ING misses earnings but restructuring on track
Dutch financial group ING missed profit expectations on Wednesday as the bank announced its restructuring, after years of state aid, was finally nearing completion.
Underlying net profit for the third-quarter of 2013 came in at 891 million euros ($1.2 billion) versus 844 million euros for the same period last year, it said Wednesday. The figure fell short of analysts' expectations in a Dow Jones poll, which forecast underlying pre-tax profit of 1.25 billion euros.
(Read More: ING US IPO Prices at $19.50, Below Expectations)
CEO Patrick Flynn told that the results were "solid" and highlighted that the bank has made good progress since the financial crash of 2008 and its restructuring program is on track.
ING reached an agreement with the Dutch government back in 2008 to strengthen its capital, receiving a capital injection of 10 billion euros. At the same time, the lender drew up a restructuring plan in order to gain approval for the aid from the European authorities. The bank announced that it was advancing further into the "end phase" of this program on Wednesday, which it now believes will be completed by 2016 - two years earlier than previous estimates.
ING Insurance IPO
It announced a 1.125 billion euro payment to the Dutch state was completed on Wednesday, as well as reaching an agreement on the unwinding of an bad asset back-up facility. The principal amount of outstanding state aid now stands at 1.5 billion euros, it said.
Several announcements were made on divestment as well, with ING Life Korea being set to be sold by the end of the year. The company's stake in ING U.S. has also been reduced to 57 percent. Additionally, ING said that ING Life Japan will be included in it's upcoming initial public offering for the ING Insurance - which will effectively be a stand-alone company that is expected to be rebranded to be called "NN".
"The divestment of the Asian insurance and investment management activities is almost complete. The sale of ING Life Korea is expected to close by year-end. We have carefully explored and evaluated several divestment options for ING Life Japan, and have now included this business within the scope of the base case IPO of ING Insurance. Preparations for the base case IPO are progressing well and we will be ready to go to the market in 2014," said Ralph Hamers, CEO of ING Group in a press release.
Flynn told CNBC that this inclusion of ING Life Japan solves one of the last concerns that the bank had with its divestment, and now the restructuring issues in Asia have been finalized. In Latin America, all restructuring has been completed, he said.
"We need to IPO the European part of the business, that's the last piece and we're aiming to do that next year," he said.
On Tuesday European Union antitrust regulators looked set to fine set to fine six global banks including Deutsche Bank, JPMorgan and HSBC for suspected rigging of benchmark euro zone interest rates, Reuters reported, citing sources. This comes after more revelations and suspensions last week regarding a global probe into the manipulation foreign exchange trading.
Flynn said that there is no such activity going on at ING, to his knowledge, and added that banks need to put this issue behind them.
"We need to regain trust," he said. "It's extremely important for the sector. As soon at that happens the better."
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