorded as operational profit.
Loans guaranteed by public authorities 8,013 15,750 23,763 8,949 13,398 22,347
Additions to the provision for loan losses 1,435 750 1,435 750
Net profit for the period 4,500 4,577 * See notes starting on page 66.
The percentages shown by risk category reflect all diversification effects, including risk reduction between the risk categories. Diversification effects as a result of combining bank and insurance activities are not taken into account.
Preferente Aandelen ING Groep decided to rename the Stichting into Stichting Continuïteit
Under new charters for these committees, which were approved early 2003, they can only be appointed after having observed a waiting period of five years following their retirement from the Executive Board.
Supervisory Board members is carefully considered and is in no way automatic. There is a set reappointment procedure to be followed. In agreement with recent legislation, it will be proposed to the General Meeting of Shareholders to partially lift this maximum age restriction.
Meeting have the right to recommend candidates and to raise objections. In connection with the abandonment of the structure regime at Group level and in line with regulatory requirements, this co-optation system for Supervisory Board membership will be replaced by a system providing for appointment by the Shareholders’
Audit Committee as of April 2001. Current and last term of office: until the 2003 AGM.
Deutsche Bundesbank. First appointment Supervisory Board ING Group: May 2000. Current and last term of office: until the 2003 AGM.
Each year, the ING Group Executive Board will take a decision as to whether the option scheme is to be continued and, if so, to what extent. Option rights granted will remain valid until expiry date, even if the option scheme is discontinued. The option rights are subject to certain conditions, including a certain continuous period of service. The exercise prices of the options are the same as the quoted prices of ING
Group shares at the date on which the options are granted.
During the 2002 financial year, the Stichting carried out duties in relation to the administration of ordinary and preference shares against which bearer depositary receipts have been issued.
Shareholders’ meeting without any further restrictions and at all times. Accordingly, each depositary-receipt holder who registered to attend a General Meeting of Shareholders and is actually present – either in person or by proxy –
As at 31 December 2002, ordinary shares totalling EUR 478,242,585.60 nominal value, against which 1,992,677,440 depositary receipts in denominations of EUR 0.24 nominal value had been issued, and A preference shares totalling EUR 104,496,540.- nominal value, against which 87,080,450 depositary receipts in denominations of EUR 1.20 nominal value had been issued, had been taken into administration. The composition of the Board is currently as follows: John Simons (Chairman),
Articles of Association. The main changes are that the Stichting is renamed Stichting Continuïteit
ING’s strategy is to achieve sustainable growth while maintaining healthy profitability. The