ING breakup spurs investor concern over state-aided banks

By Reuters Staff
October 27, 2009

The headquarters of Dutch bank and insurance group ING is pictured in Amsterdam in this file photo taken February 29, 2008. Dutch financial group ING will take a 2008 loss of 1 billion euros and will tap into a Dutch state guarantee for its troubled loan portfolio, it said on January 26, 2009, adding its Chief Executive Michel Tilmant will step down. Picture taken February 29, 2008. REUTERS/Toussaint Kluiters/United Photos/Files    (NETHERLANDS)    By Kirstin Ridley and Steve Slater
LONDON, Oct 27 (Reuters) – Investors are shunning European bank shares after an EU-imposed break-up and retrenchment of Dutch ING Groep sparked fears Belgium’s KBC and UK peers face tougher-than-expected sanctions in return for state aid.

The shake up at the flagship Dutch bancassurer had set a tough precedent for other bailed-out banks, especially Lloyds Banking Group, Royal Bank of Scotland and KBC, analysts said.

“Forced divestments, larger balance sheet reductions and restrictions on pricing are all more penal than we had expected and could potentially have a negative readacross for some other European banks,” said Andrew Stimpson, analyst at Keefe, Bruyette & Woods.

Fund managers said ING’s surprise 7.5 billion euro ($11.2 billion) cash call, on top of the sale of a 1.4 billion pound stake in Britain’s Barclays <BARC.L> last week, would do little to help Lloyds raise 11 billion pounds-plus ($18 billion) and RBS raise a possible 3-4 billion pounds in expected rights issue.

“ING’s rights issue was a surprise for the market and maybe it has mopped up a little bit of the appetite that might have been there for more banking paper,” said a senior investment manager at a large investment fund.

“This is most definitely going to make life more difficult for Lloyds and even RBS when they come out with their rights issue — ING and Barclays (investor QIA) have beaten them to the punch.”

Most bank shares pared sharp morning losses by mid afternoon, but RBS was still 4.2 percent lower and Lloyds was down 2.3 percent, underperforming a 0.9 percent weaker DJS Banks index. KBC rebounded to trade flat.
PERTURBING PRECEDENT
Market eyes have long been trained on the plans for ING by European Competition Commissioner Neelie Kroes, who is keen to leave her mark on the industry before she bows out around year-end.

Analysts said there was talk of gagging orders imposed on all sides after tense discussions between ING and Kroes, and the outcome was a useful guide to the restructuring and asset sales she could force on state-rescued UK banks.

“ING would not have been broken up had it not been for pressure from Brussels,” a senior EU official said, warning that it was a sign of things to come.

But Kroes’s so-called “remedies” for state aid received by banks brought to their knees by the credit crises went far further than analysts had expected, sending ING’s shares plunging and wiping 25 percent off the company’s market value in two days, at one point.

The measures will cut ING’s balance sheet by 30 percent. It will dispose of its insurance and asset management operations, split off some Dutch mortgage operations and sell ING Direct USA, its prized American online banking business.

RBS and Lloyds were already expected to have to sell hundreds of branches, as well as other assets, and shrink their balance sheets. KBC and Franco-Belgian Dexia are also awaiting rulings from the Commission.
($1=.6718 Euro)
($1=.6091 Pound) (Additional reporting by Raji Menon in London and John O’Donnell in Brussels; editing by Simon Jessop)
((kirstin.ridley@thomsonreuters.com; +44 207 542 7987; Reuters Messaging: kirstin.ridley.reuters.com@reuters.net))

No comments so far

We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/

You should check this out

[...] Wonderful story, reckoned we could combine a few unrelated data, nevertheless really worth taking a look, whoa did one learn about Mid East has got more problerms as well [...]…

Posted by gurtoertil | Report as abusive

Sites we Like…

[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]…

Posted by Netflix | Report as abusive

Awesome website

[...]the time to read or visit the content or sites we have linked to below the[...]…

Posted by New On Netflix | Report as abusive

Check this out

[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]…

Posted by homepage | Report as abusive

Sources

[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]…

Posted by aqui | Report as abusive

Awesome website

[...]the time to read or visit the content or sites we have linked to below the[...]…

Posted by web de planchas | Report as abusive

Websites you should visit

[...]below you’ll find the link to some sites that we think you should visit[...]…

Posted by Julia | Report as abusive

Visitor recommendations

[...]one of our visitors recently recommended the following website[...]…

Posted by Carla planchas | Report as abusive

Gems form the internet

[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]…

Posted by este enlace | Report as abusive

Cool sites

[...]we came across a cool site that you might enjoy. Take a look if you want[...]…

Posted by water heater repair | Report as abusive

Awesome website

[...]the time to read or visit the content or sites we have linked to below the[...]…

Posted by emergency plumbing | Report as abusive

Websites you should visit

[...]below you’ll find the link to some sites that we think you should visit[...]…

Posted by plumbing | Report as abusive

Awesome website

[...]the time to read or visit the content or sites we have linked to below the[...]…

Posted by tmt investments Russia | Report as abusive

Websites you should visit

[...]below you’ll find the link to some sites that we think you should visit[...]…

Posted by auto insurance ratings consumer reports | Report as abusive

Awesome website

[...]the time to read or visit the content or sites we have linked to below the[...]…

Posted by auto insurance company | Report as abusive

Check this out

[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]…

Posted by lookmoica | Report as abusive

Recommeneded websites

[...]Here are some of the sites we recommend for our visitors[...]…

Posted by pinguinalit&#233;e | Report as abusive

Related…

[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]…

Posted by plumber Charlotte | Report as abusive

Related…

[...]just beneath, are numerous totally not related sites to ours, however, they are surely worth going over[...]…

Posted by plumber Huntington Beach | Report as abusive

Great website

[...]we like to honor many other internet sites on the web, even if they aren’t linked to us, by linking to them. Under are some webpages worth checking out[...]…

Posted by Orange County plumber | Report as abusive

Recent Blogroll Additions…

[...]usually posts some very interesting stuff like this. If you’re new to this site[...]…

Posted by emergency plumber | Report as abusive

Sites we Like…

[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]…

Posted by Jack Rabbit Toy | Report as abusive

Sources

[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]…

Posted by G Spot Vibrator | Report as abusive

Superb website

[...]always a big fan of linking to bloggers that I love but don’t get a lot of link love from[...]…

Posted by Adam And Eve Butterfly Kiss | Report as abusive

Online Article…

[...]The information mentioned in the article are some of the best available [...]…

Posted by General Renovations In Haifa &#1513;&#1497;&#1508;&#1493;&#1510;&#1497;&#1501; &#1499;&#1500;&#1500;&#1497;&#1497;&#1501; &#1489;&#1495;&#1497;&#1508;&#1492; | Report as abusive

Awesome website

[...]the time to read or visit the content or sites we have linked to below the[...]…

Posted by General Renovations In Haifa &#1513;&#1497;&#1508;&#1493;&#1510;&#1497;&#1501; &#1499;&#1500;&#1500;&#1497;&#1497;&#1501; &#1489;&#1495;&#1497;&#1508;&#1492; | Report as abusive

Sources

[...]check below, are some totally unrelated websites to ours, however, they are most trustworthy sources that we use[...]…

Posted by General Renovations In Haifa &#1513;&#1497;&#1508;&#1493;&#1510;&#1497;&#1501; &#1499;&#1500;&#1500;&#1497;&#1497;&#1501; &#1489;&#1495;&#1497;&#1508;&#1492; | Report as abusive

Sites we Like…

[...] Every once in a while we choose blogs that we read. Listed below are the latest sites that we choose [...]…

Posted by General Renovations In Haifa &#1513;&#1497;&#1508;&#1493;&#1510;&#1497;&#1501; &#1499;&#1500;&#1500;&#1497;&#1497;&#1501; &#1489;&#1495;&#1497;&#1508;&#1492; | Report as abusive

Check this out

[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]…

Posted by compare car insurance rates by zip code | Report as abusive

Online Article…

[...]The information mentioned in the article are some of the best available [...]…

Posted by low home insurance quote | Report as abusive

Cool sites

[...]we came across a cool site that you might enjoy. Take a look if you want[...]…

Posted by Renovations Bakrayot &#1513;&#1497;&#1508;&#1493;&#1510;&#1497;&#1501; &#1489;&#1511;&#1512;&#1497;&#1493;&#1514; | Report as abusive

Check this out

[...] that is the end of this article. Here you’ll find some sites that we think you’ll appreciate, just click the links over[...]…

Posted by Renovations Bakrayot &#1513;&#1497;&#1508;&#1493;&#1510;&#1497;&#1501; &#1489;&#1511;&#1512;&#1497;&#1493;&#1514; | Report as abusive

Gems form the internet

[...]very few websites that happen to be detailed below, from our point of view are undoubtedly well worth checking out[...]…

Posted by Renovations Bakrayot &#1513;&#1497;&#1508;&#1493;&#1510;&#1497;&#1501; &#1489;&#1511;&#1512;&#1497;&#1493;&#1514; | Report as abusive