Home » ING Direct Annual Reports » 2014 Annual Report

ING Direct 2014 Annual Report Download

Download and view the complete annual report

Please find the complete 2014 ING Direct annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

ING Group

Annual Report

2014

Empowering people

Page 1
ING Group Annual Report 2014 Empowering people

Page 2

Page 3
... them. We empower people and organisations to realise their own vision for a better future - however modest or grand. Empowering people to stay a step ahead in life and in business

Page 4
... â€º Good customer satisfaction scores in all our retail banking markets. â€º Net loan growth of 3% spread across Retail and Commercial Banking. â€º Presentation and implementation of ING's renewed purpose, strategy and sustainability direction. â€º Number one ranked 'diversified financials' company...

Page 5
... our responsibilities Key figures Retail Banking Commercial Banking People Innovation and information technology Risk and capital management ING Shares Composition of the Executive Board and Management Board Banking About this report Assurance report of the independent auditor Corporate Governance...

Page 6
...both our retail and commercial banking customers worldwide. I am proud that our customers value our efforts. ING was recognised by Financial Times' The Banker as Best Bank in the Netherlands for the third consecutive year and Best Bank in Belgium for the second time in a row. ING Australia was again...

Page 7
... year the Board will recommend whether to return additional capital to shareholders dependent on financial, strategic and regulatory considerations. Parent company annual accounts Consolidated annual accounts Corporate Governance example. In this online forum customers exchange views and...

Page 8
... for our customers. We pay interest and keep this money safe. We use these funds to lend to other customers. Supporting life-changing decisions EUR 274.3 bln mortgages outstanding. We have offered mortgages to customers who use these funds to buy or invest in a home. P ING Group Annual Report 2014

Page 9
... or social performance. Corporate Governance ING Group Annual Report 2014 Additional information Supporting large companies' growth and export EUR 9.3 bln net growth was achieved in Structured Finance and General Lending & Transaction Services through our Commercial Banking network in more than...

Page 10
...for more information. Risk and capital management chapter for more information about our capital structure. Retail Banking chapter and Commercial Banking chapter for more information about our network. Developing our capabilities We perform our core tasks by combining our resources to best effect in...

Page 11
... future. Our strategy and progress chapter and the Market and regulatory context chapter for more information. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 12
...cash profit for the Dutch State. Finally, the remaining Government Guaranteed Notes still outstanding in 2014 were all redeemed. Over the years, ING has paid EUR 0.4 billion to the Dutch State to benefit from this scheme. Risk and capital management chapter for more information about the sale of non...

Page 13
... banking to develop new services and business models Enablers Simplify & Streamline Operational Excellence Performance Culture Lending Capabilities ING Group Annual Report 2014 Corporate Governance Empowering people to stay a step ahead in life and in business. Report of the Executive Board

Page 14
... products, plain language, fair prices and simple processes. This saves both time and money. Anytime, anywhere We work to make our services available where our customers are and when they need them. Banking should be possible anytime and anywhere. Empower The best financial decisions are informed...

Page 15
... growth in net lending. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Increase the pace of innovation to serve changing customer needs Not only do new technological developments lead to...

Page 16
...our risk management. We have consistently demonstrated our ability to generate capital and now have a limited requirement for professional funding. Internationally, our thriving commercial banking network is active in over 40 countries. We operate a good mix of mature and growth businesses worldwide...

Page 17
...to fund sustainable and profitable growth in other countries. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts reflect considerations including expected future capital requirements, growth opportunities available to the Group, the net earnings...

Page 18
... in 2014, while the interest rate on deposits held by banks at the ECB moved into negative territory, to -0.2 percent. The ECB implemented conditional long-term refinance operations and announced purchase programmes for covered bonds and asset-backed securities. The Dutch economy, with its housing...

Page 19
...are maintaining options for face-to-face service. Innovation and information technology chapter for more information. Consolidated annual accounts Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Corporate Governance Report of the Executive Board

Page 20
... different directions, with relatively new players providing more segmented offers to our customers and clients. Technology giants, payment specialists, retailers, telecommunication companies, crowd-funding initiatives and aggregators are all encroaching on traditional banking services. In general...

Page 21
... the expectations of our stakeholders and work to improve our performance on high-priority material issues. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 22
... and information technology. 5 6 Enhancing customer financial capabilities We increased our focus on enhancing customer financial capabilities and stepped up our efforts. CEO statement, Our strategy and progress, Retail Banking and Sustainability Annex 2014. ING Group Annual Report 2014

Page 23
... for ING Bank decreased from 127 to 102 kilotonnes. Key figures and Sustainability Annex 2014. Parent company annual accounts 13 Career development and employability of ING employees Consolidated annual accounts Corporate Governance Stakeholder engagement Report of the Executive Board

Page 24
... payments to our shareholders in line with our policy of linking dividends to long-term underlying development of cash earnings. Risk and capital management chapter for more information. How can we accelerate the transition to a more sustainable economy if we do business with companies that don...

Page 25
... policies since 2008 in response to the ongoing review of the financial system, public debate and applicable regulatory developments. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report...

Page 26
... tax rate Banking Risk-weighted assets ING Bank (EUR billion, year-end) Underlying risk costs in bps of average RWA 25.8% 296 55 24.9% 283 83 28.5% 279 74 Non Financials Key Figures 2014 2013 2012 Net Promoter Score Retail Banking (number of countries with number one ranking) Total number of...

Page 27
... Net result ING Group Non-financial review Net Promoter Score Retail Banking Our customer-centric focus helped us achieve a first place ranking in nine countries, compared with two or more selected local peers. NPS surveys were held in 11 countries with retail banking activities. + 9% The increase...

Page 28
ING Group Report of the Executive Board Retail Banking 24 Retail Banking In this chapter we start by explaining the scope and scale of the Retail Banking division, summarise business unit activities and highlight key developments. Secondly, we show how our activities are furthering ING's strategy ...

Page 29
... information Other information Parent company annual accounts Consolidated annual accounts We believe this omnichannel approach (swipe, click, call, face) to banking services will also lead to increased frequency of customer contact and will help us earn the primary relationship. To support...

Page 30
... share in markets where we currently trail our peers. Joining forces to serve the customer - the Netherlands In 2014, Mid Corporate Clients and Private Banking/ Private Wealth & Asset Management joined forces to provide a new service to a particular group of customer: the family businesses...

Page 31
... real value. This is vital if we are to create a truly differentiating customer experience. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts ING-DiBa is the first major German bank to offer customers this service...

Page 32
... for comparing rates on its website to alerting business customers about the best time to make a deposit to ensure the interest bonus. Aligning our processes more directly with customer priorities is also improving transparency. In the Netherlands, we are taking operational customer processes, such...

Page 33
... promote social change in the country. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance We are developing services that capitalise on the increasing importance of mobile channels. In November...

Page 34
... 18,000 at the exchange rates at that time), and got his business off to a flying start. Supporting customers in financial distress The Bank has flexible responses for people that suffer temporary financial distress. ING Netherlands offers interest breaks to mortgage customers faced with a temporary...

Page 35
... criteria. Sustainable assets under management (â,¬ mln) 2014 2013 2012 Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Sustainable portfolios (1) ING Liric SRI Top 50 CS ING SRI Index fund Subtotal Correction to...

Page 36
... consumer issues. Currently, ING Turkey's response time is 2.1 hours, while the sector average is 9.5 hours - this result delivered a number 2 ranking in "Best complaint management in banking sector". Financial results Total Retail Banking Retail Banking posted strong 2014 results. The underlying...

Page 37
... Services team won an award for its ability to meet all criteria that define a Customer Care team's daily tasks. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 38
... & Cash Management, Trade Finance Services and Working Capital Solutions. Financial Markets, as the Bank's gateway to the professional markets of the world, serves our clients from treasury through to capital markets, risk management and structured financial products. We have developed an operating...

Page 39
... attract new banks for Biosev in this transaction, increasing their access to the international banking market. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 40
... been investing to grow our capabilities in selected areas in Transaction Services (TS), across International Payments & Cash Management, Trade Finance Services (TFS), Working Capital Solutions (WCS) and also Bank Mendes Gans (BMG). We seek to support our clients' core processes and daily financial...

Page 41
...set based on local expertise. Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts During 2014, we have reduced our balance sheet usage, capital consumption and cost base but at the same time increased...

Page 42
... markets capabilities, and our strong network. We aim to get closer to these clients than any other bank. We have also been investing in our flow businesses in TS and FM to place ourselves at the heart of our clients' core processes and daily financial operations. ING Group Annual Report 2014

Page 43
..., trade and working capital requirements and established a new Commercial Banking Advanced Data Analytics team mandated to develop data analytics products (algorithms and interfaces) which enhance ING's client-driven activities. in EUR million 2014 2013 2012 Parent company annual accounts ING...

Page 44
...Due to a deal reclassification, numbers reported previously have been slightly changed. As a major relationship bank for Jacksonvillebased shipping and logistics company Crowley Maritime Corporation, ING was lead arranger of a USD 225 million term-loan facility for two state-of-the-art LNG-powered...

Page 45
...2020. ING acted as a co-mandated lead arranger for a USD 1.17 billion term loan. Parent company annual accounts Consolidated annual accounts Corporate Governance The 144MW Westermeerwind windfarm is a landmark transaction in the Netherlands, enjoying strong support from the Dutch government. The...

Page 46
... of how we do business. In 2014, environmental and social risk assessments were further embedded in core processes. ING is committed to dedicating more resources that give Commercial Banking teams the capacity to explore market developments in sustainability and support their clients to fulfil their...

Page 47
... programme to accelerate the development of ING's top leaders and renew the ING International Talent Programme. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 48
... with that of the company. All employees are enrolled in performance management processes which encompass a formal planning, mid-year review and year-end assessment. We offer coaching which can help employees further develop professionally and personally. In 2014, we refreshed and simplified...

Page 49
... their personal ambitions. The aim is to strengthen female talent and to make that talent visible to the rest of the organisation. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of...

Page 50
... that utilise easy and uniform processes and are supported by bank-wide information management. The Power of IT The move towards digital-first service delivery (with mobile as the key distribution channel) needs to deliver more agile ways of working, increased replication and collaboration, flexible...

Page 51
... customer interfaces, while other business units are closely monitoring the project and applying lessons learnt. Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Report of the Executive Board

Page 52
... our customers by structuring products and financial services to meet their requirements. To achieve that, we transform: in our retail business, for example, we accept savings, which are generally short-term and provide long-dated mortgage loans; through our payments and cash management services we...

Page 53
...long-term debt issuance totalled EUR 13.9 billion. This is compared with EUR 25.7 billion in 2013 and is lower due to a slowdown in asset growth. ING Bank's loan-to-deposit ratio, excluding securities that are recorded at amortised costs, remained stable in 2014 at 1.04. Managing non-financial risks...

Page 54
... and preventing public funding of losses. To comply with the new rules, banks across the EU will have to develop harmonised recovery plans, cooperate with resolution authorities and make necessary changes to capital holdings, business activities, legal and operating structures. ING Bank already has...

Page 55
... this approach. ING Bank Risk management chapter in the consolidated annual accounts of this Annual Report, p260. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 56
..., which increases volatility driven by movements in financial markets. The transfer of the obligations connected to the current Dutch DB Plan removes this source of volatility for both Bank and Insurance. It also removes the potential direct negative impact on capital in the event of a net pension...

Page 57
...chapter on ING's capital management practices is part of the consolidated annual accounts of this Annual Report. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 58
... listed on the stock exchanges of Amsterdam, Brussels and New York (NYSE). Report of ING Trust Office for more information. Corporate governance chapter pages 69-71 for more information about the share capital of ING Group. Pursuant to the Dutch Financial Supervision Act, shareholders and holders of...

Page 59
... Rating Fitch Outlook ING Group Annual Report 2014 Additional information Other information ING Groep N.V. ING Bank N.V. - Short term AA A-1 Negative Negative A3 A2 P-1 Negative Negative A A+ F1+ Negative Negative Parent company annual accounts ING's short- and long-term credit ratings...

Page 60
... by sustainability research and rating agencies help us to improve our strategy and policies. ING's 2014 scores and assessments for some of the key sustainability benchmarks and service providers are as follows: External reviews of our sustainability performance (1) 2014 2013 2012 2011 Dow Jones...

Page 61
... S.A. Management Board Banking Clockwise from left: Roel Louwhoff, Koos Timmermans, Ralph Hamers, Bill Connelly, Patrick Flynn, Wilfred Nagel ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance...

Page 62
... Group Report of the Executive Board About this report 58 About this report This is ING's first integrated annual report. Our stakeholders want to assess our ability to create and sustain value in the short, medium and long term. To do that, they need both financial and non-financial information...

Page 63
... 2015 The Executive Board ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Furthermore, EY audited ING Group's internal control over financial reporting as of 31 December 2014, based on criteria established in Internal Control - Integrated...

Page 64
...', 'How we are balancing our responsibilities', 'Key figures', 'Retail Banking', 'Commercial Banking', 'People', 'Innovation and information technology', 'ING Shares', 'Composition of the Executive Board and Management Board Banking' and the Sustainability Annex in the Annual Report for the year...

Page 65
... M.A. van Loo H. Hollander Consolidated annual accounts ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Corporate Governance Conclusion Based on our procedures performed, and with due consideration of the limitations described in the paragraph...

Page 66
...of where the Company is today. The hard work of recent years is paying off. The Bank has posted a satisfactory set of results. ING's financial strength enables the resumption of dividend payments to shareholders, another important milestone in the restructuring process. ING Group Annual Report 2014

Page 67
... back with pride on 2014 and start 2015 with confidence. Jeroen van der Veer Chairman of the Supervisory Board of ING Group March 2015 ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report...

Page 68
... main ones being the quarterly results, risk management, corporate governance and human resources. Supervisory Board meetings The Supervisory Board met 10 times in 2014 of which nine meetings were regular meetings. On average, 96% of the Supervisory Board members were present at the meetings. This...

Page 69
... Group Management Board. The future composition and nomination of potential candidates of the Supervisory Board was a topic of discussion throughout the year. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Internal Supervisory Board meetings...

Page 70
... external candidates for the then future NN Group Supervisory Board. Remuneration Committee meetings In 2014, the Remuneration Committee met seven times with no absentees. The annual review of the remuneration framework for ING Bank and the insurance operations took place as well as the annual risk...

Page 71
...ordinary share, subject to the approval of shareholders at the Annual General Meeting in May 2015. Consolidated annual accounts Currently, only one Supervisory Board member, Eric Boyer de la Giroday qualifies as 'non-independent' as defined in best practice provision III.2.2 of the Dutch Corporate...

Page 72
... ("ING Group") of the Dutch Corporate Governance Code effective as from 1 January 2009 ("Corporate Governance Code") and provides information on the share capital and control, the Executive Board, the Supervisory Board and the external auditor. This section, including the parts of this Annual Report...

Page 73
... for protective purposes. The ordinary shares, which are all registered shares, are not listed on a stock exchange. Consolidated annual accounts Additional information Other information Parent company annual accounts ING Group Annual Report 2014 Corporate Governance Report of the Executive Board

Page 74
... of authority is to allow ING Group to respond promptly to developments in the financial markets. â€º Without such delegation, if ING Group wished to issue new shares, there would be an increased risk that conditions in the financial markets may have changed during the time needed for convening...

Page 75
... managed by the Investor Relations department. Corporate Governance and certain aspects of credit default swaps, any person who acquires or disposes of a net short position relating to the issued share capital of ING Group, whether by a transaction in shares, depositary receipts or American...

Page 76
ING Group Corporate Governance Corporate Governance continued 72 No Investor Relations Day or conference in which ING Group participates is held shortly before the publication of quarterly financial information. ING Group strives to maintain an open and constructive dialogue with current and ...

Page 77
... to register online for the meeting, appoint a proxy or issue voting instructions to the ING Trust Office. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 78
... than one-third of the issued share capital. Function of the Executive Board The Executive Board is charged with the management of ING Group, which means, among other things, that it is responsible for the setting and achieving of ING Group's objectives, strategy and policies, as well as the ensuing...

Page 79
... information Parent company annual accounts W.F. (Wilfred) Nagel, chief risk officer (Born 1956, Dutch nationality, male; appointed in 2012, term expires in 2016) Wilfred Nagel was chief executive officer of ING Bank Turkey until his appointment as, amongst other roles, a member of the Management...

Page 80
... share capital. Function of the Supervisory Board The function of the Supervisory Board is to supervise the policy of the Executive Board and the general course of events of ING Group and its business, as well as to provide advice to the Executive Board. In line with Dutch company law, the Corporate...

Page 81
...Audit Committee Risk Committee Nomination Committee Remuneration Committee Corporate Governance Committee ING Group Annual Report 2014 Additional information Supervisory board Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the...

Page 82
...Dutch nationality, male; appointed in 2007, term expires in 2015) Former managing director of F&C and country head for F&C Netherlands (asset management firm). Most relevant ancillary positions: chairman of the Supervisory Board of NSI N.V. (real estate fund) (listed company). Non-executive director...

Page 83
... of internal control over financial reporting on 31 December 2014. Consolidated annual accounts Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Corporate Governance ING Group has started a project with the objective of changing its external audit...

Page 84
...management registered shares in the capital of ING Groep N.V., a public limited company with its registered office in Amsterdam ("ING Group") and any bonus shares which may be distributed thereon or shares acquired as stock dividend or by the exercise of subscription rights and to issue exchangeable...

Page 85
.... The increase came about as follows: add: conversion of shares into depositary receipts 17,994,914 less: conversion of depositary receipts into shares 325 Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Corporate...

Page 86
ING Group Corporate Governance Report of ING Trust Office continued 82 Composition and remuneration Board of ING Trust Office The members of the Board are appointed by the Board itself for a maximum term of four years and may be reappointed two times. Holders of depositary receipts may make ...

Page 87
... Articles of Association of ING Continuity Foundation. Amsterdam, 16 March 2015 Board of Stichting ContinuÃ¯teit ING ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive...

Page 88
ING Group Corporate Governance Conformity statement 84 Conformity statement The Executive Board is required to prepare the Annual Accounts and the Annual Report of ING Groep N.V. for each financial year in accordance with applicable Dutch law and those International Financial Reporting Standards (...

Page 89
... R.A.J.G. (Ralph) Hamers CEO, chairman of the Executive Board P.G. (Patrick) Flynn CFO, member of the Executive Board ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive...

Page 90
... Board (United States), the consolidated balance sheets of ING Groep N.V. as of 31 December 2014 and 2013, and the related consolidated profit and loss accounts, consolidated statements of comprehensive income, consolidated statements of cash flows and consolidated statements of changes in equity...

Page 91
.... ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts With effect from 2012, the law on prohibition of payment of variable remuneration to board members of financial institutions that receive state aid, the Dutch...

Page 92
... cars, contributions to company savings plans and, if applicable, expatriate allowances) which apply to other senior employees. Executive Board members may obtain banking and insurance services from ING Group subsidiaries in the ordinary course of their business and on comparable terms that apply to...

Page 93
... 3. Further strengthen the operational and legal structure 4. Develop an updated sustainability strategy and agenda for the bank 5. Develop and implement a forward-looking risk appetite strategy 6. Enhance the Non-Financial Risk management ING Group Annual Report 2014 Report of the Executive Board

Page 94
... pension costs for former members of the Executive Board in the past three years. Long-term incentives awarded in previous years In 2014 no long-term incentives were awarded to the Executive Board members. Until 2010 the long-term incentive plan (LTIP) was in place at ING and includes share options...

Page 95
...ING Group's share price at the vesting date. (4) Shares granted to Wilfred Nagel in 2012 and 2013 were awarded for his performance in positions previous to his appointment to the Executive Board. Other information Patrick Flynn Wilfred Nagel (4) Parent company annual accounts Consolidated annual...

Page 96
... members Executive Board members are permitted to hold ING shares as a long-term investment. The table below shows an overview of the shares held by members of the Executive Board at 31 December 2014, 2013 and 2012. ING shares held by members of the Executive Board number of shares 2014 2013 2012...

Page 97
...scenarios are visualised. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Benchmarks The current remuneration level of the CEO and other members of the Executive Board is benchmarked against...

Page 98
... on long-term value creation, risk and non-financial performance Variable remuneration is linked to long-term value creation and risk. It is based on individual, business line and company performance criteria. Performance measurement will increasingly account for estimated risks and cost of capital...

Page 99
... as a consequence of increased level of responsibility and the increased frequency and intensity of Supervisory Board meetings. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the...

Page 100
... ING shares as a long-term investment. The table below shows the holdings by members of the Supervisory Board at 31 December 2014, 2013 and 2012. ING shares held by members of the Supervisory Board (1) number of shares 2014 2013 2012 Jeroen van der Veer Hermann-Josef Lamberti (2) Eric Boyer de la...

Page 101
... information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Shares vested for members of the Supervisory Board in 2014 Shares Granting date Vesting date Number of shares granted Number of shares vested Vesting price Eric Boyer de la...

Page 102
ING Group Corporate Governance Works council 98 Works councils Central works council 2014 M.L.R. ...Bank, Romania A. (Aad) Kant, chairman Insurance, the Netherlands R. (Reinoud) Rijpkema, secretary Insurance, the Netherlands..., M.R. (Mark Robert) Brown, United Kingdom. ING Group Annual Report 2014

Page 103
...the Dutch State and the European Commission Restructuring Plan 57 Other events 58 Subsequent events Risk management Capital management Parent company annual accounts Parent company balance sheet Parent company proï¬t and loss account Parent company statement of changes in equity Accounting policies...

Page 104
...ING Group 100 Consolidated balance sheet as at 31 December amounts in millions of euros 2014 2013 2012 ASSETS Cash and balances with central banks 2 Amounts due from banks 3 Financial assets at fair value through profit and loss 4 - trading assets - investments for risk of policyholders - non...

Page 105
... 136 4,920 3,778 11,123 4,167 1,037 3,130 60,003 -48,119 11,884 607 1,604 Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts 3,024 -977 2,047 -980 1,122 102 -376 16,010 2,125 203 4,703 4,738 11,769...

Page 106
ING Group Consolidated annual accounts Consolidated profit and loss account of ING Group continued 102 amounts in millions of euros 2014 2013 2012 Net result from continuing and discontinued operations attributable to: Equityholders of the parent Minority interests 1,251 189 1,440 3,545 265 ...

Page 107
... loss account: Unrealised revaluations available-for-sale investments and other Realised gains/losses transferred to the profit and loss account Changes in cash flow hedge reserve Transfer to insurance liabilities/DAC Share of other comprehensive income of associates and joint ventures Exchange rate...

Page 108
... to customers - other assets - amounts due to banks, not payable on demand - customer deposits and other funds on deposit - trading liabilities - other financial liabilities at fair value through profit and loss - other liabilities Net cash ï¬,ow from/(used in) operating activities Investments and...

Page 109
... relate to the notes starting on page 129. These form an integral part of the consolidated annual accounts. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 110
...comprehensive income Employee stock option and share plans Repayment of non-voting equity securities Repurchase premium Changes in the composition of the group and other Dividends Purchase/sale of treasury shares Balance as at 31 December 2012 Remeasurement of the net defined benefit asset/liability...

Page 111
... Total equity Balance as at 1 January 2014 Remeasurement of the net defined benefit asset/liability 41 Unrealised revaluations property in own use Unrealised revaluations available-for-sale investments and other Realised gains/losses transferred to the profit and loss account Changes in cash flow...

Page 112
...Through its insurance holding company NN Group, ING operates in various countries and the accounting principles for insurance contracts follow local practice in these countries. NN Group's businesses in the Netherlands apply accounting standards generally accepted in the Netherlands (Dutch GAAP) for...

Page 113
... the balance sheet 2013 2012 Total Shareholders' equity (before change in accounting policy) Japan Closed Block VA Change in Insurance and investment contracts Impact before tax Tax effect Impact on Shareholders' equity IFRS 10 Assets held for sale Financial assets at fair value through profit and...

Page 114
... in accounting policies the comparative amounts for 2013 and 2012 were restated accordingly. As a result of the retrospective change in accounting policies set out above, the consolidated balance sheet of ING Group includes an additional balance sheet as at 31 December 2012. Investment Entities...

Page 115
... current period presentation. The impact of these changes is explained in the respective notes when significant. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 116
...acquisition costs, loan loss provisions, the determination of the fair values of real estate and financial assets and liabilities and employee benefits. In each case, the determination of these items is fundamental to the financial condition and results of operations, and requires management to make...

Page 117
... Other information Parent company annual accounts Consolidated annual accounts The process of defining methodologies and assumptions for insurance provisions and DAC is governed by NN Group risk management. Loan loss provisions Loan loss provisions are recognised based on an incurred loss model...

Page 118
... a significant impact on ING Group's consolidated financial statements. Impairments are especially relevant in two areas: Available-for-sale debt and equity securities and Goodwill/Intangible assets. All debt and equity securities (other than those carried at fair value through profit and loss) are...

Page 119
.... The geographical analyses are based on the location of the office from which the transactions are originated. Additional information Corporate Governance Other information Parent company annual accounts Consolidated annual accounts ING Group Annual Report 2014 Report of the Executive Board

Page 120
...in the profit and loss account are generally included in Net trading income. Reference is made to Note 28 'Net trading income', which discloses the amounts included in the profit and loss account. Exchange rate differences relating to the disposal of available-for-sale debt and equity securities are...

Page 121
... between credit risk classifications in that section and the consolidated balance sheet classifications above is explained below: ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of...

Page 122
... sheet classification Investments (available-for-sale and held-to-maturity); â€º Money market risk arises when ING Group places short term deposits with a counterparty in order to manage excess liquidity and among others relates to the balance sheet classifications Amounts due from banks and Loans...

Page 123
...to the profit and loss account. Consolidated annual accounts Additional information Other information Parent company annual accounts Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset, and the net amount reported, in the balance sheet when...

Page 124
...securities; generally 25% and 6 months are used as triggers. If any objective evidence exists for available-for-sale debt and equity investments, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset...

Page 125
... on a straight-line basis. On disposal the related revaluation reserve is transferred to retained earnings. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 126
.... Lease income is recognised over the term of the lease using the net investment method (before tax), which reflects a constant periodic rate of return. When assets are held subject to an operating lease, the assets are included under Assets under operating leases. ING Group Annual Report 2014

Page 127
... generally not exceed three years. Amortisation is included in Other operating expenses. Value of business acquired (VOBA) VOBA is an asset that reflects the present value of estimated net cash flows embedded in the insurance contracts of an acquired company, which existed at the time the company...

Page 128
... apply accounting standards generally accepted in the Netherlands (Dutch GAAP) for its provisions for liabilities under insurance contracts; similarly, ING's businesses in the United States apply accounting standards generally accepted in the United States (US GAAP). ING Group Annual Report 2014

Page 129
... interest rate rebates, DAC and VOBA (the net insurance liabilities), is evaluated regularly by each business unit for the business originated in that business unit. The test considers current estimates of all ING Group Annual Report 2014 Corporate Governance Report of the Executive Board

Page 130
... asset in the consolidated balance sheet is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans. Deï¬ned contribution plans For defined contribution plans, the Group pays contributions to publicly...

Page 131
.... The rights are subject to certain conditions, including a pre-determined continuous period of service. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 132
... the net cash flow and the balance sheet change in Cash and cash equivalents. Parent company accounts The parent company accounts of ING Groep N.V. are prepared in accordance with the financial reporting requirements included in Part 9 of Book 2 of the Dutch Civil Code. ING Group Annual Report 2014

Page 133
... 48 'Transfer of financial assets' for information on securities lending as well as sale and repurchase transactions. ING Group Annual Report 2014 Additional information Trading assets Investments for risk of policyholders Non-trading derivatives Designated as at fair value through profit and loss...

Page 134
...the clients of ING Group. ING offers institutional and corporate clients and governments products that are traded on the financial markets. A significant part of the derivatives in the trading portfolio are related to servicing corporate clients in their risk management to hedge for example currency...

Page 135
... profit and loss by type 2014 2013 Equity securities Debt securities Loans and receivables Other 9 1,124 1,623 2,756 437 1,289 1,052 12 2,790 Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Included in the Financial assets...

Page 136
... banking and insurance operations: Debt securities by type and balance sheet lines - Available-for-sale investments and Assets at amortised cost (banking operations) Available-for-sale investments 2014 2013 Held-to-maturity investments 2014 2013 Loans and advances to customers 2014 2013 2014 Amounts...

Page 137
... the Dutch State and the European Commission Restructuring Plan'. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Government bonds Covered bonds Corporate bonds Financial institutions' bonds...

Page 138
... fourth quarter of 2008 ING Group reclassified certain financial assets from Investments available-for-sale to Loans and advances to customers and Amounts due from banks. The Group identified assets, eligible for reclassification, for which at the reclassification date it had the intention to hold...

Page 139
... income) Recognised impairments (before tax) Recognised provision for credit losses (before tax) 22,828 2.1%- 11.7% 24,052 -1,224 nil -192 nil nil 1,594 4.1%- 21% 1,646 -69 Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts...

Page 140
...' and Note 57 'Other events'. Reference is made to Note 48 'Transfer of financial assets' for information on securities lending as well as sale and repurchase transactions. Borrowed debt securities are not recognised in the balance sheet and amount to nil (2013: nil). ING Group Annual Report 2014

Page 141
... Report 2014 Additional information Other information Netherlands International Total Parent company annual accounts Consolidated annual accounts Loans to, or guaranteed by, public authorities Loans secured by mortgages Loans guaranteed by credit institutions Personal lending Asset backed...

Page 142
... Group. Loan loss provisions analysed by type - banking operations Netherlands 2014 2013 2014 International 2013 2014 Total 2013 Loans to, or guaranteed by, public authorities Loans secured by mortgages Loans guaranteed by credit institutions Personal lending Asset backed securities Corporate loans...

Page 143
... Consolidated annual accounts Additional information Other information Parent company annual accounts Interest held (%) Fair value of listed investment Balance sheet value Total assets Total liabilities Total income Total expenses TMB Public Company Limited SulAmÃ©rica S.A. CBRE UK Property Fund...

Page 144
... Consolidated annual accounts Notes to the consolidated annual accounts of ING Group continued 140 Changes in Investments in associates and joint ventures 2014 2013 Opening balance Additions Transfers to and from Investments Revaluations Share of results Dividends received Disposals Exchange rate...

Page 145
...'. ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Banking operations Insurance operations 80 325 721 1,046 Corporate Governance Opening balance Additions Transfers to and from Property in own use Transfers to and from Other assets...

Page 146
...to the consolidated annual accounts of ING Group continued 142 9 Property and equipment Property and equipment by type 2014 2013 Property in own use Equipment Assets under operating leases 1,020 998 82 2,100 1,243 1,134 69 2,446 Property in own use by banking and insurance operations 2014 2013...

Page 147
... 2014 Total 2013 Consolidated annual accounts Additional information Other information Parent company annual accounts Value of business acquired 2014 2013 Opening balance Additions Capitalised expenses Amortisation and unlocking Impairments Effect of unrealised revaluations in equity Exchange rate...

Page 148
... acquisition costs Life insurance 2014 2013 Non-life insurance 2014 2013 2014 Total 2013 Opening balance Capitalised Amortisation and unlocking Effect of unrealised revaluations in equity Exchange rate differences Changes in the composition of the group and other changes Closing balance 1,316...

Page 149
...ING's investment management business in Malaysia and Thailand, ING's Insurance joint ventures in South Korea and India and ING Direct UK closed. Reference is made to Note 52 'Companies and businesses acquired and divested'. Consolidated annual accounts Additional information Other information Parent...

Page 150
... Consolidated annual accounts Notes to the consolidated annual accounts of ING Group continued 146 Assets held for sale 2014 2013 2012 Cash and balances with central banks Amounts due from banks Financial assets at fair value through profit and loss Investments Loans and advances to customers...

Page 151
... Non-trading derivatives Financial assets designated as at fair value through profit and loss Available-for-sale investments 10 36,997 152 454 51,445 89,058 14 3,985 6,944 38 18,981 29,962 604 240 628 41,222 7,096 492 72,277 121,715 Consolidated annual accounts Corporate Governance Report...

Page 152
... the non-financial assets carried at fair value were determined as follows: Methods applied in determining fair values of non-financial assets - Held for sale - NN Group 2014 Level 1 Level 2 Level 3 Total Real estate investments Property in own use 1,104 88 1,192 1,104 88 1,192 ING Group Annual...

Page 153
... to Note 12 'Assets and liabilities held for sale' and Note 57 'Other events'. ING Group Annual Report 2014 Additional information Net defined benefit assets Deferred tax assets Reinsurance and insurance receivables Property development and obtained from foreclosures Income tax receivable Accrued...

Page 154
... (2013: EUR 4,541 million) accrued interest on assets measured at amortised cost under the IAS 39 classification Loans and receivables. Other Other includes EUR 2,144 million (2013: EUR 3,400 million) related to transactions still to be settled at balance sheet date. ING Group Annual Report 2014

Page 155
... the number of his depositary receipts. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Share capital Share premium Revaluation reserve Currency translation reserve Net defined benefit asset...

Page 156
...1,971 718 345 2,689 5,550 7,161 -772 718 -2,181 10,476 Transfer to insurance liabilities/DAC includes the change in the deferred profit sharing liability (net of deferred tax). Reference is made to Note 18 'Insurance and investment contracts, reinsurance contracts'. ING Group Annual Report 2014

Page 157
... Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Opening balance Unrealised revaluations Realised gains/losses transferred to profit and loss Exchange rate differences Impact of IPO NN Group Closing balance...

Page 158
... premium of EUR 375 million is paid in relation to the repayment of the EUR 750 million non-voting equity securities. Changes in treasury shares Amount 2014 2013 2012 2014 2013 Number 2012 Opening balance Purchased/sold Share-based payments Other Closing balance 32 6 8 46 410 14 -100 -292...

Page 159
... Dutch Civil Code, from ING Group's subsidiaries, associates and joint ventures are as follows: Legally distributable reserves 2014 ING Bank NN Group Other Total Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Equity invested...

Page 160
... hold any of these notes. The proportional interest held and key information on NN Group is included in the tables below. NN Group N.V. - Balance sheet 2014 Interest held (%) Total assets Total liabilities Total equity Minority interests NN Group - total ING Group's share (1) (1) ING Group's share...

Page 161
...Voya. Reference is made to Note 12 'Assets and liabilities held for sale' and Note 57 'Other events'. Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts In 2013, minority interests increased with EUR 4,358 million due to the IPO...

Page 162
...2014, EUR 1,125 million was received from three external investors (Asian-based investment firms RRJ Capital, Temasek and Sea Town Holdings International) in relation to the IPO of NN Group. This funding, which bears a 4% interest rate, will be repaid in three tranches of NN Group shares. The number...

Page 163
... in Other income - Other. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts 10,329 7,168 3,220 380 1,793 5,512 28,402 12,642 5,037 2,866 1,591 338 9,151 31,625 Corporate Governance Report of the Executive Board

Page 164
... in Other borrowed funds. Subordinated loans of group companies relates to capital debentures and private loans which are subordinated to all current and future liabilities of ING Bank N.V. Preference shares of group companies comprise non-cumulative guaranteed Trust Preference Securities which are...

Page 165
...) profit sharing and rebates and amounted to EUR 3,488 million as at 31 December 2013. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts 109,371 Corporate Governance Provision for non-participating life policy...

Page 166
ING Group Consolidated annual accounts Notes to the consolidated annual accounts of ING Group continued 162 Changes in life insurance provisions Provision net of reinsurance (excluding provision for life insurance for risk of policyholders) 2014 2013 Provision for life insurance for risk of ...

Page 167
... to Note 57 'Other events'. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Additions - for the current year - for prior years - interest accrual of provision Report of the Executive Board

Page 168
... 48 'Transfer of financial assets' for information on securities lending as well as sale and repurchase transactions. 20 Customer deposits and other funds on deposit Customer deposits and other funds on deposit 2014 2013 Savings accounts Credit balances on customer accounts Corporate deposits Other...

Page 169
... 48 'Transfer of financial assets' for information on securities lending as well as sale and repurchase transactions. Non-trading derivatives by type 2014 2013 Other non-trading derivatives mainly includes interest rate swaps for which no hedge accounting is applied. ING Group Annual Report 2014...

Page 170
... the consolidated annual accounts of ING Group continued 166 Designated as at fair value through profit and loss by type 2014 2013 Debt securities Funds entrusted Subordinated liabilities 12,417 409 725 13,551 12,415 536 904 13,855 In 2014, the change in the fair value of financial liabilities...

Page 171
.... ING Group Annual Report 2014 Additional information Other information The amounts included in other provisions are based on best estimates with regard to amounts and timing of cash flows required to settle the obligation. Parent company annual accounts Litigation Other Total Consolidated...

Page 172
... to the consolidated profit and loss account 23 Interest result banking operations Interest result banking operations 2014 2013 2012 Interest income on loans Interest income on impaired loans Total interest income on loans Interest income on available-for-sale securities Interest income on held...

Page 173
...in fair value of real estate investments Investment income 3 207 305 -11 607 29 46 3 236 351 -11 607 Consolidated annual accounts Additional information Other information Parent company annual accounts In 2012, ING sold all of its shares in Capital One Financial Corporation. The transaction...

Page 174
... annual accounts Notes to the consolidated annual accounts of ING Group continued 170 26 Commission income Gross fee and commission income Banking operations 2014 2013 2012 2014 Legacy Insurance 2013 2012 2014 2013 Total 2012 Funds transfer Securities business Insurance broking Asset management...

Page 175
... Dutch State and the European Commission Restructuring plan'. In 2012, Other income - Other included losses on disposal of Loans and advances to customers of EUR 618 million. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual...

Page 176
... lower expected sales prices. In 2012, impairments on Property development related to various real estate development projects (including mainly the United Kingdom, Belgium, Spain and Germany) due to worsening market conditions. 31 Staff expenses Staff expenses 2014 2013 2012 Salaries Pension costs...

Page 177
... to the Management Board members of ING Bank and NN Group, as well as Identified staff. ING has the authority to apply a hold back to awarded but unvested shares and a claw-back to vested shares. The information presented below on stock options and share plans on ING Groep N.V. shares includes...

Page 178
ING Group Consolidated annual accounts Notes to the consolidated annual accounts of ING Group continued 174 Changes in option rights non-vested Options non-vested (in numbers) 2014 2013 2012 Weighted average grant date fair value (in euros) 2014 2013 2012 Opening balance Vested Forfeited Closing ...

Page 179
...7.78 Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts In July 2014, 2,8 million share awards of ING Group were converted in NN Group share awards, these are presented in the line Vested. As at 31 December 2014 the share awards...

Page 180
...the results of ING's Insurance and investment management businesses in Asia and Voya. In light of ING's intention to divest its remaining interests over time, NN Group and the Voya available-forsale investment are classified as held for sale and discontinued operations in 2014. Total net result from...

Page 181
... operations was as follows: Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Net result from discontinued operations - NN Group and Voya 2014 2013 2012 Operating cash flow Investing cash flow Financing cash flow Net cash...

Page 182
... the average market price during the period. The net increase in the number of shares resulting from exercising stock options and share plans is added to the average number of shares used for the calculation of diluted earnings per share. The potential conversion of the non-voting equity securities...

Page 183
... the 'Risk management' section. ING Group Annual Report 2014 Additional information Other information Total as included in balance sheet: - amounts due to banks - amounts due from banks -29,999 37,119 7,120 -27,200 42,996 15,796 -38,704 39,053 349 Parent company annual accounts Consolidated...

Page 184
...the Dutch Banking tax, these costs will be transferred from Corporate Line Banking to the relevant business lines from 2014 onwards. The comparatives were adjusted to reflect the new segment structure. As of 30 September 2014, the Insurance segments (Netherlands Life, Netherlands Non-Life, Insurance...

Page 185
... parent (1) Insurance Other comprises mainly the net result relating to warrants on the shares of Voya Financial. 12,376 2,290 630 15,296 12,376 2,290 630 15,296 Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated...

Page 186
ING Group Consolidated annual accounts Notes to the consolidated annual accounts of ING Group continued 182 ING Group Total 2013 Total Banking Legacy Insurance Total Underlying income - Net interest result - banking operations - Commission income - Total investment and other income Total ...

Page 187
...Voya Net result IFRS-EU (continuing and discontinued operations) attributable to equity holder of the parent 11,664 2,173 477 14,313 11,664 2,173 477 14,313 Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual...

Page 188
...Group Consolidated annual accounts Notes to the consolidated annual accounts of ING Group continued 184 c. Banking activities Segments Banking 2014 Retail Netherlands Retail Belgium Retail Germany Retail Rest of World Commercial Banking Corporate Line Banking Total Banking Underlying income - Net...

Page 189
... Banking 2012 Retail Netherlands Retail Belgium Retail Germany Retail Rest of World Commercial Banking Corporate Line Banking Total Banking Underlying income - Net interest result - Commission income - Total investment and other income Total underlying income Underlying expenditure - Operating...

Page 190
...-EU balance sheets by segment are not reported internally to, and not managed by, the chief operating decision maker. 40 Information on geographical areas ING Group's business lines operate in seven main geographical areas: the Netherlands, Belgium, Rest of Europe, North America, Latin America, Asia...

Page 191
...ned beneï¬t asset/liability 2014 2013 Consolidated annual accounts Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Fair value of plan assets Defined benefit obligation Funded status (Net defined benefit asset/(liability)) Presented as: - Other...

Page 192
...assets 2014 2013 Opening balance Interest income Remeasurements: Return on plan assets excluding amounts included in interest income Employer's contribution Participants contributions Benefits paid Effect of curtailment or settlement Exchange rate differences Changes in the composition of the group...

Page 193
... ING Group Annual Report 2014 Additional information Other information Parent company annual accounts The amount of the remeasurement of the net defined benefit asset/liability in 2014 was mainly a result of the change in the high quality corporate bond rate. The weighted average discount rate...

Page 194
... benefit asset/liability and the Other postemployment benefits. Weighted averages of basic actuarial assumptions in annual % as at 31 December Net defined benefit asset/liability 2014 2013 Other postemployment benefits 2014 2013 Discount rates Mortality rates Expected rates of salary increases...

Page 195
...-173 -821 Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Expected cash ï¬,ows Annual contributions are paid to the funds at a rate necessary to adequately finance the accrued liabilities of the plans calculated in accordance...

Page 196
... benefit plan in the Netherlands to the Dutch ING Pension Fund. The agreement made the Dutch ING Pension Fund financially independent. This agreement resulted in the removal of the net pension asset related to the Dutch defined benefit pension fund from ING Group's balance sheet in 2014. ING Group...

Page 197
...assets for this plan are no longer disclosed above. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts 18,713 Consolidated annual accounts Corporate Governance Investment portfolio of the pension fund Debt securities (fixed income investments...

Page 198
... Net asset (-) 2013 Change through equity Change through Exchange rate net result differences Investments Real estate investments Financial assets and liabilities at fair value through profit and loss Deferred acquisition costs and VOBA Depreciation Insurance provisions Cash ï¬,ow hedges Pension...

Page 199
... pension settlement and restructuring charges on the result. The three year medium term plan was used to substantiate the deferred tax assets in the Netherlands. In 2014, the change in deferred tax assets for insurance operations is due to the classification of NN Group as held for sale. Reference...

Page 200
... with the parent company's investments in subsidiaries as any economic benefit from those investments will not be taxable at parent company level. Proï¬t and loss account - Taxation Taxation by type Netherlands 2014 2013 2012 2014 2013 International 2012 2014 2013 Total 2012 Current taxation...

Page 201
... subjective ING Group Annual Report 2014 Additional information Other information Financial liabilities Subordinated loans Debt securities in issue Other borrowed funds Investment contracts for risk of company Investment contracts for risk of policyholders Amounts due to banks Customer deposits...

Page 202
... the adjustment. ING also applies CVA for pricing credit risk into new external trades with counterparties. The following methods and assumptions were used by ING Group to estimate the fair value of the financial instruments: Financial assets Cash and balances with central banks The carrying amount...

Page 203
...hierarchy levels are recognised as of the date of the event or change in circumstances that caused the transfer. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 204
... and liabilities (carried at fair value) 2013 Level 1 Level 2 Level 3 Total Financial Assets Trading assets Investments for risk of policyholders Non-trading derivatives Financial assets designated as at fair value through profit and loss Available-for-sale investments 27,684 38,228 4 571 111,273...

Page 205
... Other information Parent company annual accounts Opening balance Amounts recognised in the profit and loss account during the year Revaluation recognised in equity during the year Purchase of assets Sale of assets Maturity/settlement Transfers into Level 3 Transfers out of Level 3 Exchange rate...

Page 206
... consolidated annual accounts of ING Group continued 202 Changes in Level 3 Financial assets Trading assets Investments for risk of policyholders Non-trading derivatives Financial assets designated as at fair value through profit and loss Availablefor-sale investments 2013 Total Opening balance...

Page 207
... Other information Parent company annual accounts Consolidated annual accounts Held at Derecognised balance during the year sheet date Financial assets Trading assets Non-trading derivatives Financial assets designated as at fair value through profit and loss Available-for-sale investments -286...

Page 208
... Consolidated annual accounts Notes to the consolidated annual accounts of ING Group continued 204 Of the total amount of financial assets classified as Level 3 as at 31 December 2014 of EUR 1.8 billion, an amount of EUR 0.8 billion (50%) is based on unadjusted quoted prices in inactive markets...

Page 209
... pricing model Available for sale - Debt 78 - Equity 495 Price based Present value techniques Discounted cash ï¬,ow Multiplier method Comparable transactions Total 1,603 1,336 ING Group Annual Report 2014 Corporate Governance Price based Net asset value Price based Price based Net asset...

Page 210
... is made to Note 4 'Financial assets at fair value through proï¬t and loss'. Non-listed equity investments Level 3 equity securities mainly include corporate investments, fund investments, real estate positions and other equity securities which are not traded in active markets. In the absence of an...

Page 211
... 3 assets and liabilities should be seen in combination with other instruments (for example as a hedge) that are classified as level 2. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report...

Page 212
...) Interest rates (Rates derivatives, FX derivatives) Credit (Debt securities, Loans, structured notes, credit derivatives) Available-for-sale Equity Debt 42 36 24 103 14 219 9 32 17 108 23 189 Asset backed security portfolio Fair value hierarchy of certain ABS bonds 2014 Level 1 Level 2 Level...

Page 213
... 849 27,675 474,003 654,537 ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Financial assets Cash and balances with central banks Amounts due from banks Held-to-maturity investments Loans and advances to customers 13,316 4,830 1,225 3,586 22...

Page 214
... Level 3 Non-ï¬nancial assets 2014 Real estate investments Property in own use Total nonï¬nancial assets Opening balance Amounts recognised in the profit and loss account during the year Revaluation recognised in equity during the year Purchase of assets Sale of assets Reclassifications Exchange...

Page 215
...ï¬t and loss account during the year (Level 3) 2013 Held at balance sheet date Derecognised during the year Total Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Non-ï¬nancial assets Real estate investments Property in own...

Page 216
...to derivatives used in cash flow hedges. Hedges of net investments in foreign operations ING Group's net investment hedges principally consist of derivatives (including currency forwards and swaps) and non-derivative financial instruments such as foreign currency denominated funding that are used to...

Page 217
... Cash and balances with central banks Amounts due from banks Financial assets at fair value through profit and loss - trading assets - non-trading derivatives - designated as at fair value through profit and loss Investments - available-for-sale - held-to-maturity Loans and advances to customers...

Page 218
... risk is managed. Liabilities by maturity 2014 Less than 1 month(1) 1-3 months 3-12 months 1-5 years Over 5 years Maturity not applicable Adjustment(2) Total Subordinated loans Debt securities in issue Other borrowed funds Amounts due to banks Customer deposits and other funds on deposit Financial...

Page 219
... to customers until full repayment in 2014 (2013: EUR 2.7 billion). The table does not include assets relating to securities lending as well as sale and repurchase transactions. Reference is made to Note 48 'Transfer of ï¬nancial assets'. ING Group Annual Report 2014 Report of the Executive Board

Page 220
... Securities lending 2014 Equity Debt Sale and repurchase Equity Debt Transferred assets at carrying amount Financial assets at fair value through profit and loss Investments Associated liabilities at carrying amount Amounts due to banks Customer deposits and other funds on deposit Financial...

Page 221
... information Parent company annual accounts Consolidated annual accounts Gross amounts of Net amounts recognised of ï¬nancial ï¬nancial assets liabilities presented offset in the in the balance sheet balance sheet 2014 Gross amounts of recognised ï¬nancial assets Financial instruments Cash...

Page 222
... 38,661 1,649 5 1,654 29,157 Total financial assets (1) The line 'Impact of enforceable master netting agreements or similar arrangements' contains derivative positions under the same master netting arrangements being presented in different balance sheet line items. ING Group Annual Report 2014

Page 223
... information Parent company annual accounts Consolidated annual accounts Balance sheet line item Amounts due to banks Financial instrument Repurchase, securities lending and similar agreements Other 676 4 680 -3 -3 676 1 677 313 313 363 363 1 1 Customer deposits and other funds on deposit...

Page 224
...,893 -507 26 -481 32,220 Total financial liabilities (1) The line 'Impact of enforceable master netting agreements or similar arrangements' contains derivative positions under the same master netting arrangements being presented in different balance sheet line items. ING Group Annual Report 2014

Page 225
... in the consolidated ï¬nancial statements. In response to the needs of its customers, the Group offers ï¬nancial products related to loans. These products include traditional off-balance sheet credit-related ï¬nancial instruments. Contingent liabilities and commitments 2014 (1) Less than 1 month...

Page 226
... in Class' criteria as formulated on 24 November 2011 by the Dutch Minister of Finance. In December 2011, this resulted in an additional agreement on these measures with the two main consumer protection organisations. In 2012, almost all unit-linked policyholders were ING Group Annual Report 2014

Page 227
...at this moment it is not practicable to provide an estimate of the (potential) ï¬nancial effect of such action. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 228
... operations. Reference is made to Note 12 'Assets and liabilities held for sale' and Note 57 'Other events'. In addition to the above mentioned transactions, the interest in the joint venture ING Financial Services Private Limited was sold to Hathaway investments. ING Group Annual Report 2014

Page 229
...information Acquisitions effective in 2013 There were no significant acquisitions in 2013. Parent company annual accounts Consolidated annual accounts 1,901 79,339 54,250 8,245 4,359 727 4,211 2,667 Corporate Governance General Primary line of business Insurance Report of the Executive Board

Page 230
... to the consolidated annual accounts of ING Group continued 226 Asia - Insurance in Hong Kong, Macau, Thailand In October 2012, ING reached an agreement to sell its life insurance, general insurance, pension and financial planning units in Hong Kong and Macau, and its life insurance operation in...

Page 231
... a guarantee from ING Bank. ING Direct Canada was included in the segment Retail Rest of World. The transaction closed in November 2012. ING Direct USA In June 2011, ING reached an agreement to sell ING Direct USA to Capital One Financial Corporation, a leading US-based financial holding company. In...

Page 232
...in Capital One Financial Corporation as disclosed in Note 24 'Investment income'. Most signiï¬cant companies divested in 2012 ING Direct USA ING Direct Canada Insurance Malaysia Total General Primary line of business Sales proceeds Cash proceeds (1) Non-cash proceeds (2) Sales proceeds Assets Cash...

Page 233
... their statutory place of incorporation or primary place of business are as follows: Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Companies that are part of the banking operations Proportion of...

Page 234
...ING North America Insurance Corporation Lion Connecticut Holdings Inc. ReliaStar Life Insurance Company ReliaStar Life Insurance Company of New York Security Life of Denver Insurance Company ING USA Annuity and Life Insurance Company ING Investment Management Co Security Life of Denver International...

Page 235
... 5.2 billion) which are funded by third parties. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts 426 426 Consolidated annual accounts 1. Consolidated ING originated Credit management securitisation programmes ING Group enters into synthetic...

Page 236
...providing structuring, accounting, funding and operations services. The types of assets currently in Mont Blanc include trade receivables, consumer finance receivables, credit card receivables, motor vehicle loans and residential mortgage backed securities ('RMBS'). ING Group supports the commercial...

Page 237
... managed investment funds. The maximum exposure to loss for ING is equal to the reported carrying value of the investment recognised in the consolidated balance sheet of ING Group. For 2014, reference is made to Note 12 'Assets and liabilities held for sale'. Corporate Governance 7. Investments...

Page 238
... one new member who was appointed to the Management Board NN Group on 1 August 2014. (6) One of the Board members received an award in a deferred investment in funds that are managed by the respective business. In 2013, 'Management Boards' included the Management Boards of ING Bank N.V. ('ING Bank...

Page 239
... 2014, members of the Supervisory Board held 168,263 ING Groep N.V. shares (2013: 285,157). Key management personnel compensation is generally included in Staff expenses in the profit and loss account, except for key management personnel employed by entities that are presented as held for sale...

Page 240
... respect to corporate governance and executive remuneration were agreed with the Dutch State which were in place until the Illiquid Assets Back-up Facility was unwound. The last State Nominee remained in office until 12 May 2014. Illiquid Assets Back-up Facility ING Group and the Dutch State reached...

Page 241
... revaluation and therefore an increase in equity of EUR 4.6 billion (after tax). Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts The valuation method of the 20% Alt-A securities in the IFRS-EU balance sheet is not impacted by...

Page 242
... of ING's balance sheet; Divestment of all Insurance and Investment Management activities; Divestment of ING Direct USA; Creation of a new company in the Dutch retail market composed of Interadvies (including Westland Utrecht and the mortgage activities of Nationale-Nederlanden) and the existing...

Page 243
... the divestment of 100% of ING's European insurance and investment management activities by year-end 2016. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 244
...State to participate in the Credit Guarantee Scheme. In 2014, all these bonds were fully repaid. Reference is made to Note 16 'Debt securities in issue'. 57 Other events NN Group Initial Public Offering (IPO) On 2 July 2014, ING sold 77 million existing ordinary shares in the initial public offering...

Page 245
... Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Establishment of NN Group In 2014, ING Verzekeringen N.V. ('ING Insurance') was the holding company of the insurance and investment management activities of ING. ING Insurance...

Page 246
... equity accounting. Before the changes in the governance structure ING Bank had substantial additional powers, including the majority in the Board of Directors and power over operational decision making; as a result, ING Vysya was consolidated by ING. After the deconsolidation, the investment in ING...

Page 247
...risk Funding and Liquidity risk Non-financial risk Business risk 248 248 251 254 256 258 260 262 263 298 310 314 317 244 244 ING Group Annual Report 2014 ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate...

Page 248
...main financial risks ING Group is exposed to are credit risk (including transfer risk), market risk (including interest rate, equity, real estate and foreign exchange risks), liquidity & funding risk, insurance risk (via NN Group) and business risk. In addition, ING Group is exposed to non-financial...

Page 249
... may be internal to NN Group, such as operating and financial performance, introduction of new or enhancement in products or services by NN Group, or by competitors, or external such as adverse developments in the legal or other proceedings related to Dutch unit-linked policies or negative publicity...

Page 250
... consolidated financial statements. Pillar III information is from a regulatory perspective largely based on internal modelled risk metrics under the Basel rules and not addressed for verification to the External Auditors. Enhanced disclosure task force Although ING Bank strives towards a reporting...

Page 251
... Liquidity risk transfer and pricing Contingency funding plan Regulatory developments 311 311 311 312 312 313 313 314 404 404 Non-financial risk Subjects Risk Management Pillar III Operational risk is the risk of direct or indirect loss returning from inadequate or failed internal processes...

Page 252
... loyal customer base and a leadership position in our key markets and product franchises. Risk Governance ING Bank's risk management framework is based on a 'three lines of defence' governance model, whereby each line has a specific role and defined responsibilities and at the same time work closely...

Page 253
... Risk Committee 2-tier board structure Management Board Bank CRO Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Executive Level Bank Finance & Risk Committee Risk Committees GCC(P) GCC(TA) ALCO Bank Non-Financial Risk...

Page 254
...Bank risk organisation. Chief Risk Officer Risk and Capital Integration Bank Model Validation Bank Credit Risk Management Bank Market Risk Management Bank Non-Financial Risk Management Bank The heads of these departments (Risk General Managers) report to the CRO and bear direct responsibility...

Page 255
...quarterly basis to senior management and to the supervisor. Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts An independent model validation department is one of the cornerstones of ING Bank's risk...

Page 256
... accounts, - Investment products - Consumer lending - SME/business lending - Lending, - Debt capital, - Payments and cash management - Structured Finance, - Commercial Finance, - Equity Markets, - Financial Markets. - Capital management - Funding Economic Capital Total: Of which: Credit risk...

Page 257
...mitigating measure. Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts R i sk itoring n o m Ri s k contr ol R es isk sm en t ide sk Ri ca fi i nt ti on Report of the Executive Board k Ris ng...

Page 258
...-down process, which bases itself on the ambition of the Bank in terms of its risk profile and is a function of the capital and liquidity levels and ambitions, the regulatory environment and the economic context. The process is set up according to the following steps: ING Group Annual Report 2014

Page 259
... credit, market and liquidity & funding risk appetite statements. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Step 1. Identify & assess ING Bank's key risks Setting the Risk Appetite Framework starts...

Page 260
... required risk management processes are in place and effective within the business units. Key Control testing scorecards form one of the inputs of the Non-Financial Risk Dashboard (NFRD), which is a report that is discussed each quarter in the MBB and the Risk Committee. NFRD provides management at...

Page 261
... include sales or transfers of assets, reductions of risk limits, start-up or strengthening of marketing campaigns and lobbying campaigns with regulators or other authorities. ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Step 1. Risk...

Page 262
... is in line with the net market value (or surplus) definition. The process of EC modelling enables ING Bank to allocate economic capital to the business units and support risk-adjusted performance measurement via the Risk Adjusted Return on Capital (RAROC). The use of RAROC increases focus on...

Page 263
... 23,706 2013 10,174 7,015 5,155 256 22,600 (1) Corporate Line includes funding activities at ING Bank level, internal transactions between business units and the Corporate Line, and is managed by Capital Management. ING Group Annual Report 2014 Corporate Governance Report of the Executive Board

Page 264
... of the interest rate risk in the banking books in EC. In RC, only market risk in trading books is in scope. Furthermore, for Equity Investments the EC figures are reported under market risk, while the RC figures are reported under credit risk; â€º The EC figures include business risk, while RC does...

Page 265
...&A) Review. The AQR looked at both Credit and Market risk - the overall scope providing coverage for at least 50% of the Bank's risk-weighted assets and 40% of the balance sheet. Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts...

Page 266
...amount of mortgages in our credit portfolio, ING Bank closely follows all developments related to the Dutch housing market and its mortgage portfolio. Business lending Benelux ING Bank's Business Lending portfolio, defined as lending to corporates in the business line Retail Banking, is concentrated...

Page 267
...market, house prices in the Netherlands finally showed an uptick in 2014. This development improved the LTV and reduced RWA for the Dutch mortgages. Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts ING Group Annual Report 2014...

Page 268
... to reduce Settlement Risk. For the reconciliation between credit risk outstanding categories and financial assets we refer to the section 'Credit risk management classification' as included in the chapter 'Accounting policies for the consolidated annual accounts' ING Group Annual Report 2014

Page 269
... policies and systems and tools to manage the credit lifecycle of all credit risk taking activities. ING Group Annual Report 2014 Additional information Other information Commercial Banking & Corporate Line Retail Banking Benelux & International Parent company annual accounts Consolidated...

Page 270
... line covers Retail Banking Benelux and Retail Banking International. There is a functional reporting line from the business units to the Retail Risk Management (RRM) department. The retail risk portfolio is defined as a group of homogeneous credit assets, where a set of policies and processes...

Page 271
... Reference Benchmarks Credit Approval Process Following Organisational Structure: Lines of Business Business Unit Department Measured through various metrics: Expected Loss CRWA@Risk Economic Capital Exposure at Default (EAD) LGD Amount ING Group Annual Report 2014 Report of the Executive Board

Page 272
...(pre-settlement, money market, lending, investment), and connected to ING Bank high-level risk appetite across all risk types (credit, market, business and non-financial risk). They consist of a set of high-level credit risk metrics; expected loss, economic capital, risk-weighted assets and exposure...

Page 273
... assessed on a name-by-name basis. For each type of counterparty (corporate, banks/financial institution, structured products clients) there is a separate process. The line credit risk managers are organised along the business lines of ING Bank and are specialised in the relevant area of expertise...

Page 274
... a 99.95% confidence level and a 12 months' time horizon. It is used throughout ING Bank in the decision making process (mainly commercial banking), in risk adjusted counterparty and portfolio profitability measurement tools (commercial banking and retail), in investment and divestment decisions, in...

Page 275
... With the exception of guarantees and letters of credit, the EAD is always ING Group Annual Report 2014 Additional information Other information Parent company annual accounts EC is calculated using the economic values of rating models (PD, EAD and LGD). In line with regulatory requirements, so...

Page 276
... position. ING Bank uses the Internal Assessment Approach for the support facilities it provides to Asset Backed Commercial Paper (ABCP) conduit Mont Blanc Capital Corp., based on externally published rating agency methodologies. Credit risk models Within ING Bank internal Basel compliant models are...

Page 277
... all counterparty types and segments, including countries. Other information Parent company annual accounts Consolidated annual accounts Corporate Governance â€º MtM plus model based add-on approach: In this approach, the PS risk is calculated as the sum between the MtM of the trade and the...

Page 278
... loans to Group and Insurance being "intercompany loans", unless stated otherwise: Exposure classes ING Bank portfolio per risk category, as % of total EAD 2014 Lending Investment Money Market Pre-Settlement Total Total (ALL) Sovereigns Institutions Corporate Residential mortgages Other retail...

Page 279
... than secured facilities. Parent company annual accounts Consolidated annual accounts Models used for exposure classes ING Bank has developed PD, EAD and LGD models for Commercial Banking and Retail Banking portfolios. PD, EAD and LGD models are subject to CRC (or in some delegated cases: MDC...

Page 280
..., funding and operations services. ING Bank also provides support facilities (liquidity and program wide enhancement) backing the transactions funded by the conduit. Mont Blanc is fully consolidated into the ING Bank financial accounts. Credit risk tools Credit risk policies ING credit risk policies...

Page 281
... diagram. Risk Weighted Assets (RWA) Loan Loss Provisioning (LLP) Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts CDD/MiFID Expected Weight Loss CRR/CRD IV Country Risk Policy Regulatory...

Page 282
...risk ratings; Customer due diligence (CDD) Risk Level determination; MiFID classification determination; Environment and social responsibility reviews; Determining loan pricing; Seeking credit risk approval (the analysis); Administration of (standardised) documentation; ING Group Annual Report 2014

Page 283
... STARpro. Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Financial Statements data is automatically forwarded to Risk Rater, where it is incorporated into one of the various probabilities of default rating models. Risk Rater...

Page 284
... as it becomes more of a liquidity portfolio to support liabilities under a new Liquidity Coverage Ratio regime. Due to local regulatory requirements in certain units, Money Market postings tend to be with central banks and other highly rated financial institutions. ING Group Annual Report 2014

Page 285
... ING Bank's internal credit risk measurement methodologies. Economic sectors below 2% are not shown separately but grouped in Other. ING Group Annual Report 2014 Additional information Other information Private Individuals Commercial Banks Central Governments Non-Bank Financial Institutions Real...

Page 286
...Commercial Banking: for business loans (governments, institutions, corporates); ING Bank has adopted a policy to classify the obligor as a non-performing loan as quickly as possible upon the occurrence of a payment default or even before. These are the default triggers: ING Group Annual Report 2014

Page 287
... refer to the Forbearance section. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance 1) Bankruptcy or financial reorganisation: The Borrower has sought or has been placed (or is likely to seek...

Page 288
... industry reflects the further improvement in this market and the fact that ING Bank has been able to sell several distressed real estate assets in 2014. The increase in the sector natural resources (77%) is mainly due to the economic deterioration in Ukraine and Russia. ING Group Annual Report 2014

Page 289
... varies per business unit, but generally is nil in Commercial Banking, and a maximum of EUR 1 million in the Retail 'home markets'. A specific provision is calculated based on several scenarios and assumptions. Provisions level is up to date given the quarterly reviews; Discounted cash flow (DCF...

Page 290
... mandates vary, based on the legal framework in place and market practices, but are in line with ING Bank policy. Clients which are granted forbearance measures can have any risk rating (performing or non-performing), depending on their risk profile: â€º Performing - If the contract is considered as...

Page 291
... in Asia/Pacific declined during the year. ING Group Annual Report 2014 Additional information Real Estate Builders & Contractors General Industries Transportation & Logistics Food, Beverages & Personal Care Natural Resources Services Utilities Retail Media Telecom Other Total 1,906 650 510...

Page 292
.... The Turkish government reduced the maximum credit card limit, hence large numbers of credit card accounts were modified. Credit risk mitigation ING Bank's lending and investment businesses are subject to credit risk. As such, the creditworthiness of our customers and investments is continually...

Page 293
.... The ï¬rst two tables give a comprehensive overview of the collateralisation of the total portfolio of ING Bank. Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Report of the Executive Board

Page 294
...and Money Market Commercial Banking Corporate Line Bank Retail Banking Benelux Retail Banking International Total Lending, Investment and Money Market Pre-settlement (3) Commercial Banking Corporate Line Bank Retail Banking Benelux Retail Banking International Total Bank ING Group Annual Report 2014...

Page 295
... ING Bank's central database (Vortex) and in most cases external data is used to index the market value. On a quarterly or annual basis, the mortgages value is updated in Vortex using the relevant house price index (the NVM Index in the Netherlands, Level Housing Index in Australia, Crif Real Estate...

Page 296
...insurers under the Nationale Hypotheek Garantie (NHG) in the Netherlands. The NHG guarantees the repayment of a loan in case of a forced property sale. Business Lending portfolio Business Lending is an important business of ING Bank, accounting for 36.0% of the total ING Bank's outstandings. In line...

Page 297
.... Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Business Lending per economic sector Cover values including guarantees received - Business Lending portfolio - 2014 (1)(2) Cover type Outstandings...

Page 298
...Group Risk management ING Bank Risk Management continued 294 Cover values including guarantees received - Business Lending portfolio - 2013 (1)(2) Cover type Outstandings Other Eligible Mort- Financial CRR/CRD gages Collateral IV eligible Non CRR/ No Cover/ CRD IV Data not Guaraneligible available...

Page 299
... positions ING Group Annual Report 2014 Consolidated annual accounts Africa of which Non-performing America of which Non-performing Asia of which Non-performing Australia of which Non-performing Europe Belgium of which Non-performing Germany of which Non-performing Netherlands of which Non...

Page 300
...to A-, based on external ratings. In the Investment portfolio, the cover mainly relates to government guarantees and supranational institution guarantees. Pre-settlement portfolio ING Bank uses various market pricing and measurement techniques to determine the amount of credit risk on pre-settlement...

Page 301
... positions Consolidated annual accounts Additional information ING Group Annual Report 2014 Other information Parent company annual accounts The increase in the gross MtM (25.4%) was mainly observed in the UK (Rest of Europe), due to Clearing Houses. After netting the increase for Clearing Houses...

Page 302
... Carlo simulation. Real estate price risk includes the market risks in both the real estate investment and the development portfolio of ING Commercial Banking. The economic capital for real estate price risk is calculated by stressing the underlying market variables. ING Group Annual Report 2014

Page 303
... Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Economic Capital Regulatory Capital Trading Interest rate risk in the banking books Foreign exchange Real Estate Equity Investments (1) Market risk...

Page 304
...) customer behaviour risk with the commercial business. Risk measurement and the risk transfer process take place on a monthly basis, but more often if deemed necessary, for instance in volatile markets. The customer behaviour in relation to mortgages, loans, savings and demand deposits is modelled...

Page 305
..., like mortgages. In some cases, convexity risk is transferred from the commercial books to treasury books using swaption and cap/floor contracts. Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts Bank Treasury manages the...

Page 306
...the interest rate sensitive long-term investments of own funds, as the equity itself is not modelled and hence is not presented as an offset for the investments of own funds. The value of these investments is impacted significantly if interest rates move up by 1%. Convexity risk in retail portfolios...

Page 307
... the most important currencies for FX translation result: ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts By accounting category Amortised Cost Fair value through equity Fair value through profit and loss Total...

Page 308
... price risk in banking books Governance ING Bank maintains a strategic portfolio with substantial equity exposure in its banking books. Local offices are responsible for the management of the equity investments positions. Market risk is responsible for monitoring and reporting the regulatory capital...

Page 309
... rates, equity prices, foreign exchange rates and credit spreads. Governance The Financial Markets Risk Committee (FMRC) is the market risk committee that, within the risk appetite set by ALCO Bank, sets market risk limits both on an aggregated level and on a desk level, and approves new products...

Page 310
...of market risks of Commercial Banking (mainly Financial Markets) as this is the only business line where trading activities take place. Trading activities include facilitation of client business and market making. MRM is responsible for the development and implementation of trading risk policies and...

Page 311
...event risk number for the ING Commercial Banking trading activity is generated on a weekly basis. Like VaR, event risk is limited by ALCO Bank. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance...

Page 312
ING Group Risk management ING Bank Risk Management continued 308 ING Bank's event risk policy is based on a large set of possible stress scenarios per risk type (fixed income, equity, foreign exchange, credit and related derivative markets). For example, for equity products we assume both a crisis...

Page 313
... 40 21 Foreign exchange Chinese Yuan US Dollar Romanian Leu Singapore Dollar Taiwan Dollar 297 -214 46 -21 19 ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 314
...available or cannot be generated in time at a reasonable costs by attracting new unsecured funding or rolling over existing funding, or selling / repo-ing assets, potentially resulting in default. Liquidity risk can materialise both through trading and non-trading positions. ING Group Annual Report...

Page 315
... within the Bank. Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts The Management Board Bank defines the funding and liquidity strategy, target funding and liquidity position and the risk appetite...

Page 316
..., both short term and long term. In the table below, the various funding sources are presented in the funding mix: ING Bank Funding Mix 2014 2013 Funding type Retail deposits Corporate & other deposits Interbank (incl. central bank) Lending/repurchase agreement Public debt Subordinated debt Total...

Page 317
... funding plans are in place to enable senior management to act effectively and efficiently in times of crisis. These contingency plans are tested on a regular basis, both centrally and at business unit level. ING Group Annual Report 2014 Additional information Other information Parent company...

Page 318
.... Framework ING Bank has a comprehensive framework for operational and compliance risks. This supports and governs the process of identifying, measuring, mitigating, monitoring and reporting non-financial risks thus reflecting the stages described in the Enterprise Risk Management model of COSO...

Page 319
... of licenses, which would adversely impact customers, staff, shareholders and other stakeholders of ING Bank. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 320
... with certain named parties. Management of ING Bank entities use their existing control framework to ensure compliance with these sanctions. Main developments in 2014 Whistleblower Ethics Line ING has an Ethics Line which makes it possible for all ING staff to report suspected cases of wrongdoing on...

Page 321
... is calculated separately, and combined to one business risk figure via the variance-covariance methodology. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 322
... debt for ING Group; â€º EC - ING Bank uses Internal economic capital models to allocate capital for unexpected losses given 99.95% confidence level. These models capture credit risk, market risk, operational risks , business risks as well as diversification. Developments In 2014, Capital Management...

Page 323
... also introduced this analysis for ING Group. During 2014, ING Group and ING Bank were adequately capitalised. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 324
ING Group Consolidated annual accounts Capital management continued 320 ING capital position according to CRR/CRD IV (fully loaded) Group 2014 Bank 2014 (phased in) Group 2014 Bank 2014 Shareholders' equity (parent) - Deductions of significant investments in financial institutions - Proposed ...

Page 325
...risk-weighted assets. Basel III requires Banks to hold a capital of at least 80% of the old Basel I requirements, which was 8% of the RWAs as calculated with the Basel I methodology. This Basel I floor has been extended until the end of 2017. Parent company annual accounts (1) Shareholders' equity...

Page 326
...Risk Weighted Assets); â€º Group FICO capital using an approach similar to that used for Bank BIS capital and Insurance IGD capital whereby Group leverage is deducted. Group debt decreased from EUR -4.9 billion at year-end 2013 to EUR -1.5 billion at 31 December 2014. Regulatory capital adequacy ING...

Page 327
... judgment, circumstances so warrant. ING accepts no responsibility for the accuracy or reliability of the ratings. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts ING's key credit ratings and outlook are shown in...

Page 328
ING Group Consolidated annual accounts Capital management continued 324 Authorisation of annual accounts Amsterdam, 16 March 2015 The Supervisory Board J. (Jeroen) van der Veer, chairman J.C.L. (Joost) Kuiper, vice-chairman E.F.C.B. (Eric) Boyer de la Giroday H.W. (Henk) Breukink I. (Isabel) Mart...

Page 329
325 Parent company balance sheet as at 31 December before appropriation of result amounts in millions of euros 2014 2013 Assets Investments in group companies 1 Other assets 2 Total assets Equity 3 Share capital Share premium Non-voting equity securities Legal reserves (1) Other reserves ...

Page 330
... company profit and loss account 326 Parent company profit and loss account for the years ended 31 December amounts in millions of euros 2014 2013 Result of group companies after taxation Other results after taxation Net result 3,380 -2,129 1,251 3,565 -20 3,545 ING Group Annual Report 2014

Page 331
... policy Balance as at 1 January 2013 (after change in accounting policy Remeasurement of the net defined benefit asset/liability Unrealised revaluations property in own use Unrealised revaluations available-for-sale and other Realised gains/losses transferred to profit and loss Transfer to insurance...

Page 332
... with the consolidated balance sheet and profit and loss account are also applicable to the parent company balance sheet and profit and loss account with the exception of Investments in group companies and investments in associates and joint ventures which are recognised at net asset value with...

Page 333
...sheet date. ING Group Annual Report 2014 Additional information Other information Receivables from group companies Available-for-sale equity investment in Voya Financial Inc. Other receivables, prepayments and accruals 11,609 1,591 557 13,757 9,417 Parent company annual accounts Consolidated...

Page 334
ING Group Parent company annual accounts Notes to the parent company annual accounts continued 330 3 Equity Equity 2014 2013 Share capital Share premium Non-voting equity securities Share of associates and joint ventures reserve Currency translation reserve Other reserves Equity 925 16,046 11,...

Page 335
... on investment property and certain participations recognised in income and consequently presented in Retained earnings in the consolidated accounts, is presented in the Share of associates and joint ventures reserve in the parent company accounts. ING Group Annual Report 2014 Corporate Governance...

Page 336
... 14 'Equity' and the Capital Management section in the consolidated annual accounts for additional information, including restrictions with respect to dividend and repayment of capital. Change in treasury shares Amount 2014 2013 2014 Number 2013 Opening balance Purchased/sold Share-based payments...

Page 337
... from group companies by remaining term 2014 2013 Consolidated annual accounts Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Within 1 year More than 1 year but less than 5 years 56 56 25 266 291 6 Other Guarantees As at 31 December 2014, ING...

Page 338
...to the parent company annual accounts continued 334 Remuneration of Senior Management, Executive Board and Supervisory Board The information on share-based payment plans and remuneration of the members of the Executive Board and the Supervisory Board is included in the Consolidated annual accounts...

Page 339
.... The ï¬nancial information of this group is included in the consolidated annual accounts of ING Group. ING Group is structured along the segments: Retail Netherlands, Retail Belgium, Retail Germany, Retail Rest of the World, Commercial Banking, Corporate Line Banking and Legacy Insurance, each...

Page 340
... start of the ï¬nancial year, operating in the Netherlands. In February 2014 the Company reached ï¬nal agreement to transfer all future funding and indexation obligations of the deï¬ned beneï¬t plan in the Netherlands to the Dutch ING Pension Fund. The agreement makes the Dutch ING Pension Fund...

Page 341
... the preparation of the annual accounts that are free from material misstatement, whether due to fraud or error. Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts ING Group Annual Report 2014 Report of the Executive Board

Page 342
... to do so. Management should disclose events and circumstances that may cast significant doubt on ING Group's ability to continue as a going concern in the annual accounts. The Supervisory Board is responsible for overseeing the company's financial reporting process. Our responsibility for the audit...

Page 343
...the proï¬t and loss account of ING in 2015. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Subsequent events Sale of NN Group shares In February 2015, ING sold 52 million ordinary shares of NN Group. As part of...

Page 344
... fee income on certain insurance products, and our capital base. We also offer a number of insurance and financial products that expose us to risks associated with fluctuations in interest rates, securities prices, corporate and private default rates, the value of real estate assets, exchange rates...

Page 345
..., including deposit funds repurchase agreements, commercial paper, medium- and long-term debt, subordinated debt securities, capital securities and stockholders' equity. Corporate Governance Additional information Other information Parent company annual accounts Consolidated annual accounts In the...

Page 346
...of our business, which may include liquidity, capital adequacy, permitted investments, ethical issues, money laundering, anti-terrorism measures, privacy, recordkeeping, product and sale suitability, marketing and sales practices, remuneration policies and our own internal governance practices. Also...

Page 347
... insurance and reinsurance companies known as "Solvency II". The EC is currently in the process of preparing implementing technical standards. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance...

Page 348
... to capital, risk management, documentation and reporting processes, this could have a material adverse effect on its business, solvency, results of operations and financial condition. EU Insurance Guarantee Scheme Certain jurisdictions in which NN Group's insurance subsidiaries operate require...

Page 349
... scrutiny or to potential increases in whistleblower claims in light of the increased awards available to whistleblowers under Dodd-Frank and have a material effect on our results of operations or financial condition. ING Group Annual Report 2014 Corporate Governance Report of the Executive Board

Page 350
... 2017 with respect to non-U.S. source payments by non-U.S. financial institutions. In general, non-publicly traded debt and equity interests in investment vehicles will be treated as 'accounts' and subject to these reporting requirements. In addition, certain insurance policies and annuities are...

Page 351
... of national financial authorities of the G20 nations. The G20 and the FSB have issued a series of papers ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 352
... the Dutch State and the European Commission Restructuring Plan' to the consolidated financial statements of ING Group. Sections 382 and 383 of the U.S. Internal Revenue Code, as amended, operate as anti-abuse rules, the general purpose of which is to prevent trafficking in tax losses and credits...

Page 353
... securities, including those rated investment grade and especially the sovereign debt of some EEA countries and the U.S., the international credit and interbank money markets generally, and a wide range of financial institutions and markets, asset classes, such as public and private equity, and real...

Page 354
... nature are key assets on the balance sheets of financial institutions and are widely used as collateral by financial institutions to meet their day-to-day cash flows in the shortterm debt market. The impact of any further downgrades to the sovereign credit rating of the U.S. government or a default...

Page 355
... business for the types of insurance, commercial banking, investment banking, asset management and other products and services we provide. Customer loyalty and retention can be influenced by a number of factors, including brand recognition, reputation, relative service levels, investment performance...

Page 356
... these developments or losses could materially and adversely affect our business, financial condition, results of operations, liquidity and/or prospects. Reinsurers Our insurance operations have bought protection for risks that exceed certain risk tolerance levels set for both our life and non-life...

Page 357
... Journal of the EU in June 2014. Main characteristics include an ex-ante funding of up to 0.8% of the banking ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 358
... with decreased prices for equity securities and sluggish performance of equity markets generally. A sustained decline in equity markets may: 1) result in impairment charges to equity securities that we hold in our investment portfolios and reduced levels of unrealised capital gains available to us...

Page 359
... to the 20% cap but are limited to the CRD IV caps. Since the financial crisis, ING has adapted its remuneration policies to the new national and international standards. For ING Group's Executive Board members no increase in base salary took place in 2014. This resulted in that, as of 2009, the...

Page 360
... and models. ING Group companies operate various defined benefit retirement plans covering a number of our employees. The liability recognised in our consolidated balance sheet in respect of our defined benefit plans is the present value of the defined benefit obligations at the balance sheet date...

Page 361
... Dutch insurance companies towards consumers, consumer protection organisations, regulatory or governmental authorities or other decision making bodies in ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate...

Page 362
... of operations, solvency, financial condition and prospects. ING is exposed to the risk of claims from customers who feel misled or treated unfairly because of advice or information received. Our life insurance, non-life insurance, banking, investment and pension products and advice services for...

Page 363
... risk remains with us. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Claims-paying ability, at the Group or subsidiary level, and financial strength ratings are factors in establishing...

Page 364
...it may also be difficult to divest the remaining part of our insurance and investment management business through one or more followon transaction(s) and/or spin-off transaction(s). There can also be no assurance that we could obtain favourable pricing for a sale of the ING Group Annual Report 2014

Page 365
... of restructuring and cost saving initiatives may have a material adverse effect on our business, financial condition, results of operations and cash flows. Additional risks relating to ownership of ing shares Because we are a Dutch company and because Stichting ING Aandelen holds more than 99.9% of...

Page 366
... into the accounting practices of other financial institutions; and â€º general market circumstances. There can be no assurance that we will pay dividends on our Ordinary Shares in the future. It is ING's policy to pay dividends in relation to the long-term underlying development of cash earnings...

Page 367
...disclosure requirements. Below an overview is given on where ING Group has implemented the EDTF recommendations. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 368
... Risk governance, risk management and business model Capital adequacy and risk-weighted assets 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Liquidity & Funding Market risk Summarise the risk management organisation, processes and key functions Risk culture, related procedures and strategies...

Page 369
... - Corporate - Residential mortgages - Other retail Total portfolios subject to AIRB approach Securitisation exposures Equity portfolios in the banking book under the simple risk weight approach Other Non-Credit Obligation Assets Total Credit Risk Market risk Standardised approach Internal models...

Page 370
... filters: Own credit risk Deï¬ned beneï¬t remeasurement (IAS19R) Net deï¬ned beneï¬t pension fund assets Deferred tax assets Own credit risk adjustments to derivatives (DVA) Foreseeable dividend Other (rounding) Available capital - Common equity Tier 1 Subordinated loans qualifying as Tier...

Page 371
... to Asset Backed Commercial Paper programmes and this is explained in more detail in the securitisation section. Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Report of the Executive Board

Page 372
... capital calculations done by credit risk systems (Vortex). â€º Book size: The increasing book size, excluding divestments and de-consolidations, led to EUR 5.9 billion higher RWA, mainly driven by the Commercial Banking and Retail Banking International portfolios. Growth was seen in the Corporates...

Page 373
... ING Bank exposure class Consolidated annual accounts Additional information Other information Parent company annual accounts Central governments and central banks Institutions Corporates - Specialised lending Corporates - SME Corporates - Other Retail - Secured by immovable property SME Retail...

Page 374
..., and an increase in the investment portfolio in anticipation of the new Liquidity Coverage Ratio regime. This increase was partially compensated by the deconsolidation of ING Vysya Bank, and the downsizing of the Real Estate Finance and Securitizations portfolios. ING Group Annual Report 2014

Page 375
... Report 2014 Other information Parent company annual accounts Consolidated annual accounts 2014 2013 Delta % Sovereigns Sovereigns Sovereigns Sovereigns Includes both AIRB and SA portfolios; excludes equities and ONCOA. Due to the CRR/CRD IV liquidity requirements, increased customer deposits...

Page 376
... - credit risk disclosure in READ 2014 2013 Delta % Institutions Total per rating Performing Impaired/Non-performing Geography/business units Africa America Asia Australia Europe Europe Netherlands Belgium Germany Other Europe Product Type Bond Investments Derivatives Revolving Money Market Term...

Page 377
... American Industry Classification System). Corporate - credit risk disclosure in READ 2014 2013 Delta % Corporate Total per rating Performing Impaired/Non-performing Geography/business units Africa America Asia Australia Europe Europe Netherlands Belgium Germany Rest of Europe Industry Real Estate...

Page 378
... most portfolios, ING uses house price development to index these market values. In several markets, customers provide additional collateral or (government sponsored) mortgage insurance programs are used. None of these additional covers are included in the LTV figures. ING Group Annual Report 2014

Page 379
... bottomed out in 2014. As a result an increase in the Dutch house price index for the first and third quarter of 2014 improved the LTV ratio. Consolidated annual accounts Additional information Other information Parent company annual accounts While in the Netherlands the house price index improved...

Page 380
... are due to differences in portfolio characteristics and underwriting criteria. â€º Securitisation: The LGD estimates depend on the type of securitisation. ING Bank does not use internally developed models for securitisation PD's. They are based on external ratings. ING Group Annual Report 2014

Page 381
... Implied Government Local Other Bank Commercial Bank Implied Government Local Other Corporates Large Commercial Property Finance SME Belgium Other Mortgages (Residential) Holland Mortgages (Residential) Germany Mortgages (Residential) Australia Other SB NL Client - Credit Risk Products Retail NL...

Page 382
...). Mortgages generally benefit from large levels of (over) collateralisation. ING has been working on a project to map the 1-19 rating grades to internal data instead of external rating agency scales. In March 2014, the Dutch National Bank approved the implementation of the new Masterscale (ING Bank...

Page 383
... rate is based on the weighted average READ of the defaulted portfolio whereas the models are developed on an obligor basis. ING Group Annual Report 2014 Parent company annual accounts Additional information Other information Consolidated annual accounts Residential mortgages Corporate Governance...

Page 384
ING Group Additional information Additional Pillar III information continued 380 Average estimated PD under the Advanced AIRB approach versus the actual default rate per exposure class Sovereigns Institutions Corporate Residential mortgages Other retail Total 2014 Average PD 2013* Observed ...

Page 385
... buckets. Exposure per risk weight bucket per exposure class Sovereigns and their central banks Non-central government public sector entities Banks Corporates Regulatory retail portfolios Secured by residential property Secured by commercial real estate Past due loans Total 2014 Total 2013 0% 1 10...

Page 386
...explanation on these business lines is given in the Risk Management paragraph. Reconciliation of non-performing loans disclosures (4) Commercial Banking Retail Banking Benelux Retail Banking International Total ING Bank Impaired loan book movements Impaired loans at 1 January 2014 (1) Classified as...

Page 387
... Group Annual Report 2014 Additional information Private Individuals Real Estate Builders & Contractors Services Food, Beverages & Personal Care General Industries Transportation & Logistics Natural Resources Retail Chemicals, Health & Pharmaceuticals Utilities Automotive Media Non-Bank Financial...

Page 388
... conjunction with the information and statements made in the Risk Management Paragraph. Non-performing exposure (READ) by geographic area Sovereigns Institutions Corporate Residential mortgages Other retail Total 2014 Total 2013 Netherlands Belgium Germany Other Europe Americas Asia / Paciï¬c ROW...

Page 389
... of arrears and due to an overall improvement seen in the economic conditions. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Netherlands Belgium Germany Other Europe Americas Asia / Pacific ROW (1) Total 1,592 1,323 169 295 3 556 1 3,939...

Page 390
.... In most cases, the obligor pays a commitment fee to ING Bank on the unused portion of these facilities. Pre-Settlement, Money Market and Investment limits are generally not committed. Undrawn commitments Sovereigns Institutions Corporate Residential mortgages Other retail Total 2014 Total 2013...

Page 391
... ING Bank to classify virtually all of its Securities Financing exposures under the AIRB approach. ING Group Annual Report 2014 Consolidated annual accounts Corporate Governance Interest Rate Derivatives Foreign Exchange Derivatives Equity Derivatives Exchange Traded Products Credit Derivatives...

Page 392
ING Group Additional information Additional Pillar III information continued 388 Securities financing by product type in READ Sovereigns Institutions Corporate Residential mortgages Other retail Total 2014 Total 2013 Bond Financing Given Equity Financing Given Bond Financing Taken Equity ...

Page 393
... Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Sovereigns of which Pre Settlement Institutions of which Pre Settlement Corporates of which Pre Settlement Residential Mortgages of which Pre Settlement Other Retail of...

Page 394
... insurers under the Nationale Hypotheek Garantie (NHG) in the Netherlands. The NHG guarantees the repayment of a loan in case of a forced property sale. Exposures secured by third party guarantees received Sovereigns Institutions Corporate Residential mortgages Other retail Total 2014 Total...

Page 395
... accounting policy is 'Classification of financial instruments'. Regulatory capital method used and Rating Agencies ING Bank has implemented the AIRB approach for credit risk. As a consequence, ING Bank uses the Rating Based Approach (RBA) for investments in tranches of asset-backed securities...

Page 396
... notable exceptions mainly: 1) an increase in the Netherlands driven by an NN Bank Originated RMBS position where ING Bank participated in the primary offering; and 2) an increase in Asset Backed Securities as explained in the section below on Investor securitisations. ING Group Annual Report 2014

Page 397
...Corporate Governance Additional information ING Group Annual Report 2014 Other information Parent company annual accounts Consolidated annual accounts Investor securitisation activities Traditional Synthetic Total 2014 Retail Of which residential mortgage Of which credit card Of which other retail...

Page 398
... multi seller Asset Backed Commercial Paper (ABCP) conduit Mont Blanc Capital Corp. (rated A-1/P-1). Despite the conditions in the international money markets Mont Blanc Capital Corp. continues to fund itself externally in the ABCP markets. In its role as administrative agent, ING Bank facilitates...

Page 399
... left. The last securitisation for which ING Bank acted as originator was BEL SME 2006 and it ran-off in March 2014. Consolidated annual accounts Additional information Other information Parent company annual accounts Corporate Governance Liquidity and funding Although the most senior tranches in...

Page 400
... pension fund IFRS-EU Basel III* Interest Rate +100bp Credit Spread Equity Prices +40bp -10% Real Estate -10% Foreign Exchange +10% Capital elements Reserve Property revaluation reserve Cash ï¬,ow hedge reserve Available-for-sale reserve Debt securities Equity securities Currency translations...

Page 401
... received by the reporting institution Equity instruments Debt securities Other collateral received Own debt securities issued other than own covered bonds or ABSs 61,805 3,721 57,876 - 40,506 15,787 24,432 114 ING Group Annual Report 2014 Corporate Governance Report of the Executive Board

Page 402
... ING Group manages it balance sheet prudently whereby a variety of funding sources is readily available. Given this situation, the level of encumbrance of ING Group's balance sheet is relatively low. Encumbered assets on ING Group's balance sheet comprise to a large extent mortgages and other loans...

Page 403
...) ALCO manages the balance sheet of ING, especially with regard to the strategic non-trading risk. These are interest rate risk, equity risk, real estate risk, liquidity, solvency and foreign exchange risk and fluctuations. Asset & Liability Management (ALM) The practice of managing a business such...

Page 404
... of net earned premiums. Collateralised Debt Obligation (CDO) A type of asset-backed security that provides investors with exposure to the credit risk of a pool of fixed income assets. Collateralised Loan Obligation (CLO) A type of CDO that is backed primarily by leveraged bank loans. Combined...

Page 405
...to make up the shortfall before any distribution may be made on shares of any other category. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Credit Guarantee Scheme (CGS) in the Netherlands...

Page 406
... a major line of business or geographical area, which the disposal group classifies as discontinued operations. Discount rate A rate used to place a current value on future cash flows. It is needed to reflect the fact that money has a time value. In the embedded value calculated for ING's insurance...

Page 407
... sheet as Assets held for sale. A sale is highly probable when management is demonstrably committed to the ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 408
... between the average interest received on funds lent and the interest paid by the bank on capital raised. Internal Rate of Return (IRR) Internal rate of return is the discount rate at which the present value of distributable earnings from new business equals the investment in new business (i.e. the...

Page 409
...prices, foreign exchange rates, credit spreads and real estate prices, negatively impact the bank's earnings, capital, market value or liquidity position. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate...

Page 410
... parent company. Monetary assets and liabilities Assets and liabilities that are fixed in terms of units of currency by contract or otherwise. Examples are cash, short or long-term accounts, notes receivable in cash and notes payable in cash. Money market risk Money market risk arises when ING Bank...

Page 411
... transitional rules into account Plan assets Comprise assets held by a long-term employee benefit fund and qualifying insurance policies. Assets held by a long-term employee benefit fund are assets (other than non-transferable financial instruments issued by the reporting enterprise) that: â€º Are...

Page 412
... average equity. Risk Committee The Risk Committee, consisting of members of the Supervisory Board, assists and advises the Supervisory Board in monitoring the risk profile of the company as well as the structure and operation of the internal risk management and control systems. Risk-Weighted Assets...

Page 413
... performance of these units. The insurance company may decide to provide guarantees on the return of the units. ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 414
...in risk factors (e.g. interest rates, equity prices, foreign exchange rates, credit spreads, implied volatilities) if positions remain unchanged for a time period of one day. Note that risk due to DVA and CVA sensitivities is not covered in this trading risk measure. Next to general market movements...

Page 415
... Cover: Suzanne Karsters Illustrations Shop Around, Frenk Meeuwsen @Roughmen Printed by Drukkerij Tesink, Zutphen ING Group Annual Report 2014 Additional information Other information Parent company annual accounts Consolidated annual accounts Corporate Governance Report of the Executive Board

Page 416

Page 417

Page 418
... N.V. Bijlmerplein 888 1102 MG Amsterdam P.O. Box 1800, 1000 BV Amsterdam The Netherlands Telephone: +31 20 5639111 Internet: www.ing.com Commercial Register of Amsterdam, no. 33231073. Â© CO neutral We print Printed with Bio ink & varnish Â© Drukkerij Tesink CO neutrally Â© Drukkerij Tesink

ING Direct 2014 Annual Report Download

Download and view the complete annual report

Table of contents