- ING Groep NV, the biggest Dutch financial-services firm, will get 10 billion euros ($13.4 billion) from the Netherlands after warning Oct. 17 of its first quarterly loss and falling the most in Amsterdam trading since 1991.
ING will scrap this year's final dividend and sell the government non-voting preferred securities that won't dilute existing shareholders and will lift the bank's core Tier 1 capital to about 8 percent, the Amsterdam-based company said today in a statement. The securities pay 8.5 percent annual interest, Dutch Finance Minister Wouter Bos told reporters today.
ING, which fell a record 27 percent after saying it will post a loss of 500 million euros in the third quarter, is the first to draw on the 20 billion euros that the Dutch government made available to financial firms on Oct. 10. While the government will appoint two representatives to ING's supervisory board, have a say in executive compensation and get a share of company profit, ING hasn't been nationalized, Chief Executive Officer Michel Tilmant told reporters today.
Governments from Washington to London to Berlin have rushed to shore up banks' capital and unlock lending since credit markets froze up following the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc. In the U.S., Treasury Secretary Henry Paulson plans to spend $250 billion of a $700 billion financial rescue package on buying non-voting preferred equity stakes in banks.
The Dutch government bought local units of Fortis and ABN Amro Holding NV earlier this month for 16.8 billion euros. Zurich- based UBS AG agreed last week to sell a stake of 6 billion Swiss francs ($5.2 billion) to the government and split off as much as $60 billion of risky assets. Royal Bank of Scotland Group Plc, the U.K.'s second-biggest bank before its shares plunged this year, may sell as much as 20 billion pounds of stock to the government unless investors agree to buy shares.
But China has more options than most countries to cope with slower growth. For starters, inflation is slowing at the consumer level — the government said on Monday that it was 4.6 percent in September, down from 4.9 percent in August and the fifth monthly decline.
With less to fear from rising prices, China’s central bank has already begun reducing regulated interest rates and loosening restrictions on bank lending. With the government running a large budget surplus, the finance ministry has begun lowering taxes on stock and real estate transactions and on exports of textiles and electric machinery.
While South Korea announced Sunday that it would guarantee up to $100 billion in foreign debt held by its banks and would pump $30 billion more into the banking sector.
“The government has decided to join in global coordinated efforts to stabilize financial markets,” Kang Man-soo, minister of strategy and finance, said at a news conference after a series of emergency financial meetings. “And we will continue to provide pre-emptive, decisive and sufficient measures to this end.”
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Sources :
- Bloomberg: ING Gets $13.4 Billion Injection From the Netherlands (Update2), October 19, 2008 17:20 EDT
- The New York Times: South Korea to Guarantee Some Foreign Debt, October 19, 2008
- The New York Times: China’s Economic Growth Is Slowest in 5 Years, October 19, 2008
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