Dutch bancassurer ING has outlined plans for early repayment of its credit crunch bailout from the Dutch government.
ING said that by May 2011 it will have repaid €7bn (£6bn) out of a total €10bn it received from the Dutch state, with the remaining €3bn to be paid back by May 2012.
Early repayment is an important step for the banking and insurance group: once free of its state shackles, a European ban on acquisitions will be lifted and ING will have more pricing flexibility, allowing it to compete more easily.
“The Dutch state and ING are likely, in our view, to have been keen for the CT1 securities [Dutch state aid] to be repaid in part because a further year with no coupon on them might lead to a renegotiation of the quantum of state aid attributed to ING by the EU,” said S&P Equity Research analyst Tony Silverman.
The Dutch government paid nearly €40bn to rescue the domestic financial sector in 2008 when it nationalised ABN AMRO and provided capital injections for ING, insurer Aegon, and bancassurer SNS Reaal.
"Today's announcement marks another important milestone as we work towards the full repayment of the support ING received from the Dutch state," said Jan Hommen, ING's chief executive, in a statement.
"The strong recovery of the banking business in 2010 has enabled us to accelerate the repurchase of the core Tier 1 securities from retained earnings, while maintaining a robust capital position post repayment."
ING has already divested several non-core assets, including most of its real estate management operations and its Asian private banking business, to raise funds, and plans to list its insurance units in 2012.