CALCULATION OF REGISTRATION FEE

 

 

 

 

 

NOT FOR DISTRIBUTION OUTSIDE THE UNITED STATES

 

 

ING GROEP N.V.

 

Offering of 1,768,412,544 Ordinary Shares represented by Bearer Depositary Receipts, including
American depositary shares representing such Bearer Depositary Receipts

 

Subscription Price in the Rights Offering: EUR 4.24 per Bearer Depositary Receipt and equivalent amount in US$ per American depositary share

 

This prospectus supplement relates to an offering of 1,768,412,544 bearer depositary receipts (the “New BDRs”) of Stichting ING Aandelen (the “Trust”) representing 1,768,412,544 ordinary shares (the “New Ordinary Shares”) of ING Groep N.V., which New BDRs may be represented by American depositary shares (“ADSs”). We refer to the New BDRs, together with the New Ordinary Shares, as the “New Shares” and to the existing ordinary shares of ING Groep N.V. (the “Existing Ordinary Shares”) and the existing bearer depositary receipts of the Trust (the “Existing BDRs”) as the “Existing Shares”. We refer to the new ADSs as the “New ADSs” and to the existing ADSs each representing one Existing BDR as the “Existing ADSs”. The offering (the “Offering”) comprises: (1) the rights offering (“Rights Offering”) in which the holders of Existing Ordinary Shares (other than the Trust) and Existing BDRs will receive tradable rights (“Tradable Rights”) and the holders of Existing ADSs will receive non-transferable rights (“ADS Rights” and, together with the Tradable Rights, the “Rights”) to subscribe for New BDRs and New ADSs, respectively, at the BDR Subscription Price or ADS Subscription Price, respectively, and (2) the global offering (“Global Offering”), in which New BDRs for which Tradable Rights have not been validly exercised during the Tradable Rights Exercise Period (the “Rump Shares”) may be sold at the Global Offering Price (as defined below) or in open market transactions. In this prospectus supplement, “ING shares” refers to bearer depositary receipts issued by the Trust representing ordinary shares of ING Groep N.V. and any ADSs in respect of such bearer depositary receipts.

 

The ADS Rights

If you own Existing ADSs, you will receive one non-transferable right for each Existing ADS you owned on November 27, 2009. 7 ADS Rights allow you to acquire 6 New ADSs against payment of the ADS Subscription Price (the “ADS Subscription Price”). If you decide to acquire New ADSs, you must deposit US$7.06, or the ADS deposit amount, per New ADS subscribed, which represents 110% of the estimated ADS Subscription Price of US$6.42 per New ADS, to account for possible exchange rate fluctuations and any currency conversion expenses. The estimated ADS Subscription Price is the US dollar equivalent of the BDR Subscription Price (as defined below) of EUR 4.24 per New BDR using an exchange rate of US dollar 1.5134 per EUR (as published by Bloomberg at close of business (New York time) on November 25, 2009). The ADS Rights Agent (as defined below) will refund any excess amount of the ADS deposit amount over the ADS Subscription Price to you, and you must pay any shortfall to the ADS Rights Agent prior to the New ADSs being issued to you. The ADS Rights will expire at 5:00 p.m. (New York time) on December 11, 2009. If you decide not to acquire any New ADSs and therefore not to exercise your ADS Rights, you may surrender your ADS Rights by no later than 5:00 p.m. (New York time) on December 11, 2009 for cancellation, pay the ADS Rights Agent a fee of US$0.05 per ADS Right and (1) receive delivery of the underlying Tradable Rights so as to enable you to attempt to sell or exercise them yourself or (2) instruct the ADS Rights Agent by no later than 5:00 p.m. (New York time) on December 11, 2009 to sell the Tradable Rights underlying the ADS Rights for you on Euronext Amsterdam or Euronext Brussels. If you do not exercise or exchange your ADS Rights, or sell or exercise the Tradable Rights underlying the ADS Rights, you will be deemed to have delivered your ADS Rights to the ADS Rights Agent for cancellation and the ADS Rights Agent will use reasonable efforts to sell the Tradable Rights underlying the ADS Rights for you on or after December 14, 2009 for a fee of US$0.05 per ADS Right cancelled. New BDRs underlying New ADSs in respect of ADS Rights that have not been exercised, exchanged or subsequently sold by the ADS Rights Agent may be sold in the Global Offering.

 

The Tradable Rights

If you own Existing BDRs or Existing Ordinary Shares, you will receive one Tradable Right for every Existing BDR or Existing Ordinary Share you owned on November 27, 2009. 7 Tradable Rights allow you to acquire 6 New BDRs against payment of the BDR Subscription Price. The BDR Subscription Price for holders of Existing BDRs or Existing Ordinary Shares is EUR 4.24 per New BDR (the “BDR Subscription Price”). The Tradable Rights will expire at 3:00 p.m. (Amsterdam time) on December 15, 2009. If you decide not to acquire any New BDRs and therefore do not exercise your Tradable Rights, New BDRs in respect of Tradable Rights that have not been exercised may be sold in the Global Offering.

 

 

The Existing BDRs are listed on Euronext Amsterdam by NYSE Euronext (“Euronext Amsterdam”) under the symbol “INGA”, and on Euronext Brussels by NYSE Euronext (“Euronext Brussels”) under the symbol “INGB”, and the Existing ADSs are listed on the New York Stock Exchange (“NYSE”) under the symbol “ING”. Beginning on November 30, 2009, the Existing BDRs are expected to trade on Euronext Amsterdam and Euronext Brussels “ex subscription right”, at which time the Tradable Rights are expected to start trading on Euronext Amsterdam and Euronext Brussels. The ADS Rights will not be listed on or traded on the NYSE or any other exchange, and are not transferable. Applications have been or will be made for listing of the New BDRs on Euronext Amsterdam and Euronext Brussels and for listing of the New ADSs on the NYSE, which are expected to be granted on or before December 21, 2009. Trading of the New BDRs is expected to commence on or about December 21, 2009 and trading of the New ADSs is expected to commence on or about December 21, 2009.

 

Application has been made for the Tradable Rights and the New BDRs to be accepted for clearance through Nederlands Centraal Instituut voor Giraal Effectenverkeer B.V. (“Euroclear Netherlands”), Clearstream Banking S.A. Luxembourg (“Clearstream”) and Euroclear Banking S.A./N.V., as operator of the Euroclear system (“Euroclear”). The New BDRs for which Tradable Rights have been exercised are expected to be delivered through the facilities of Euroclear Netherlands on or about December 21, 2009. Application has been made for the New ADSs to be accepted for clearance through The Depository Trust Company (“DTC”). The New ADSs for which ADS Rights have been exercised are expected to be delivered through the facilities of DTC on or about December 23, 2009.

 

 

For a discussion of the risks that you should consider before purchasing the securities, see “Risk Factors” beginning on page S-11 of this prospectus supplement.

 

 

 

(1) For BDRs represented by ADSs, payable in US dollars in an amount estimated to be US$7.06 per New ADS subscribed. The figure represents (i) the estimated ADS subscription price per New ADS calculated as the US dollar equivalent of the euro subscription price per New BDR using an exchange rate of US dollar 1.5134 per EUR (as published by Bloomberg at close of business (New York City time) on November 25, 2009), plus (ii) an additional amount of US$0.64 (representing 10% of the estimated ADS subscription price) for purposes of increasing the likelihood that the ADS Rights Agent will have sufficient funds to pay the final ADS Subscription Price. The final ADS Subscription Price per New ADS will be the ADS Rights Agent’s cost of the BDR Subscription Price of EUR 4.24 in US dollars on or about December 15, 2009.

 

(2) We expect to receive no proceeds from the initial offering and allotment of the Rights.

 

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined that this prospectus supplement and the accompanying prospectus are truthful or complete. Any representation to the contrary is a criminal offense.

 

Joint Global Coordinators and Joint Bookrunners

 

Co-Bookrunners

 

Joint Lead Managers

 

Co-Lead Managers

 

The date of this prospectus supplement is November 27, 2009

 

TABLE OF CONTENTS

 

Prospectus Supplement

 

 

Prospectus

 

 

You should rely only on the information contained or incorporated by reference in this prospectus supplement and the accompanying prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus supplement and the accompanying prospectus, as well as information we previously filed with the Securities and Exchange Commission, which we sometimes refer to as the SEC, and incorporated by reference, is accurate as of the date on the front cover of this prospectus supplement only. Our business, financial condition, results of operations and prospects may have changed since that date.

 

This prospectus supplement does not constitute an offer to sell, or a solicitation of an offer to buy, any of the securities offered hereby by any person in any jurisdiction in which it is unlawful for such person to make such an offering or solicitation. The offer or sale of the ADS Rights, Tradable Rights, New ADSs, New BDRs or New Ordinary Shares may be restricted by law in certain jurisdictions, and you should inform yourself about, and observe, any such restrictions.

 

SUMMARY

Issuer:		ING Groep N.V., a public company with limited liability (Naamloze Vennootschap) incorporated under the laws of the Netherlands, with its corporate seat in Amsterdam, the Netherlands.
Offering:		The Offering relates to a total of 1,768,412,544 New BDRs representing an equal number of New Ordinary Shares, which New BDRs may be represented by New ADSs, and consists of the Rights Offering and the Global Offering, as described below. The New Ordinary Shares will be fully fungible and rank pari passu with each other and with the Existing Ordinary Shares of the Company. The New BDRs will be fully fungible and rank pari passu with each other and with the Existing BDRs. The New ADSs will be fully fungible and rank pari passu with each other and with the Existing ADSs. As such, the New BDRs and New ADSs will be entitled to any distributions for which the applicable record date is after the Closing Date (as defined below).
		Goldman Sachs International, ING Bank N.V. and J.P. Morgan Securities Ltd. are the Joint Global Coordinators and Joint Bookrunners of the Offering.
		ING Bank N.V. is acting as principal subscription agent.
		An underwriting syndicate led by Goldman Sachs International and J.P. Morgan Securities Ltd. (the “Representatives” and, together with the other members of such underwriting syndicate, the “Underwriters”), based on an underwriting agreement dated as of October 25, 2009, as supplemented by a pricing agreement dated November 26, 2009 (together, the “Underwriting Agreement”), has agreed to underwrite the Offering subject to the satisfaction of customary terms and conditions.
Number of Existing Ordinary Shares outstanding at the date of this prospectus supplement:		2,063,147,969
Number of ordinary shares outstanding after issue of New Shares and New ADSs:		3,831,560,513

Offering of ADS Rights :		Subject to the terms and conditions set out in this prospectus supplement and accompanying prospectus, holders of Existing ADSs after close of business on November 27, 2009 (the “ADS Record Date”) will be granted one non-transferable ADS Right per Existing ADS held. 7 ADS Rights will grant the holder thereof the right to subscribe for 6 New ADSs at the ADS Subscription Price.
		ING has arranged for its ADS depositary, JPMorgan Chase Bank, N.A. (the “Depositary”), which is acting as ADS Rights Agent (the “ADS Rights Agent”), to send each registered holder of ADSs on the ADS Record Date an ADS subscription form showing its entitlement to subscribe for New ADSs. Each beneficial owner of Existing ADSs

		should consult with the financial intermediary through which it holds its Existing ADSs as to its entitlement to subscribe for New ADSs.
ADS Subscription Price:		Holders of Existing ADSs will be required to deposit the preliminary US dollar equivalent of the BDR Subscription Price, plus a margin of 10%, with any excess to be refunded following final calculation of the US dollar equivalent of the BDR Subscription Price. The actual ADS Subscription Price per New ADS will be the ADS Rights Agent’s cost of the BDR Subscription Price of EUR 4.24 in US dollars on or about December 15, 2009. On November 25, 2009, the closing price of Existing ADSs was US$12.28 per ADS on the NYSE.
		The preliminary ADS subscription price is the US dollar equivalent of the BDR Subscription Price, using an exchange rate of US dollar 1.5134 per EUR (as published by Bloomberg at close of business (New York City time) on November 25, 2009). A subscriber of the New ADSs must deposit US$7.06, or the ADS deposit amount, per New ADS subscribed, which represents 110% of the estimated ADS subscription price, upon the exercise of each ADS Right. The purpose of this additional amount over and above the estimated ADS subscription price is to increase the likelihood that the ADS Rights Agent will have sufficient funds to pay the final ADS Subscription Price in the event of a possible appreciation of the Euro against the US dollar between the date hereof and the end of the ADS Rights Exercise Period, and to pay any currency conversion expenses.
		If the actual US dollar price (equal to the BDR Subscription Price denominated in Euro converted into US dollars on or about December 15, 2009) plus any currency conversion expenses, governmental charges or taxes and the issuance fee of US$0.05 per New ADS issued, is less than the ADS deposit amount, the ADS Rights Agent will refund such excess to the subscribing ADS Rights holder without interest. However, if the actual US dollar price plus any currency conversion expenses, governmental charges or taxes and the issuance fee of US$0.05 per New ADS issued, exceeds the ADS deposit amount, the ADS Rights Agent will not deliver the New ADSs to such subscribing ADS Rights holder until it has received payment of the deficiency from the subscriber. The ADS Rights Agent may sell a portion of the New ADSs that is sufficient to pay any shortfall that is not paid by January 8, 2010, and the ADS Rights Agent may allocate the proceeds of such sales for the account of the relevant holder upon an averaged or other practicable basis without regard to any distinctions among such holders because of exchange restrictions, or otherwise, in an amount sufficient to cover such deficiency (including interest and expenses). In that event, the ADS Rights Agent will then send promptly any remaining New ADSs to such holder together with a check in the amount of excess proceeds, if any, from such sale provided.
ADS Rights Exercise Period:		Subject to the terms set out in this prospectus supplement, holders of ADS Rights wishing to subscribe for New ADSs must exercise their ADS Rights during the period from November 30, 2009 through 5:00 p.m. (New York time) on December 11, 2009 (the “ADS Rights Exercise Period”). ADS Rights may be exercised only in integral multiples of the subscription ratio. Holders of ADS Rights are

		advised to seek and follow instructions from their custodian bank or broker, or in the case of registered holders of ADS Rights, the US Information Agent or Depositary, as applicable, in relation to the proper and timely exercise or exchange of their ADS Rights, or the sale or exercise of Tradable Rights underlying the ADS Rights, as described under the “The Offering — ADS Rights — Exercise of ADS Rights”, “The Offering — ADS Rights — Exercise of ADS Rights — Exchange of ADS Rights for Tradable Rights” and ‘‘The Offering — ADS Rights — Sales of Tradable Rights by the ADS Rights Agent”. The Depositary will attempt to sell Tradable Rights underlying ADS Rights not validly exercised, exchanged or sold during the ADS Rights Exercise Period, including Tradable Rights underlying ADS Rights in excess of the nearest integral multiple of the subscription ratio, as described under “The Offering — ADS Rights — Sales of Tradable Rights by the ADS Rights Agent”. If such sales are not completed, the ADS Rights will continue to be reflected in the securities account of each holder of unexercised ADS Rights solely for the purpose of the payment of the Excess Amount (as defined below), if any, in respect of the Tradable Rights underlying such ADS Rights. See “The Offering — ADS Rights — General — Excess Amount” below. The exercise of ADS Rights is irrevocable and may not be withdrawn, cancelled or modified, except as otherwise described in the section “The Offering — Withdrawal of the Offering”.
Transfer of ADS Rights:		ADS Rights are not transferable and may not be exercised by, or sold or assigned to, third parties. However, (1) the Depositary may sell Tradable Rights underlying ADS Rights on behalf of the ADS Rights holders as described under “The Offering — ADS Rights — Sales of Tradable Rights by the ADS Rights Agent”; or (2) an ADS Rights holder may exchange its ADS Rights for delivery of the underlying Tradable Rights as described under “The Offering — ADS Rights — Exchange of ADS Rights for Tradable Rights”.
		The ADS Rights will not be admitted to trading on the NYSE or any other exchange.
Exercise of ADSs:		Each holder or beneficial owner of ADS Rights may exercise all or only part of its ADS Rights. Subscriptions must be received by the ADS Rights Agent prior to 5:00 p.m. (New York City time) on December 11, 2009.
		Each beneficial owner of ADS Rights who wishes to exercise its ADS Rights should consult with the financial intermediary through which it holds its ADSs and ADS Rights as to the manner, timing and form of exercise documentation, method of payment of the ADS deposit amount and other related matters required to effect such exercise. The financial intermediary with whom the subscription is made may require any person exercising rights to pay or block the ADS deposit amount for the New ADSs being subscribed for in a deposit account as a condition to accepting the relevant subscription. Holders of ADS Rights are urged to consult their financial intermediary without delay in case your financial intermediary is unable to act immediately.

		Please see “The Offering — ADR Rights — Exercise of ADS Rights” for further details on how to exercise ADS Rights.
Sales of Tradable Rights by the ADS Rights Agent:		The Tradable Rights underlying ADS Rights may be sold by the ADS Rights Agent in one of two ways:
		• ADS Rights holders may deliver ADS Rights for cancellation along with a fee of $0.05 per ADS Right so cancelled and direct the Depositary by no later than 5:00 p.m. (New York City time) on December 11, 2009 to attempt to sell all or a portion of the Tradable Rights underlying the ADS Rights on behalf of such holder. The Depositary will, assuming an instruction to sell is received prior to 5:00 p.m. on December 11, 2009, use reasonable efforts to sell Tradable Rights underlying ADS Rights on Euronext Amsterdam or Euronext Brussels beginning on the trading day following the day on which the instruction to sell is received. The ADS Rights Agent will distribute the net proceeds from any such sale, after deduction of any currency conversion expenses, to the holders of ADS Rights entitled thereto by whom it has been directed to make such sales on an averaged or other practicable basis. The instruction to sell ADS Rights may be given through the DTC system or by completing and returning an ADS subscription form.
		• Assuming ADS Rights have not been exercised, exchanged or otherwise sold as described under “The Offering — ADS Rights — Exercise of ADS Rights”, “The Offering — ADS Rights — Exchange of ADS Rights for Tradable Rights” and “The Offering — ADS Rights — Sales of Tradable Rights by the ADS Rights Agent”, the holder will be deemed to have delivered his ADS Rights to the ADS Rights Agent for cancellation and the ADS Rights Agent will use reasonable efforts to sell the Tradable Rights underlying the ADS Rights for such holder on or after December 14, 2009. Sales will be made either on Euronext Amsterdam or Euronext Brussels beginning on the trading day following the end of the ADS Rights Exercise Period until 5:00 p.m. (New York City time) on December 14, 2009. The ADS Rights Agent will distribute the net proceeds, after accounting for the Depositary’s fees of US$0.05 per ADS Right cancelled and any currency conversion expenses, to the relevant holders of ADS Rights entitled thereto.
Exchange of ADS Rights for Tradable Rights:		If an ADS Rights holder wishes to surrender any ADS Rights and receive the underlying Tradable Rights, such holder must instruct the ADS Rights Agent to cancel its ADS Rights before 5:00 p.m. (New York City time) on December 11, 2009. After receiving payment from the requesting ADS Rights holder of the Depositary’s fees of US$0.05 per ADS Right in respect of which such instruction was given, expenses, and any applicable taxes, the ADS Rights Agent will deliver the underlying Tradable Rights to an account in the Euroclear Netherlands, Clearstream or Euroclear systems specified by such holder.

Trading of ADS Rights:		The ADS Rights are not transferable and will not be admitted to trading on the NYSE or any other exchange.
		Beginning on November 30, 2009, the Existing ADSs are expected to be traded on the NYSE “ex subscription right”.
US Information Agent:		Georgeson
ADS Rights Agent and Depositary:		JPMorgan Chase Bank, N.A.

Offering of Tradable Rights:		Subject to the terms and conditions set out in this prospectus supplement, holders of Existing Shares (other than the Trust) after close of business on November 27, 2009 (the “BDR Record Date”) will be allotted one Tradable Right per Existing Share held. 7 Tradable Rights will grant the holder thereof the right to subscribe for 6 New BDRs at the BDR Subscription Price.
BDR Subscription Price:		The BDR Subscription Price will be EUR 4.24 per New BDR, which compares to a closing price of EUR 8.92 per ING share on Euronext Amsterdam and on Euronext Brussels on November 26, 2009.
Tradable Rights Exercise Period:		Subject to the terms set out in this prospectus supplement, holders of Tradable Rights wishing to subscribe for New BDRs must exercise their Tradable Rights during the period from November 30, 2009 through 3:00 p.m. (Amsterdam time) December 15, 2009 (the “Tradable Rights Exercise Period”). Tradable Rights may be exercised only in integral multiples of the subscription ratio. Holders of Tradable Rights are advised to seek and follow instructions from their custodian bank or broker in relation to the proper and timely exercise or sale of their Tradable Rights. See “The Offering — Tradable Rights Offering — Exercise of Tradable Rights”. Tradable Rights not validly exercised during the Tradable Rights Exercise Period, including Tradable Rights in excess of the nearest integral multiple of the subscription ratio, will continue to be reflected in the securities account of each holder of unexercised Tradable Rights solely for the purpose of the payment of the Excess Amount (as defined below), if any. See “The Offering — General — Excess Amount” below. The exercise of Tradable Rights is irrevocable and may not be withdrawn, cancelled or modified, except as otherwise described in this prospectus supplement and in the section “The Offering — Withdrawal of the Offering”.
		ING Bank N.V. is acting as principal subscription agent.
Trading and Sale of Tradable Rights:		The Tradable Rights are expected to be traded on Euronext Amsterdam and Euronext Brussels, from November 30, 2009 through 1:15 p.m. (Amsterdam time) on December 15, 2009. No arrangement has been made for the Tradable Rights to be tradable on any other market, including the NYSE.
		Beginning on November 30, 2009, the Existing BDRs are expected to be traded on Euronext Amsterdam and Euronext Brussels “ex subscription right”, at which time the Tradable Rights will start trading on Euronext Amsterdam and Euronext Brussels.

Pre-emptive Rights:		The statutory pre-emptive rights (wettelijke voorkeursrechten) in respect of the Offering have been excluded for the purpose of the Offering. See “The Offering — General — Pre-emptive Rights”.
Voting Rights:		The New Ordinary Shares will carry the same voting rights as the Existing Ordinary Shares. The New BDRs will carry the same entitlement to a voting proxy as the Existing BDRs. The New ADSs will carry the same entitlement as the Existing ADSs to instruct the Depositary as to the exercise of a voting proxy associated with the ADSs.
Treatment of New BDRs for which Tradable Rights have not been validly exercised:		New BDRs for which Tradable Rights (including any Tradable Rights received by holders of ADS Rights upon exchange of their ADS Rights) have not been validly exercised prior to the end of the Tradable Rights Exercise Period (the “Rump Shares”) may be sold by the Joint Global Coordinators and Joint Bookrunners in their sole discretion in the Global Offering and/or in open market transactions, subject to applicable selling and transfer restrictions.
		Tradable Rights (including any Tradable Rights received by holders of ADS Rights upon exchange of their ADS Rights) not validly exercised during the Tradable Rights Exercise Period, including Tradable Rights in excess of the nearest integral multiple of the subscription ratio, will expire and become null and void without compensation, except for the payment of the Excess Amount, if any.
Existing Shares Held in Treasury:		As of October 31, 2009, the Company directly or indirectly held a total of 35,041,271 Existing Shares. Such shares are held, inter alia, to hedge awards granted under employee equity compensation plans, including employee options. Additionally, ING shares are used for market making and hedging purposes. Existing Shares held in treasury will be allocated Tradable Rights in the Rights Offering. The Company will sell the Tradable Rights allocated to such shares.
Global Offering Price:		In the case of a Global Offering, the Global Offering price (the “Global Offering Price”) is expected to be determined following an institutional bookbuilding procedure commencing on or about December 16, 2009 and is expected to be published on or about December 16, 2009. The Global Offering Price, if any, will be denominated in Euro.
		In any event, including in the case of a Global Offering, the issue price for the New BDRs (including the form of New ADSs) and New Ordinary Shares will be the BDR Subscription Price and as described under “The Offering — Excess Amount”, the Company will not be entitled to receive any part of the Excess Amount (as defined below), if any.
Excess Amount:		Upon the completion of the Global Offering, if the aggregate proceeds for the Rump Shares offered and sold in the Global Offering, after deduction of selling expenses (including any value added tax) exceed the aggregate BDR Subscription Price for such Rump Shares (such

		amount, the “Excess Amount”), this Excess Amount will be paid in the following manner:
		Each holder of a Tradable Right (including any Tradable Rights received by holders of ADS Rights upon exchange of their ADS Rights) that is not exercised at the end of the Tradable Rights Exercise Period will be entitled to receive a part of the Excess Amount in cash proportional to the number of unexercised Tradable Rights reflected in such holder’s securities account, but only if that amount exceeds €0.01 per unexercised Tradable Right. In respect of Tradable Rights underlying ADS Rights that have not been exchanged for such Tradable Rights, and such Tradable Rights have not been exercised, the Depositary will convert these proceeds to US dollars and remit the proceeds pro rata to the holders of such ADS Rights. Payments will be made following the withholding of any applicable taxes.
		The Excess Amount, if any, will only be available if the Rump Shares are placed within two business days of the end of the Tradable Rights Exercise Period.
		If it has been announced that an Excess Amount is available for payment to holders of unexercised Tradable Rights (including any Tradable Rights received by holders of ADS Rights upon exchange of their ADS Rights) and you have not received payment thereof within a reasonable time following the closing of the Global Offering, you should contact the financial intermediary through which you hold unexercised and unsold ADS Rights or unexercised Tradable Rights.
		We cannot guarantee that the Global Offering will be successfully completed. Should the Global Offering take place, neither we, the Underwriters, the Subscription Agent, the ADS Rights Agent nor any person procuring subscriptions for Rump Shares will be responsible for any lack of Excess Amount arising from any placement of the Rump Shares in the Global Offering.
		The Company will not be entitled to receive any part of the Excess Amount.
Joint Global Coordinators and Joint Bookrunners:		Goldman Sachs International, ING Bank N.V. and J.P. Morgan Securities Ltd.
Representatives:		Goldman Sachs International and J.P. Morgan Securities Ltd.
Co-Bookrunners:		Credit Suisse Securities (Europe) Limited, Deutsche Bank AG, HSBC Bank Plc and Morgan Stanley & Co. International plc.
Joint Lead Managers:		Citigroup Global Markets Limited, ABN AMRO Bank N.V. and UBS Limited.
Co-Lead Managers:		Banca IMI S.p.A., BNP PARIBAS, COMMERZBANK Aktiengesellschaft, Fortis Bank (Nederland) N.V., Lloyds TSB Bank Plc, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., Banco Santander, S.A., Société Générale, and UniCredit Group (Bayerische Hypo- und Vereinsbank AG).
Underwriters		The Representatives, Co-Bookrunners, Joint Lead Managers and Co-Lead Managers are collectively referred to as the “Underwriters”.

Lock-Up:		The Company has agreed with the Underwriters that, except for the issue of ING shares in the Offering, for a period ending 90 days after the Closing Date, it will not, subject to certain exceptions, directly or indirectly issue, sell, offer or otherwise dispose of any ING shares or other securities convertible or exchangeable into ING shares or representing rights to subscribe for ING shares or enter into a transaction with similar economic effect. See “The Offering — Lock-Up” for further information, including the exceptions to the lock-up.
Subscription, Listing and Paying Agent:		ING Bank N.V.
Stock Exchange Admission:		All of the Existing BDRs are listed on Euronext Amsterdam and Euronext Brussels, and the ADSs are listed on the NYSE.
		Applications have been or will be made for listing the New BDRs on Euronext Amsterdam and Euronext Brussels, and for listing the New ADSs on the NYSE. The Tradable Rights are expected to be traded on Euronext Amsterdam and Euronext Brussels from November 30, 2009 through 1:15 p.m. (Amsterdam time) on December 15, 2009. The transfer of Tradable Rights will take place through the book-entry systems of Euroclear and Clearstream. The ADS Rights are not transferable and will not be admitted to trading on the NYSE or any other exchange.
		The listings of the New BDRs and the New ADSs are expected to become effective on or before December 21, 2009. The first trading day for the New BDRs and the New ADSs is scheduled to be on December 21, 2009.
Use of Proceeds:		ING intends to use the proceeds of the Offering primarily to fund the repurchase of EUR 5 billion in issue amount of the Core Tier-1 Securities held by the Dutch State plus accrued interest and the repurchase premium. The repurchase premium payable in respect of the repurchased Core Tier-1 Securities will range from EUR 346 million to EUR 705 million, based on the market price of the ING shares at the time of the repurchase. Accrued interest at a rate of 8.5% on the repurchased Core Tier-1 Securities is estimated to be approximately EUR 260 million (assuming a repayment on December 21, 2009 (the “Closing Date”)). Accordingly, the amount necessary to repurchase the EUR 5 billion issue amount is expected to be between EUR 5,605 million and EUR 5,963 million. See “Recent Developments — Business — Recent Developments — Repurchase of a Portion of the Core Tier-1 Securities Held by the Dutch State”.
		ING intends to use the remaining proceeds of the Offering to strengthen its capital position, including to offset the EUR 1.3 billion one-off pre-tax charge that will be taken in the fourth quarter of 2009 as a result of the additional payments to the Dutch State in the form of fee adjustments to the Illiquid Assets Back-Up Facility as described under “Recent Developments — Business — Recent Developments — Transactions with the Dutch State”, and to allocate the remaining proceeds partially to coupon payments due in December 2009 on its outstanding hybrid securities, as required by

		the EC in order not to be required to defer coupons on hybrid securities.
Conditions to the Offering:		The Offering is being underwritten by the Underwriters based on the Underwriting Agreement from which the Underwriters can withdraw under certain circumstances. If any or all of the conditions of the Offering are not met or waived by the Representatives on behalf of the Underwriters prior to payment for and delivery of the Rump Shares or if certain circumstances occur prior to payment for and delivery of the Rump Shares, the Representatives, on behalf of the Underwriters may, at their discretion, terminate the Global Offering and their obligation to subscribe for any Rump Shares, whereupon the Offering will be cancelled and the Company will not receive the proceeds expected to be generated by the Offering. See “The Offering — Withdrawal of the Offering”.
		If the Offering is withdrawn, both the exercised and unexercised Rights will be forfeited without compensation to their holders and subscription for and allotments of New BDRs and New ADSs that have been made will be disregarded. Any subscription payments received by ING Groep N.V., the Subscription Agent, the Paying Agent, the ADS Rights Agent or the Underwriters will be returned without interest. Any such forfeiture of Rights will be without prejudice to the validity of any settled trades in the Rights. There will be no refund of any Tradable Rights purchased in the market. All trades in Tradable Rights, New Shares and New ADSs are at sole risk of the parties concerned. The Underwriters, the Company, the Subscription Agent, the Listing Agent, the ADS Rights Agent, the Paying Agent and Euronext Amsterdam N.V. do not accept any responsibility or liability with respect to any person as a result of the withdrawal of the Offering or (the related) annulment of any transactions in Tradable Rights or New Shares on Euronext Amsterdam, Euronext Brussels, or in New ADSs on the NYSE. See “Risk Factors — Risks Related to the Offering — If the Offering does not take place, our credit ratings and funding costs could be adversely affected, and the price of ING shares could drop sharply. In either case, the Rights could become worthless”.
Allotment:		Allotment of the New BDRs is expected to take place on December 16, 2009, and the delivery by the Depositary of New ADSs in respect of such New BDRs is expected to take place on December 23, 2009.
Delivery, Payment and Certification:		Delivery of the New BDRs against payment of the BDR Subscription Price or the Global Offering Price, as the case may be, and payment for the New ADSs at the ADS Subscription Price, is expected to take place on the Closing Date, or on such other date as the Joint Global Coordinators and Joint Bookrunners may determine. Delivery of the New ADSs is expected to take place on or about December 23, 2009. Delivery against payment will take place through the clearing systems of Euroclear and, with respect to ADSs, through DTC or by direct registration on an uncertificated basis the relevant holder is registered directly with the Depositary.

International Securities Identification Numbers (ISIN):		Existing BDRs: NL0000303600 (Euronext Amsterdam and Euronext Brussels)
		Existing ADSs: US4568371037 (NYSE)
		Tradable Rights: NL0009307941 (Euronext Amsterdam and Euronext Brussels)
CUSIPs:		Existing BDRs: N4578E413 (Euronext Amsterdam and Euronext Brussels)
		Existing ADSs: 456837103 (NYSE)
SEDOL:		Existing BDRs: 7154182 (Euronext Amsterdam and Euronext Brussels)
		Existing ADSs: 2452643 (NYSE)
Common Code:		Existing BDRs: 013208344 (Euronext Amsterdam and Euronext Brussels)
		Existing ADSs: 010377292 (NYSE)
		Tradable Rights: 047074070 (Euronext Amsterdam and Euronext Brussels)
Ticker Symbols:		Existing BDRs: “INGA” (Euronext Amsterdam and Euronext Brussels)
		Existing ADSs:  “ING” (NYSE)
		Tradable Rights: “INGRI” (Euronext Amsterdam and Euronext Brussels)

 

Potential investors should carefully consider the specific risk factors outlined below in addition to the other information contained in or incorporated by reference into this prospectus supplement before making a decision to acquire the ADS Rights, Tradable Rights, the New Shares or New ADSs. Any of these risks could have a material adverse effect on the business activities, financial condition, results of operations and prospects of ING. The market price of ING shares or Tradable Rights could decline due to any of these risks, and investors could lose all or part of their investments. Additional risks of which the Company is not presently aware could also affect the business operations of ING and have a material adverse effect on ING’s business activities, financial condition, results of operations and prospects. In addition, the business of a multinational, broad-based financial services firm such as ING is inherently exposed to risks that only become apparent with the benefit of hindsight. The sequence in which the risk factors are presented below is not indicative of their likelihood of occurrence or the potential magnitude of their financial consequences.

 

Risks Related to the Financial Services Industry

 

Because we are an integrated financial services company conducting business on a global basis, our revenues and earnings are affected by the volatility and strength of the economic, business and capital markets environments specific to the geographic regions in which we conduct business. The ongoing turbulence and volatility of such factors have adversely affected, and may continue to adversely affect, the profitability of our insurance, banking and asset management business.

 

Factors such as interest rates, securities prices, credit (including liquidity) spreads, exchange rates, consumer spending, business investment, real estate and private equity valuations, government spending, inflation, the volatility and strength of the capital markets, and terrorism all impact the business and economic environment and, ultimately, the amount and profitability of business we conduct in a specific geographic region. For example, in an economic downturn, such as the one that has affected world economies since mid-2007, characterized by higher unemployment, lower family income, lower corporate earnings, higher corporate and private debt defaults, lower business investment and consumer spending, the demand for banking and insurance products is adversely affected and our reserves and provisions are likely to increase, resulting in lower earnings. Securities prices, real estate valuations and private equity valuations may be adversely impacted, and any such losses would be realized through profit and loss and shareholders’ equity. Some insurance products contain minimum return or accumulation guarantees. If returns do not meet or exceed the guarantee levels we may need to set up additional reserves to fund these future guaranteed benefits. In addition, we may experience an elevated incidence of claims and lapses or surrenders of policies. Our policyholders may choose to defer paying insurance premiums or stop paying insurance premiums altogether. Similarly, a downturn in the equity markets causes a reduction in commission income we earn from managing portfolios for third parties, income generated from our own proprietary portfolios, asset-based 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 and credit spreads. See also “Risks Related to the Group — Interest rate volatility may adversely affect our profitability” below.

 

In case one or more of the factors mentioned above adversely affects the profitability of our business this might also result, among others, in the following:

 

 

Management believes that if ongoing market volatility adversely impacts the performance of the reporting units Retail Banking — Central Europe and Insurance Americas — United States, compared with what was assumed in the year-end 2008 goodwill impairment test, the book value (including goodwill) of these reporting units may

exceed the related fair values, which would result in impairments. See “Intangible Assets” under Paragraph 9 of Note 2.1.3 to our 2008 consolidated financial statements.

 

In 2008 and 2009, shareholders’ equity and our net result were significantly impacted by the turmoil and the extreme volatility in the worldwide financial markets. Further negative developments in financial markets and/or economies may have a material adverse impact on shareholders’ equity and net result in future periods, including as a result of the potential consequences listed above. We are currently recalibrating our economic capital models to reflect the extreme market conditions experienced over recent quarters in order to align them more closely with regulatory measures. This may have a material impact on our economic capital for credit risk. See “Risks Related to the Group — Ongoing turbulence and volatility in the financial markets have adversely affected us, and may continue to do so”.

 

Adverse capital and credit market conditions may impact our ability to access liquidity and capital, as well as the cost of credit and capital.

 

The capital and credit markets have been experiencing extreme volatility and disruption for more than two years. In the second half of 2008, the volatility and disruption reached unprecedented levels. In some cases, market developments have resulted in restrictions on the availability of liquidity and credit capacity for certain issuers.

 

We need liquidity in our day-to-day business activities to pay our operating expenses, interest on our debt and dividends on our capital stock; maintain our securities lending activities; and replace certain maturing liabilities. The principal sources of our liquidity are deposit funds, insurance premiums, annuity considerations, cash flow from our investment portfolio and assets, consisting mainly of cash or assets that are readily convertible into cash. Sources of liquidity in normal markets also include a variety of short- and long-term instruments, including repurchase agreements, commercial paper, medium-and long-term debt, junior subordinated debt securities, capital securities and stockholders’ equity.

 

In the event current resources do not satisfy our needs, we may have to seek additional financing. The availability of additional financing will depend on a variety of factors such as market conditions, the general availability of credit, the volume of trading activities, the overall availability of credit to the financial services industry, our credit ratings and credit capacity, as well as the possibility that customers or lenders could develop a negative perception of our long- or short-term financial prospects. Similarly, our access to funds may be limited if regulatory authorities or rating agencies take negative actions against us. If our internal sources of liquidity prove to be insufficient, there is a risk that external funding sources might not be available, or available at unfavorable terms.

 

Disruptions, uncertainty or volatility in the capital and credit markets may also limit our access to capital required to operate our business. Such market conditions may limit our ability to raise additional capital to support business growth, or to counter-balance the consequences of losses or increased regulatory capital requirements. This could force us to (1) delay raising capital, (2) reduce, cancel or postpone payment of dividends on our shares, (3) reduce, cancel or postpone interest payments on other securities, (4) issue capital of different types or under different terms than we would otherwise, or (5) incur a higher cost of capital than in a more stable market environment. This would have the potential to decrease both our profitability and our financial flexibility. Our results of operations, financial condition, cash flows and regulatory capital position could be materially adversely affected by disruptions in the financial markets.

 

In the course of 2008 and 2009, governments around the world, including the Dutch government, implemented unprecedented measures to provide assistance to financial institutions, in certain cases requiring (indirect) influence on or changes to governance and remuneration practices. In certain cases governments nationalized companies or parts thereof. The measures adopted in the Netherlands include both liquidity provision and capital reinforcement, and a Dutch Credit Guarantee Scheme. The liquidity and capital reinforcement measures expired on October 10, 2009, while the Credit Guarantee Scheme of the Netherlands is scheduled to run through December 31, 2009 (see “Recent Developments — Business — Transactions with the Dutch State”). To date, we have been able to benefit from these measures, but our participation in these measures has resulted in certain material restrictions on us, including those agreed to with the EC as part of our Restructuring Plan. See “Risks Related to the Group — Our agreements with the Dutch State impose certain restrictions regarding the issuance or repurchase of our shares and the compensation of certain senior management positions”, “Risks Related to the Group — The implementation of

the Restructuring Plan and the divestments anticipated in connection with that plan will significantly alter the size and structure of the Group and involve significant costs and uncertainties that could materially impact the Group” and “Recent Developments — Business — Recent Developments — Insurance and other Divestments, EC Agreement”. The Restructuring Plan as well as any potential future transactions with the Dutch State or any other government, if any, or actions by such government regarding ING could adversely impact the position or rights of shareholders, bondholders, customers or creditors and our results, operations, solvency, liquidity and governance.

 

In addition, we have built our liquidity risk framework on the premise that our liquidity is most efficiently and effectively managed by a centralized Group function. However, we are subject to the jurisdiction of a variety of banking and insurance regulatory bodies, some of which have proposed regulatory changes that, if implemented, would hinder our ability to manage our liquidity in such a centralized manner. Furthermore, regulatory liquidity requirements in certain jurisdictions in which we operate are generally becoming more stringent, undermining our efforts to maintain this centralized management of our liquidity. These developments may cause trapped pools of liquidity, resulting in inefficiencies in the cost of managing our liquidity, and hinder our efforts to integrate our balance sheet, which is an essential element of our Back to Basics program and our Restructuring Plan.

 

The default of a major market participant could disrupt the markets.

 

Within the financial services industry the default of any one institution could lead to defaults by other institutions. The failure of a sufficiently large and influential institution could disrupt securities markets or clearance and settlement systems in our markets. This could cause market declines or volatility. Such a failure could lead to a chain of defaults that could adversely affect us and our contract counterparties. Concerns about, or a default by, one institution could lead to significant liquidity problems, losses or defaults by other institutions, as was the case after the bankruptcy of Lehman Brothers, because the commercial and financial soundness of many financial institutions may be closely related as a result of their credit, trading, clearing or other relationships. Even the perceived lack of creditworthiness of, or questions about, a counterparty may lead to market-wide liquidity problems and losses or defaults by us or by other institutions. This risk is sometimes referred to as “systemic risk” and may adversely affect financial intermediaries, such as clearing agencies, clearing houses, banks, securities firms and exchanges with whom we interact on a daily basis. Systemic risk could have a material adverse effect on our ability to raise new funding and on its business, financial condition, results of operations, liquidity and/ or prospects. In addition, such a failure could impact future product sales as a potential result of reduced confidence in the financial services industry.

 

The way AIG suffered in the aftermath of the bankruptcy of Lehman Brothers in September 2008 is an example of this type of risk. Management believes that despite increased attention recently, systemic risk to the markets in which we operate continues to exist, and dislocations caused by the interdependency of financial market participants continues to be a potential source of material adverse changes to our business, results of operations and financial condition.

 

Because our life and non-life insurance and reinsurance businesses are subject to losses from unforeseeable and/or catastrophic events, which are inherently unpredictable, our actual claims amount may exceed our established reserves or we may experience an abrupt interruption of activities, each of which could result in lower net results and have an adverse effect on our results of operations.

 

In our life and non-life insurance and reinsurance businesses, we are subject to losses from natural and man-made catastrophic events. Such events include, without limitation, weather and other natural catastrophes such as hurricanes, floods, earthquakes and epidemics, as well as events such as terrorist attacks.

 

The frequency and severity of such events, and the losses associated with them, are inherently unpredictable and cannot always be adequately reserved for. Furthermore, we are subject to actuarial and underwriting risks such as, for instance, mortality, longevity, morbidity, and adverse home claims development which result from the pricing and acceptance of insurance contracts. In accordance with industry practices, modeling of natural catastrophes is performed and risk mitigation measures are made. In case claims occur, reserves are established based on estimates using actuarial projection techniques. The process of estimating is based on information available at the time the

reserves are originally established and includes updates when more information becomes available. Although we continually review the adequacy of the established claim reserves, there can be no assurances that our actual claims experience will not exceed our estimated claim reserves. If actual claim amounts exceed the estimated claim reserves, our earnings may be reduced and our net results may be adversely affected. In addition, because unforeseeable and/or catastrophic events can lead to an abrupt interruption of activities, our banking and insurance operations may be subject to losses resulting from such disruptions. Losses can relate to property, financial assets, trading positions, insurance and pension benefits to employees and also to key personnel. If our business continuity plans are not able to be put into action or do not take such events into account, losses may further increase.

 

We operate in highly regulated industries. There could be an adverse change or increase in the financial services laws and/or regulations governing our business.

 

We are subject to detailed banking, insurance, asset management and other financial services laws and government regulation in each of the jurisdictions in which we conduct business. Regulatory agencies have broad administrative power over many aspects of the financial services business, which may include liquidity, capital adequacy and permitted investments, ethical issues, money laundering, privacy, record keeping, and marketing and selling practices. Banking, insurance and other financial services laws, regulations and policies currently governing us and our subsidiaries may also change at any time in ways which have an adverse effect on our business, and it is difficult to predict the timing or form of any future regulatory or enforcement initiatives in respect thereof. Also, bank regulators and other supervisory authorities in the EU, the US and elsewhere continue to scrutinize payment processing and other transactions under regulations governing such matters as money-laundering, prohibited transactions with countries subject to sanctions, and bribery or other anti-corruption measures. Regulation is becoming increasingly more extensive and complex and regulators are focusing increased scrutiny on the industries in which we operate, often requiring additional Company resources. These regulations can serve to limit our activities, including through our net capital, customer protection and market conduct requirements, and restrictions on businesses in which we can operate or invest. If we fail to address, or appear to fail to address, appropriately any of these matters, our reputation could be harmed and we could be subject to additional legal risk, which could, in turn, increase the size and number of claims and damages asserted against us or subject us to enforcement actions, fines and penalties.

 

In light of current conditions in the global financial markets and the global economy, regulators have increased their focus on the regulation of the financial services industry. Most of the principal markets where we conduct our business have adopted, or are currently considering, major legislative and/or regulatory initiatives in response to the financial crisis. In particular, governmental and regulatory authorities in the Netherlands, the United Kingdom, the United States and elsewhere are implementing measures to increase regulatory control in their respective financial markets and financial services sectors, including in the areas of prudential rules, capital requirements, executive compensation and financial reporting, among others. For example, the EC is conducting a full scale review of solvency margins and provisions for insurance companies known as “Solvency II”. Each member state of the EEA, including the Netherlands, is required to implement Solvency II by October 31, 2012. The EC is also considering increasing the capital requirements for banks. In addition, the International Accounting Standards Board (“IASB”) is considering changes to several IFRS standards, including significant changes to the standard on financial instruments (IAS 39) and to the standard on pensions (IAS 19). These changes could have a material impact on our reported results and financial condition.

 

Governments in the Netherlands and abroad have also intervened on an unprecedented scale, responding to stresses experienced in the global financial markets. Some of the measures adopted subject us and other institutions for which they were designed to additional restrictions, oversight or costs. For restrictions related to the Core Tier-1 Securities and the Illiquid Assets Back-Up Facility (together, the “Dutch State Transactions”), see “— Our agreements with the Dutch State impose certain restrictions regarding the issuance or repurchase of our shares and the compensation of certain senior management positions”. As a result of having received state aid through the Dutch State Transactions, we were required to submit our Restructuring Plan to the EC in connection with obtaining final approval for the Dutch State Transactions. See “Risks Related to the Group — The implementation of the Restructuring Plan and the divestments anticipated in connection with that plan will significantly alter the size and structure of the Group and involve significant costs and uncertainties that could materially impact the Group”. We

cannot predict whether or when future legislative or regulatory actions may be taken, or what impact, if any, actions taken to date or in the future could have on our business, results of operations and financial condition.

 

Despite our efforts to maintain effective compliance procedures and to comply with applicable laws and regulations, there are a number of risks in areas where applicable regulations may be unclear, subject to multiple interpretation or under development or may conflict with one another, where regulators revise their previous guidance or courts overturn previous rulings, or we fail to meet applicable standards. Regulators and other authorities have the power to bring administrative or judicial proceedings against us, which could result, amongst other things, in suspension or revocation of our licenses, cease and desist orders, fines, civil penalties, criminal penalties or other disciplinary action which could materially harm our results of operations and financial condition.

 

Risks Related to the Group

 

Ongoing turbulence and volatility in the financial markets have adversely affected us, and may continue to do so.

 

Our results of operations are materially impacted by conditions in the global capital markets and the economy generally. The stress experienced in the global capital markets that started in the second half of 2007 continued and substantially increased throughout 2008 and, although market conditions have improved, volatility continued in 2009, particularly the early part of the year. The crisis in the mortgage market in the United States, triggered by a serious deterioration of credit quality, led to a revaluation of credit risks. These conditions have resulted in greater volatility, widening of credit spreads and overall shortage of liquidity and tightening of financial markets throughout the world. In addition, prices for many types of asset-backed securities (“ABS”) and other structured products have significantly deteriorated. These concerns have since expanded to include a broad range of fixed income securities, including those rated investment grade, 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 estate sectors. As a result, the market for fixed income instruments has experienced decreased liquidity, increased price volatility, credit downgrade events, and increased probability of default. Securities that are less liquid are more difficult to value and may be hard to dispose of. International equity markets have also been experiencing heightened volatility and turmoil, with issuers, including ourselves, that have exposure to the real estate, mortgage, private equity and credit markets particularly affected. These events and market upheavals, including extreme levels of volatility, have had and may continue to have an adverse effect on our revenues and results of operations, in part because we have a large investment portfolio and extensive real estate activities around the world. In addition, the confidence of customers in financial institutions is being tested. Consumer confidence in financial institutions may, for example, decrease due to our or our competitors’ failure to communicate to customers the terms of, and the benefits to customers of, complex or high-fee financial products. Reduced confidence could have an adverse effect on our revenues and results of operations, including through an increase of lapses or surrenders of policies and withdrawal of deposits. Because a significant percentage of our customer deposit base is originated via Internet banking, a loss of customer confidence may result in a rapid withdrawal of deposits over the Internet.

 

As a result of the ongoing and unprecedented volatility in the global financial markets in 2007, 2008 and, to a lesser extent, the first nine months of 2009, we have incurred substantial negative revaluations on our investment portfolio, which have impacted our earnings and shareholders’ equity. Furthermore, we have incurred impairments and other losses, which have impacted our profit and loss accounts. Although we believe that reserves for insurance liabilities are generally adequate at the Group and business line level, inadequacies in certain product areas have developed.

 

Such impacts have arisen primarily as a result of valuation issues arising in connection with our investments in real estate (both in and outside the US) and private equity, exposures to US mortgage-related structured investment products, including sub-prime and Alt-A Residential and Commercial Mortgage-Backed Securities (“RMBS” and “CMBS”, respectively), Collateralized Debt Obligations (“CDOs”) and Collateralized Loan Obligations (“CLOs”), monoline insurer guarantees, Structured Investment Vehicles (“SIVs”) and other investments. In many cases, the markets for such investments and instruments have been and remain highly illiquid, and issues relating to counterparty credit ratings and other factors have exacerbated pricing and valuation uncertainties. Valuation of such investments and instruments is a complex process involving the consideration of market

transactions, pricing models, management judgment and other factors, and is also impacted by external factors such as underlying mortgage default rates, interest rates, rating agency actions and property valuations. While we continue to monitor our exposures in this area, in light of the ongoing market environment and the resulting uncertainties concerning valuations, there can be no assurances that we will not experience further negative impacts to our shareholders’ equity or profit and loss accounts from such assets in future periods.

 

The implementation of the Restructuring Plan and the divestments anticipated in connection with that plan will significantly alter the size and structure of the Group and involve significant costs and uncertainties that could materially impact the Group.

 

As described under “Recent Developments — Business — Transactions with the Dutch State”, in November 2008 the Dutch State purchased the Core Tier-1 Securities, and in the first quarter of 2009 we and the Dutch State entered into the Illiquid Assets Back-Up Facility (the “Illiquid Assets Back-Up Facility”) pursuant to which we transferred to the Dutch State the economic risks and rewards of 80% of the approximately EUR 30 billion par value Alt-A residential mortgage-backed securities portfolios of ING Direct US and Insurance Americas.

 

As a result of having received state aid through the Dutch State Transactions, we were required to submit a restructuring plan (the “Restructuring Plan”) to the EC in connection with obtaining final approval for the Dutch State Transactions under the EC state aid rules. On October 26, 2009, we announced our Restructuring Plan, pursuant to which we are required to divest by the end of 2013 all of our insurance business, including the investment management business, as well as ING Direct US, which operates our direct banking business in the United States, and certain portions of our retail banking business in the Netherlands. The EC’s approval of the Restructuring Plan was issued on November 18, 2009. In addition, in order to obtain approval of the Restructuring Plan, we committed to make a series of additional payments to the Dutch State, corresponding to adjustments to the net fees payable under the Illiquid Assets Back-Up Facility. These payments will significantly increase the cost of the Illiquid Assets Back-Up Facility to us and will result in a one-time, pre-tax charge of EUR 1.3 billion to be recorded in the fourth quarter of 2009 which will in turn adversely affect our results of operations and financial condition. For more information about our Restructuring Plan and the additional payments, see “Recent Developments — Business — Recent Developments — Insurance and other Divestments, EC Agreement”.

 

In connection with the Restructuring Plan, we have also agreed to not be a price leader in certain EU markets with respect to certain retail, private and direct banking products and to refrain from acquisitions of financial institutions and of businesses that would delay our repurchase of the Core Tier-1 Securities not purchased with the proceeds of the Offering. Those limitations may last until November 18, 2012 and could adversely affect our ability to maintain or grow market share in key markets as well as our results of operations. See “Risks Related to the Group — The limitations agreed with the EC on our ability to compete and to make acquisitions or call certain debt instruments could materially impact the Group”.

 

We have announced that we will consider making our required divestments by means of initial public offerings, sales, spin-offs, combinations of the foregoing or other means. There can be no assurance that we will be able to implement the Restructuring Plan successfully or complete the announced divestments on favorable terms or at all, particularly in light of both the plan’s 2013 deadline and expected challenging market conditions in which other financial institutions may place similar assets for sale during the same time period and may seek to dispose of assets in the same manner. Any failure to successfully implement the Restructuring Plan may result in EC enforcement actions and may have a material adverse impact on the assets, profitability, capital adequacy and business operations of the Group. Moreover, in connection with the implementation of the Restructuring Plan, including any proposed divestments, we or potential buyers may need to obtain various approvals, including of shareholders, works councils and regulatory and competition authorities, and we and potential buyers may face difficulties in obtaining these approvals in a timely manner or at all. In addition, the implementation of the Restructuring Plan may strain relations with our employees, and specific proposals in connection with the implementation may be opposed by labor unions or works councils. Furthermore, following the announcement of the Restructuring Plan, several of our subsidiaries have been downgraded or put on credit watch by rating agencies. See “Risks Related to the Group — Ratings are important to our business for a number of reasons. Among these are the issuance of debt, the sale of certain products and the risk weighting of bank and insurance assets. Downgrades could have an adverse impact on our operations and net results”.

Other factors that may impede our ability to implement the Restructuring Plan successfully include an inability of prospective purchasers to obtain funding due to the deterioration of the credit markets, insufficient access to equity capital markets, a general unwillingness of prospective purchasers to commit capital in the current market environment, antitrust concerns, any adverse changes in market interest rates or other borrowing costs and any declines in the value of the assets to be divested. Although equity capital markets have improved over the past few months, it may also be difficult to divest all or part of our insurance or investment management business through one or more initial public offerings. There can also be no assurance that we could obtain favorable pricing for a sale of all or part of our insurance or investment management business in the public markets or succeed in turning the relevant subsidiaries into viable standalone businesses. A divestment may also release less regulatory capital than we would otherwise expect. Any failure to complete the divestments on favorable terms, whether by sale, through an initial public offering, a spin-off or otherwise, could have a material adverse impact on our assets, profitability, capital adequacy and business operations. If we are unable to complete the announced divestments in a timely manner, we would be required to find alternative ways to reduce our leverage, and we could be subject to enforcement actions or proceedings by the EC. In particular, if we do not succeed in completing divestitures contemplated by the Restructuring Plan within the timelines set out therein, the EC may request the Dutch State to appoint a divestiture trustee with a mandate to complete the relevant divestiture with no minimum price.

 

In addition, it is possible that a third party will challenge the EC decision to approve the Restructuring Plan in the European Courts. ING does not believe that any such challenge would be likely to succeed, but if it were to succeed the EC would need to reconsider its decision which may have an adverse impact on our results of operations and financial condition.

 

The implementation of the divestments announced in connection with the Restructuring Plan, including the separation of the insurance and investment management operations from the banking operations, will also give rise to additional costs related to the legal and financial assessment of potential transactions. The implementation may also result in increased operating and administrative costs. The process of completing the steps contemplated by the Restructuring Plan may be disruptive to our business and the businesses we are trying to sell and may cause an interruption or reduction of our business and the businesses to be sold as a result of, among other factors, the loss of key employees or customers and the diversion of management’s attention from our day-to-day business as a result of the need to manage the divestment process as well as any disruptions or difficulties that arise during the course of the divestment process. We may face other difficulties in implementing the Restructuring Plan and completing the planned divestments. For instance, the divestments, individually or in the aggregate, may trigger provisions in various contractual obligations, including debt instruments, which could require us to modify, restructure or refinance the related obligations. We may not be able to effect any such restructuring or refinancing on similar terms as the current contractual obligations or at all. In addition, the announced divestments could be the subject of challenges or litigation, and a court could delay any of the divestment transactions or prohibit them from occurring on their proposed terms, or from occurring at all, which could adversely affect our ability to use the funds of the divestments to repurchase the Core Tier-1 Securities, reduce or eliminate our double leverage and strengthen our capital ratios as anticipated and eliminate the constraints on competition imposed by the EC.

 

The limitations agreed with the EC on our ability to compete and to make acquisitions or call certain debt instruments could materially impact the Group.

 

As part of our Restructuring Plan, we have undertaken with the EC to accept certain limitations on our ability to compete in certain retail, private and direct banking markets in the European Union and on our ability to acquire financial institutions and businesses that would delay our repurchase of the Core Tier-1 Securities held by the Dutch State. These restrictions apply until the earlier of: (1) November 18, 2012, and (2) the date upon which we repurchase all remaining Core Tier-1 Securities held by the Dutch State. We have also agreed to limitations on our ability to call Tier-2 capital and Tier-1 hybrid debt instruments. See “Recent Developments — Business — Recent Developments — Insurance and other Divestments, EC Agreement”. If the EC does not approve the calling of Tier-2 capital and Tier-1 hybrid debt instruments in the future, this may have adverse consequences for us, result in additional payments on these instruments and limit our ability to seek refinancing on more favorable terms. The limitations described above will impose significant restrictions on our banking business operations and on our

ability to take advantage of market conditions and growth opportunities. Such restrictions could adversely affect our ability to maintain or grow market share in key markets, as well as our results of operations.

 

Upon the implementation of the Restructuring Plan, we will be less diversified and may experience competitive and other disadvantages.

 

Following completion of the planned divestments under the Restructuring Plan, we expect to become a significantly smaller, regional financial institution focused on retail, direct and commercial banking in the Benelux region and certain other parts of Europe, as well as selected markets outside Europe. See “Recent Developments — Business — Group Strategy”. Although we will remain focused on banking operations, we may become a smaller bank than that represented by our current banking operations. In the highly competitive Benelux market and the other markets in which we operate, our competitors may be larger, more diversified and better capitalized and have greater geographical reach than us, which could have a material adverse effect on our ability to compete, as well as on our profitability. The divested businesses may also compete with the retained businesses, on their own or as part of the purchasers’ enlarged businesses. In addition, the restrictions on our ability to be a price leader and make acquisitions and on our compensation policies could further hinder our capacity to compete with competitors not burdened with such restrictions, which could have a material adverse effect on our results of operations. There can be no assurance that the implementation of the Restructuring Plan will not have a material adverse effect on the market share, business and growth opportunities and results of operations for our remaining core banking businesses.

 

Our Back to Basics program and our Restructuring Plan may not yield intended reductions in costs, risk and leverage.

 

In April 2009, we announced our Back to Basics program to reduce our costs, risk and leverage. In addition to restructuring our banking and insurance businesses so that they are operated separately under the ING umbrella, the Back to Basics program includes cost-reduction measures, as well as plans for divestments. On October 26, 2009, we announced that we had reached an agreement with the EC on our Restructuring Plan, pursuant to which we announced further divestments. See “Recent Developments — Business — Recent Developments — Insurance and Other Divestments, EC Agreement.” Projected cost savings and impact on our risk profile and capital associated with these initiatives are subject to a variety of risks, including:

 

 

While we have begun and expect to continue to implement these strategies, there can be no assurance that we will be able to do so successfully or that we will realize the projected benefits of these and other restructuring and cost saving initiatives. If we are unable to realize these anticipated cost reductions, our business may be adversely affected. Moreover, our continued implementation of restructuring and cost saving initiatives may have a material adverse effect on our business, financial condition, results of operations and cash flows.

 

Because we operate in highly competitive markets, including our home market, we may not be able to increase or maintain our market share, which may have an adverse effect on our results of operations.

 

There is substantial competition in the Netherlands and the other countries in which we do 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 relative service levels, the prices and attributes of products and services, and actions taken by competitors. If we are not able to match or compete with the products and services offered by our competitors, it could adversely impact our ability to maintain or further increase our market share, which would adversely affect our results of operations. Such competition is most pronounced in our more mature markets of the Netherlands, Belgium, the Rest of Western Europe, the United States, Canada and Australia. In recent years, however, competition in emerging markets, such as Latin America, Asia and Central and Eastern Europe, has also increased as large insurance and banking industry participants from more developed countries have sought to establish themselves in markets which are perceived to offer higher growth potential, and as local institutions have become more sophisticated and competitive and have sought alliances, mergers or strategic relationships with our competitors. The Netherlands and the United States are our largest markets for both our banking and insurance operations. Our main competitors in the banking sector in the Netherlands are ABN AMRO Bank/Fortis and Rabobank. Our main competitors in the insurance sector in the Netherlands are Achmea, ASR and Aegon. Our main competitors in the United States are insurance companies such as Lincoln National, Hartford, Aegon Americas, AXA, Met Life, Prudential, Nationwide and Principal Financial. Increasing competition in these or any of our other markets may significantly impact our results if we are unable to match the products and services offered by our competitors. Over time, certain sectors of the financial services industry have become more concentrated, as institutions involved in a broad range of financial services have been acquired by or merged into other firms or have declared bankruptcy. In 2008 and 2009, this trend accelerated considerably, as several major financial institutions consolidated, were forced to merge or received substantial government assistance, and this trend may continue in light of the EC’s scrutiny of state aid transactions. These developments could result in our competitors gaining greater access to capital and liquidity, expanding their ranges of products and services, or gaining geographic diversity. We may experience pricing pressures as a result of these factors in the event that some of our competitors seek to increase market share by reducing prices. In addition, under the Restructuring Plan we have agreed to certain restrictions imposed by the EC, including with respect to our price leadership in EU banking markets and our ability to make acquisitions of financial institutions and other businesses. See “Recent Developments — Business — Recent Developments — Insurance and other Divestments, EC Agreement” and “— The limitations agreed with the EC on our ability to compete and to make acquisitions or call certain debt instruments could materially impact the Group”.

 

Our agreements with the Dutch State impose certain restrictions regarding the issuance or repurchase of our shares and the compensation of certain senior management positions.

 

For so long as the Dutch State holds at least 25% of the Core Tier-1 Securities, issued by us on November 12, 2008, for so long as the Illiquid Assets Back-Up Facility is in place, or for so long as any of the government guaranteed senior unsecured bonds issued by ING Bank N.V. on January 30, 2009, February 20, 2009 and March 12, 2009 under the Credit Guarantee Scheme of the Netherlands (the “Government Guaranteed Bonds”) are outstanding, we are prohibited from issuing or repurchasing any of our own shares (other than as part of regular hedging operations and the issuance of shares according to employment schemes) without the consent of the Dutch State’s nominees on the Supervisory Board (see below). In addition, under the terms of the Core Tier-1 Securities and Illiquid Assets Back-Up Facility, we have agreed to institute certain restrictions on the compensation of the members of the Executive Board and senior management, including incentives or performance-based compensation. These restrictions could hinder or prevent us from attracting or retaining the most qualified management with the talent and experience to manage our business effectively. In connection with these transactions, the Dutch State was granted the right to nominate two candidates for appointment to the Supervisory Board. The Dutch State’s nominees have veto rights over certain material transactions. For more information on our transactions with the Dutch State, see “Recent Developments — Business — Transactions with the Dutch State” below. Our agreements with the Dutch State have also led to certain restrictions imposed by the EC as part of the Restructuring Plan, including with respect to our price leadership in EU banking markets and our ability to make acquisitions of financial institutions and other businesses. See “Risks Related to the Group — The limitations agreed with the EC on our ability to compete and to make acquisitions or call certain debt instruments could materially impact the Group”.

Because we do business with many counterparties, the inability of these counterparties to meet their financial obligations could have a material adverse effect on our results of operations.

 

General

 

Third-parties that owe us money, securities or other assets may not pay or perform under their obligations. These parties include the issuers whose securities we hold, borrowers under loans originated, customers, trading counterparties, counterparties under swaps, credit default and other derivative contracts, clearing agents, exchanges, clearing house and other financial intermediaries. Defaults by one or more of these parties on their obligations to us due to bankruptcy, lack of liquidity, downturns in the economy or real estate values, operational failure, etc., or even rumors about potential defaults by one or more of these parties or regarding the financial services industry generally, could lead to losses for us, and defaults by other institutions. In light of the significant constraints on liquidity and high cost of funds in the interbank lending market, which arose in 2008 and early 2009, particularly following the collapse of Lehman Brothers in September 2008, and given the high level of interdependence between financial institutions, we are and will continue to be subject to the risk of deterioration of the commercial and financial soundness, or perceived soundness, of other financial services institutions. This is particularly relevant to our franchise as an important and large counterparty in equity, fixed-income and foreign exchange markets, including related derivatives, which exposes it to concentration risk.

 

We routinely execute a high volume of transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks, mutual and hedge funds, insurance companies and other institutional clients, resulting in large daily settlement amounts and significant credit exposure. As a result, we face concentration risk with respect to specific counterparties and customers. We are exposed to increased counterparty risk as a result of recent financial institution failures and weakness and will continue to be exposed to the risk of loss if counterparty financial institutions fail or are otherwise unable to meet their obligations. A default by, or even concerns about the creditworthiness of, one or more financial services institutions could therefore lead to further significant systemic liquidity problems, or losses or defaults by other financial institutions.

 

With respect to secured transactions, our credit risk may be exacerbated when the collateral held by us cannot be realized, or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. We also have exposure to a number of financial institutions in the form of unsecured debt instruments, derivative transactions and equity investments. For example, we hold certain hybrid regulatory capital instruments issued by financial institutions which permit the issuer to defer coupon payments on the occurrence of certain events or at their option. The EC has indicated that, in certain circumstances, it may require these financial institutions to defer payment. If this were to happen, we expect that such instruments may experience ratings downgrades and/or a drop in value and we may have to treat them as impaired, which could result in significant losses. There is no assurance that losses on, or impairments to the carrying value of, these assets would not materially and adversely affect our business or results of operations.

 

In addition, we are subject to the risk that our rights against third parties may not be enforceable in all circumstances. The deterioration or perceived deterioration in the credit quality of third parties whose securities or obligations we hold could result in losses and/ or adversely affect our ability to rehypothecate or otherwise use those securities or obligations for liquidity purposes. A significant downgrade in the credit ratings of our counterparties could also have a negative impact on our income and risk weighting, leading to increased capital requirements. While in many cases we are permitted to require additional collateral from counterparties that experience financial difficulty, disputes may arise as to the amount of collateral we are entitled to receive and the value of pledged assets. Our credit risk may also be exacerbated when the collateral we hold cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure that is due to us, which is most likely to occur during periods of illiquidity and depressed asset valuations, such as those currently experienced. The termination of contracts and the foreclosure on collateral may subject us to claims for the improper exercise of its rights. Bankruptcies, downgrades and disputes with counterparties as to the valuation of collateral tend to increase in times of market stress and illiquidity.

 

Any of 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 businesses. This protection is bought through reinsurance arrangements in order to reduce possible losses. Because in most cases we must pay the policyholders first, and then collect from the reinsurer, we are subject to credit risk with respect to each reinsurer for all such amounts. As a percentage of our (potential) reinsurance receivables as of June 30, 2009, the greatest exposure after collateral to an individual reinsurer was approximately 33%, approximately 37% related to four other reinsurers and the remainder of the reinsurance receivables balance related to various other reinsurers. The inability or unwillingness of any one of these reinsurers to meet its financial obligations to us, or the insolvency of our reinsurers, could have a material adverse effect on our net results and our financial results.

 

Current market conditions have increased the risk of loans being impaired. We are exposed to declining property values on the collateral supporting residential and commercial real estate lending.

 

We are exposed to the risk that our borrowers may not repay their loans according to their contractual terms and that the collateral securing the payment of these loans may be insufficient. We may continue to see adverse changes in the credit quality of our borrowers and counterparties, for example as a result of their inability to refinance their indebtedness, with increasing delinquencies, defaults and insolvencies across a range of sectors. This trend has led and may lead to further impairment charges on loans and other assets, higher costs and additions to loan loss provisions. The volume of impaired loans may continue if unfavorable economic conditions persist.

 

Furthermore, a significant increase in the size of our provision for loan losses could have a material adverse effect on our financial position and results of operations. Due to worsening economic conditions in the past two years, we have experienced an increase of impaired loans.

 

The fall of commercial and residential real estate prices and lack of market liquidity during the past two years has had an adverse effect on the value of the collateral we hold. Economic and other factors could lead to further contraction in the residential mortgage and commercial lending market and to further decreases in residential and commercial property prices which could generate substantial increases in impairment losses.

 

Interest rate volatility may adversely affect our profitability.

 

Changes in prevailing interest rates may negatively affect our business including the level of net interest revenue we earn, and for our banking business the levels of deposits and the demand for loans. In a period of changing interest rates, interest expense may increase at different rates than the interest earned on assets. Accordingly, changes in interest rates could decrease net interest revenue. Changes in the interest rates may negatively affect the value of our assets and our ability to realize gains or avoid losses from the sale of those assets, all of which also ultimately affect earnings. In addition, an increase in interest rates may decrease the demand for loans.

 

In addition, during periods of declining interest rates, life insurance and annuity products may be relatively more attractive to consumers, resulting in increased premium payments on products with flexible premium features, and a higher percentage of insurance policies remaining in force from year-to-year, creating asset liability duration mismatches. A decrease in interest rates may also require an addition to provisions for guarantees included in life policies, as the guarantees become more valuable to policy holders. During a low interest rate period, our investment earnings may be lower because the interest earnings on our fixed income investments will likely have declined in parallel with market interest rates, which would also cause unrealized losses on our assets recorded at fair value under IFRS-EU. Declining interest rates may also affect the results of our reserve adequacy testing which may in turn result in reserve strengthening. Reserves for variable annuity guarantees have been inadequate since December 31, 2008. Lower interest rates would result in further inadequacies at the US level, though reserves remain adequate at the Group level. In addition, mortgages and fixed maturity securities in our investment portfolios will be more likely to be prepaid or redeemed as borrowers seek to borrow at lower interest rates. Consequently, we may be required to reinvest the proceeds in securities bearing lower interest rates. Accordingly, during periods of declining interest rates, our profitability may suffer as the result of a decrease in the spread between interest rates charged to policyholders and returns on our investment portfolios.

Conversely, in periods of rapidly increasing interest rates, policy loans, and withdrawals and surrenders of life insurance policies and fixed annuity contracts may increase as policyholders choose to forego insurance protection and seek higher investment returns. Obtaining cash to satisfy these obligations may require us to liquidate fixed maturity investments at a time when market prices for those assets are depressed because of increases in interest rates. This may result in realized investment losses. Regardless of whether we realize an investment loss, these cash payments would result in a decrease in total invested assets, and may decrease our net income. Premature withdrawals may also cause us to accelerate amortization of deferred policy acquisition costs, which would also reduce our net income.

 

We may incur losses due to failures of banks falling under the scope of state compensation schemes.

 

In the Netherlands and other jurisdictions deposit guarantee schemes and similar funds (“Compensation Schemes”) have been implemented from which compensation may become payable to customers of financial services firms in the event the financial service firm is unable to pay, or unlikely to pay, claims against it. In many jurisdictions in which we operate, these Compensation Schemes are funded, directly or indirectly, by financial services firms which operate and/or are licensed in the relevant jurisdiction. As a result of the increased number of bank failures, in particular since the fall of 2008, we expect that levies in the industry will continue to rise as a result of the Compensation Schemes. In particular, we are a participant in the Dutch Deposit Guarantee Scheme, which guarantees an amount of EUR 100,000 per person per bank (regardless of the number of accounts held). The costs involved with making compensation payments under the Dutch Deposit Guarantee Scheme are allocated among the participating banks by the Dutch Central Bank, De Nederlandsche Bank N.V. (the “DNB”), based on an allocation key related to their market shares with respect to the deposits protected by the Dutch Deposit Guarantee Schemes. Given our size we may incur significant compensation payments to be made under the Dutch Deposit Guarantee Scheme, which we may be unable to recover from the bankrupt estate. The ultimate costs to the industry of payments which may become due under the Compensation Schemes, remains uncertain although they may be significant and these and the associated costs to us may have a material adverse effect on our results of operations and financial condition. As a result of the recent failure of DSB Bank N.V. in the Netherlands, we expect to take a provision which may be significant, as a result of liabilities under the Dutch Deposit Guarantee Scheme in the fourth quarter of 2009.

 

We may be unable to manage our risks successfully through derivatives.

 

We employ various economic hedging strategies with the objective of mitigating the market risks that are inherent in our business and operations. These risks include currency fluctuations, changes in the fair value of our investments, the impact of interest rate, equity markets and credit spread changes and changes in mortality and longevity. We seek to control these risks by, among other things, entering into a number of derivative instruments, such as swaps, options, futures and forward contracts including from time to time macro hedges for parts of our business.

 

Developing an effective strategy for dealing with these risks is complex, and no strategy can completely insulate us from risks associated with those fluctuations. Our hedging strategies also rely on assumptions and projections regarding our assets, general market factors and the credit worthiness of our counterparties that may prove to be incorrect or prove to be inadequate. Accordingly, our hedging activities may not have the desired beneficial impact on our results of operations or financial condition. Poorly designed strategies or improperly executed transactions could actually increase our risks and losses. If we terminate a hedging arrangement, we may also be required to pay additional costs, such as transaction fees or breakage costs. There have been periods in the past, and it is likely that there will be periods in the future, during which we have incurred or may incur losses on transactions, perhaps significant, after taking into account our hedging strategies. Further, the nature and timing of our hedging transactions could actually increase our risk and losses. In addition, hedging strategies involve transaction costs and other costs. Our hedging strategies and the derivatives that we use and may use may not adequately mitigate or offset the risk of interest rate volatility, and our hedging transactions may result in losses.

Because we use assumptions about factors to determine the insurance provisions, deferred acquisition costs (“DAC”) and value of business added (“VOBA”), the use of different assumptions about these factors may have an adverse impact on our results of operations.

 

The establishment of insurance provisions, including the impact of minimum guarantees which are contained within certain variable annuity products, the adequacy test performed on the provisions for life policies and the establishment of DAC and VOBA are inherently uncertain processes involving assumptions about factors such as court decisions, changes in laws, social, economic and demographic trends, inflation, investment returns, policyholder behavior (e.g., lapses, persistency, etc.) and other factors, and, in the life insurance business, assumptions concerning mortality, longevity and morbidity trends.

 

The use of different assumptions about these factors could have a material effect on insurance provisions and underwriting expense. Changes in assumptions may lead to changes in the insurance provisions over time. Furthermore, some of these assumptions can be volatile.

 

Because we use assumptions to model client behavior for the purpose of our market risk calculations, the difference between the realization and the assumptions may have an adverse impact on the risk figures and future results.

 

We use assumptions in order to model client behavior for the risk calculations in our banking and insurance books. Assumptions are used to determine insurance liabilities, the price sensitivity of savings and current accounts and to estimate the embedded optional risk in the mortgage and investment portfolios. The realization or use of different assumptions to determine the client behavior could have material adverse effect on the calculated risk figures and ultimately future results.

 

Our risk management policies and guidelines may prove inadequate for the risks we face.

 

The methods we use to manage, estimate and measure risk are partly based on historic market behavior. The methods may, therefore, prove to be inadequate for predicting future risk exposure, which may be significantly greater than what is suggested by historic experience. For instance, these methods did not predict the losses seen in the stressed conditions in recent periods, and may also not adequately allow prediction of circumstances arising due to the government interventions and stimulus packages, which increase the difficulty of evaluating risks. Other methods for risk management are based on evaluation of information regarding markets, customers or other information that is publicly known or otherwise available to us. Such information may not always be correct, updated or correctly evaluated.

 

We may incur further liabilities in respect of our defined benefit retirement plans if the value of plan assets is not sufficient to cover potential obligations.

 

ING Group companies operate various defined benefit retirement plans covering a significant number of our employees. The liability recognized 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, less the fair value of each plan’s assets, together with adjustments for unrecognized actuarial gains and losses and unrecognized past service costs. We determine our defined benefit plan obligations based on internal and external actuarial models and calculations using the projected unit credit method. Inherent in these actuarial models are assumptions including discount rates, rates of increase in future salary and benefit levels, mortality rates, trend rates in health care costs, consumer price index, and the expected return on plan assets. These assumptions are based on available market data and the historical performance of plan assets, and are updated annually. Nevertheless, the actuarial assumptions may differ significantly from actual results due to changes in market conditions, economic and mortality trends and other assumptions. Any changes in these assumptions could have a significant impact on our present and future liabilities to and costs associated with our defined benefit retirement plans.

 

We are subject to a variety of regulatory risks as a result of our operations in less developed markets.

 

In the less developed markets in which we operate, judiciary and dispute resolution systems may be less developed. As a result in case of a breach of contract we may have difficulties in making and enforcing claims against

contractual counterparties and, if claims are made against us, we might encounter difficulties in mounting a defense against such allegations. If we become party to legal proceedings in a market with an insufficiently developed judiciary system, it could have an adverse effect on our operations and net result.

 

In addition, as a result of our operations in less developed markets, we are subject to risks of possible nationalization, expropriation, price controls, exchange controls and other restrictive government actions, as well as the outbreak of hostilities, in these markets. In addition, the current economic environment in certain of the less developed countries in which we operate may increase the likelihood for regulatory initiatives to protect homeowners from foreclosures. Any such regulatory initiative could have an adverse impact on our ability to protect our economic interest in the event of defaults on residential mortgages.

 

Because we are a financial services company and we are continually developing new financial products, we might be faced with claims that could have an adverse effect on our operations and net result if clients’ expectations are not met.

 

When new financial products are brought to the market, communication and marketing aims to present a balanced view of the product (however there is a focus on potential advantages for the customers). Whilst we engage in a due diligence process when we develop products, if the products do not generate the expected profit, or result in a loss, or otherwise do not meet expectations, customers may file claims against us. Such claims could have an adverse effect on our operations and net result.

 

Ratings are important to our business for a number of reasons. Among these are the issuance of debt, the sale of certain products and the risk weighting of bank and insurance assets. Downgrades could have an adverse impact on our operations and net results.

 

We have credit ratings from Standard & Poor’s Ratings Service (“Standard & Poor’s”), a division of the McGraw Hill Companies, Moody’s Investor Service (“Moody’s”) and Fitch Ratings. Each of the rating agencies reviews its ratings and rating methodologies on a recurring basis and may decide on a downgrade at any time. In the event of a downgrade the cost of issuing debt will increase, having an adverse effect on net results. Certain institutional investors may also be obliged to withdraw their deposits from ING following a downgrade, which could have an adverse effect on our liquidity. In addition, in the event of certain downgrades the Underwriters may be able to withdraw from the Underwriting Agreement (as defined below) entered into in connection with the Offering. See “Underwriting” and “Risks Related to the Offering — If the Offering does not take place, our credit ratings and funding costs could be adversely affected, and the price of ING shares could drop sharply. In either case, the Rights could become worthless.” Following the announcement of the Restructuring Plan, several of our subsidiaries have been downgraded or put on credit watch by rating agencies.

 

Claims paying ability, at the Group or subsidiary level, and financial strength ratings are factors in establishing the competitive position of insurers. A rating downgrade could elevate lapses or surrenders of policies requiring cash payments, which might force us to sell assets at a price that may result in realized investment losses. Among others, total invested assets decreases and deferred acquisition costs might need to be accelerated, adversely impacting earnings. A downgrade may adversely impact relationships with distributors of our products and services and customers, which may affect new sales and our competitive position.

 

Furthermore, ING Bank’s assets are risk weighted. Downgrades of these assets could result in a higher risk weighting which may result in higher capital requirements. This may impact net earnings and the return on capital, and may have an adverse impact on our competitive position.

 

Capital requirements for ING’s insurance businesses in a number of jurisdictions, such as the US and the EU, are based on a risk-based capital model. A downgrade of assets in these markets could result in a higher risk weighting which may lead to higher capital requirements.

 

Our business may be negatively affected by a sustained increase in inflation.

 

A sustained increase in the inflation rate in our principal markets would have multiple impacts on us and may negatively affect our business, solvency position and results of operations. For example, a sustained increase in the

inflation rate may result in an increase in market interest rates which may (1) decrease the value of certain fixed income securities we hold in our investment portfolios resulting in reduced levels of unrealized capital gains available to us which could negatively impact our solvency position and net income, (2) result in increased surrenders of certain life & savings products, particularly, those with fixed rates below market rates, and (3) require us, as an issuer of securities, to pay higher interest rates on debt securities we issue in the financial markets from time to time to finance our operations which would increase our interest expenses and reduce our results of operations. A significant and sustained increase in inflation has historically also been associated 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 unrealized capital gains available to us which would reduce our net income and negatively impact our solvency position, (2) negatively impact performance, future sales and surrenders of our unit-linked products where underlying investments are often allocated to equity funds, and (3) negatively impact the ability of our asset management subsidiaries to retain and attract assets under management, as well as the value of assets they do manage, which may negatively impact their results of operations. In addition, in the context of certain property & casualty risks underwritten by our insurance subsidiaries (particularly “long-tail” risks), a sustained increase in inflation with a resulting increase in market interest rates may result in (1) claims inflation (i.e., an increase in the amount ultimately paid to settle claims several years after the policy coverage period or event giving rise to the claim), coupled with (2) an underestimation of corresponding claims reserves at the time of establishment due to a failure to fully anticipate increased inflation and its effect on the amounts ultimately payable to policyholders, and, consequently, (3) actual claims payments significantly exceeding associated insurance reserves which would negatively impact our results of operations. In addition, a failure to accurately anticipate higher inflation and factor it into our product pricing assumptions may result in a systemic mispricing of our products resulting in underwriting losses which would negatively impact our results of operations.

 

Operational risks are inherent in our business.

 

Our businesses depend on the ability to process a large number of transactions efficiently and accurately. Losses can result from inadequate personnel, IT failures, inadequate or failed internal control processes and systems, regulatory breaches, human errors, employee misconduct including fraud, or from external events that interrupt normal business operations. We depend on the secure processing, storage and transmission of confidential and other information in our computer systems and networks. The equipment and software used in our computer systems and networks may be at or near the end of their useful lives or may not be capable of processing, storing or transmitting information as expected. Certain of our computer systems and networks may also have insufficient recovery capabilities in the event of a malfunction or loss of data. In addition, such systems and networks may be vulnerable to unauthorized access, computer viruses or other malicious code and other external attacks or internal breaches that could have a security impact and jeopardize our confidential information or that of our clients or our counterparts. These events can potentially result in financial loss, harm to our reputation and hinder our operational effectiveness. We also face the risk that the design of our controls and procedures prove to be inadequate or are circumvented. We have suffered losses from operational risk in the past and there can be no assurance that we will not suffer material losses from operational risk in the future. Furthermore, while recent widespread outbreaks of communicable diseases, such as the outbreak of the H1N1 influenza virus, also known as “swine flu,” experienced world-wide in 2009, have not adversely affected us thus far, a worsening of this outbreak, or the occurrence of another outbreak of a different communicable disease, may impact the health of our employees, increasing absenteeism, or may cause a significant increase in the utilization of health benefits offered to our employees, either or both of which could adversely impact our business.

 

Reinsurance may not be available, affordable or adequate to protect us against losses. We may also decide to reduce, eliminate or decline primary insurance or reinsurance coverage.

 

As part of our overall risk and capacity management strategy we purchase reinsurance for certain risks underwritten by our various insurance business segments. Market conditions beyond our control determine the availability and cost of the reinsurance protection we purchase. Accordingly, we may be forced to incur additional expenses for reinsurance or may not be able to obtain sufficient reinsurance on acceptable terms, which could adversely affect our ability to write future business.

In addition, we determine the appropriate level of primary insurance and reinsurance coverage based on a number of factors and from time to time decide to reduce, eliminate or decline coverage based on our assessment of the costs and benefits involved. In such cases, the uninsured risk remains with us.

 

Our business may be negatively affected by adverse publicity, regulatory actions or litigation with respect to us, other well-known companies or the financial services industry in general.

 

Adverse publicity and damage to our reputation arising from our failure or perceived failure to comply with legal and regulatory requirements, financial reporting irregularities involving other large and well known companies, increasing regulatory and law enforcement scrutiny of “know your customer” anti-money laundering, prohibited transactions with countries subject to sanctions, and bribery or other anti-corruption measures and anti-terrorist-financing procedures and their effectiveness, regulatory investigations of the mutual fund, banking and insurance industries, and litigation that arises from the failure or perceived failure by us to comply with legal, regulatory and compliance requirements, could result in adverse publicity and reputation harm, lead to increased regulatory supervision, affect our ability to attract and retain customers, maintain access to the capital markets, result in cease and desist orders, suits, enforcement actions, fines and civil and criminal penalties, other disciplinary action or have other material adverse effects on us in ways that are not predictable.

 

Because we are a Dutch company and because the Stichting ING Aandelen holds more than 99.9% of our ordinary shares, the rights of our shareholders may differ from the rights of shareholders in other jurisdictions or companies that do not use a similar trust structure, which could affect your rights as a shareholder.

 

While holders of our bearer depositary receipts are entitled to attend and speak at our General Meeting of Shareholders (“General Meeting”), voting rights are not attached to the bearer depositary receipts. The Trust holds more than 99.9% of our ordinary shares, and exercises the voting rights attached to the ordinary shares (for which bearer depositary receipts have been issued). Holders of bearer depositary receipts who attend — in person or by proxy — the General Meeting must obtain voting rights by proxy from the Trust. Holders of bearer depositary receipts and holders of the ADSs (American depositary shares) representing the bearer depositary receipts who do not attend the General Meeting may give binding voting instructions to the Trust. The Trust is entitled to vote on any ordinary shares underlying the bearer depositary receipts for which the Trust has not granted voting proxies, or voting instructions have not been given to the Trust. In exercising its voting discretion, the Trust is required to make use of the voting rights attached to the ordinary shares in the interest of the holders of bearer depositary receipts, while taking into account:

 

 

so as to ensure that all the interests are given as much consideration and protection as possible. The Trust may, but has no obligation to, consult with the holders of bearer depositary receipts in exercising its voting rights in respect of any ordinary shares for which it is entitled to vote. These arrangements differ from practices in other jurisdictions, and accordingly may affect the rights of the holders of bearer depositary receipts and their power to affect ING’s business and operations.

 

The share price of ING shares has been, and may continue to be, volatile which may impact the value of ING shares you hold.

 

The share price of our bearer depositary receipts has been volatile in the past, in particular over the past year. During and after the Offering, the share price and trading volume of our bearer depositary receipts may continue to be subject to significant fluctuations due, in part, to changes in our actual or forecast operating results and the inability to fulfill the profit expectations of securities analysts, as well as to the high volatility in the securities markets

generally and more particularly in shares of financial institutions. Other factors, besides our financial results, that may impact our share price include, but are not limited to:

 

 

We did not pay a final dividend in 2008 or an interim dividend in 2009. There can be no assurance that we will pay dividends on our ordinary shares in the future.

 

Although we had declared and paid dividends each year since our formation in 1991, we did not pay a final dividend for 2008 or an interim dividend for 2009. This year, we decided not to pay an interim dividend on ordinary shares and have announced that it is difficult to foresee whether we will be in a position to pay a final dividend for 2009. The declaration of interim dividends is subject to the discretion of the Executive Board, whose decision to that effect is subject to the approval of the Supervisory Board of the Company. Moreover, the declaration and payment of dividends and the amount thereof is dependent upon our results of operations, financial condition, cash requirements, future prospects and other factors deemed relevant by the Executive Board, which makes a recommendation to the General Meeting regarding payment of dividends after allocation of our result to reserves and payment of dividends on cumulative preference shares. If we pay a dividend on our ordinary shares we will be required to pay a coupon on our Core Tier-1 Securities, including, in respect of any dividend over 2009, any Core Tier-1 Securities that we may repurchase with the proceeds of the Offering, at a multiple of the dividend paid per share. There can be no assurance that we will declare and pay any dividends in the future.

 

Our ability to use beneficial US tax attributes may become subject to limitations.

 

Our US subsidiaries currently have net operating losses, net capital losses, and built-in losses that may on a carryforward-basis be used to offset future US taxable income. The use of these tax attributes could be limited, however, if our US subsidiaries were to undergo an “ownership change” and Sections 382 and 383 of the US Internal Revenue Code were to apply. In general, Sections 382 and 383 limit the use of loss carryforwards of a corporation that undergoes an “ownership change” and there would be an ownership change of our US subsidiaries if there were an increase in the aggregate ownership of certain shareholders by more than 50 percentage points over a three-year period (for which purpose the Core Tier-1 Securities may be treated as stock).

 

We believe that the issuance of the Core Tier-1 Securities to the Dutch State on November 12, 2008 did not result in an ownership change and that it is more likely than not that an ownership change will not result from the Rights Offering, the Global Offering, and the concurrent repurchase of Core Tier-1 Securities held by the Dutch State. However, the determination of whether an ownership change occurs is complex and subject to uncertainties, and we could in the future take additional actions that could result in an ownership change. An ownership change could have an adverse effect on our US subsidiaries’ future US tax liabilities and could have a material adverse effect on our financial condition and results of operations. The exact impact on our financial condition and results of operations would not be ascertainable until an ownership change actually occurs. Using the best, currently available estimates and interpretations, the estimated range of the potential adverse impact on equity is between EUR 0.66 billion to EUR 1.44 billion.

Risks related to the Offering

 

A shareholder’s failure to validly exercise his or her ADS Rights by the end of the ADS Rights Exercise Period or Tradable Rights by the end of Tradable Rights Exercise Period, as applicable, will result in such Rights being no longer exercisable, and any shareholder failing to exercise all of his or her Rights, however held, will suffer dilution of his or her percentage ownership of ING shares.

 

If a shareholder does not validly exercise his or her ADS Rights by the end of the ADS Rights Exercise Period, or does not validly exercise his or her Tradable Rights (including any Tradable Rights received upon exchange of ADS Rights) by the end of the Tradable Rights Exercise Period, as applicable, such Rights, including rights in excess of the nearest integral multiple of the subscription ratio, will no longer be exercisable.

 

To the extent that any holder of ING shares does not validly exercise his or her Rights, however held, to subscribe for the New ADSs or New BDRs, as applicable, his or her proportionate ownership in the Company will be reduced, and the percentage of the Company’s share capital represented by the shares such holder of ING shares held prior to the Offering will, after the Offering, also be reduced accordingly.

 

If none of the existing holders of ING shares who were granted Rights exercise those Rights, the existing shareholders’ ownership will be diluted by approximately 46.2% as a result of Rump Shares sold in the context of the Global Offering. Even if you elect to sell your Rights, or if you decide to hold your Rights through the end of the ADS Rights Exercise Period or Tradable Rights Exercise Period, as applicable, entitling you to receive any Excess Amount (to the extent any Tradable Rights underlying the ADS Rights have not been sold by the ADS Rights Agent after the end of the ADS Rights Exercise Period), the consideration you receive, if any, may not be sufficient to fully compensate you for the dilution of your percentage ownership of ING shares that may be caused as a result of the Offering.

 

Holders of ING shares may experience immediate and substantial dilution in the value of the New Shares or New ADSs in the event of future capital raisings.

 

We are raising capital through the Offering and may raise capital in the future through public or private debt or equity financings by issuing additional ordinary shares or other classes of shares, debt or equity securities convertible into ordinary shares, or rights to acquire these securities. If we raise a significant amount of capital by these or other means, it could dilute the percentage ownership of shareholders. Moreover, the issuance and sale of the New Shares and New ADSs could have a material adverse effect on the trading price of the ING shares and could increase the volatility in the market price of the ING shares.

 

The Core Tier-1 Securities issued to the Dutch State may be converted into ordinary shares or bearer depositary receipts and dilute existing shareholders.

 

In November 2008, we issued EUR 10 billion Core Tier-1 Securities to the Dutch State. We intend to fund the repurchase of EUR 5 billion of these securities with a portion of the proceeds of the Offering. See “Reasons for the Offering and Use of Proceeds — Use of Proceeds”. The terms of the Core Tier-1 Securities permit us, on or after November 12, 2011, to convert any or all of the Core Tier-1 Securities into ordinary shares or bearer depositary receipts on a one-for-one basis. Any such conversion would dilute existing shareholders. If we exercise our conversion right, the Dutch State may opt to require us to redeem the Core Tier-1 Securities on the conversion date.

 

If the Offering does not take place, our credit ratings and funding costs could be adversely affected, and the price of ING shares could drop sharply. In either case, the Rights could become worthless.

 

The Offering is underwritten by the Underwriters based on an Underwriting Agreement from which the Underwriters can withdraw under certain circumstances. See “The Offering — Withdrawal of the Offering” and “Underwriting”. If the Underwriting Agreement is terminated, the Offering will be cancelled. We will not receive the net proceeds expected to be generated by the Offering and we would expect to be unable to take advantage of the opportunity to repurchase the EUR 5 billion issue amount of Core Tier-1 Securities on the terms recently agreed with the Dutch State. Even if the Offering does not take place, we would still need to comply with the terms of the Restructuring Plan and we would incur the EUR 1.3 billion pre tax charge in the fourth quarter of

2009 described under “Reasons for the Offering and Use of Proceeds”. We may also be required by the EC to defer coupon payments on hybrid Tier-1 securities, which would limit our access to this type of capital. The impact on our credit rating and on our funding costs of any failure to receive the net proceeds of this Offering is uncertain, but would most likely be negative. Any of these developments would likely have an adverse effect on our results of operations and financial condition and on the price of the ING shares.

 

In addition, if the Offering is cancelled, the Rights will expire without compensation and become worthless. Any subscription payments received by us will be returned without interest. Investors who have acquired any Rights on the secondary market will then bear a corresponding loss, because trading in Rights cannot be reversed if the Offering is terminated.

 

None of the Company, the Subscription Agent, the Listing Agent, the ADS Rights Agent, and the Paying Agent, the Joint Global Coordinators and Joint Bookrunners or the Underwriters accept any responsibility or liability to any person as a result of the withdrawal of the Offering or (the related) annulment of any transactions in Rights. Neither Euronext Amsterdam nor Euronext Brussels accepts any responsibility or liability to any person as a result of the withdrawal of the Offering or (the related) annulment of any transactions in Rights on Euronext Amsterdam or Euronext Brussels.

 

Moreover, the value of the Rights materially depends on the price of ING shares. A considerable drop in the price of ING shares can therefore adversely affect the value of the Rights and render them worthless. In such an event, investors who have acquired any Rights in the secondary market will bear a corresponding loss.

 

There is no certainty that trading in the Tradable Rights will develop, and the Tradable Rights may be subject to more intense price fluctuations than ING shares.

 

We intend the Tradable Rights to be traded on Euronext Amsterdam and Euronext Brussels during the period from November 30, 2009 (inclusive) until 1:15 p.m. (Amsterdam time) on December 15, 2009 (inclusive). There is no plan to apply for admission of the Tradable Rights to trading on any other stock exchange, including the NYSE. In addition, there is no plan to apply for admission of the ADS Rights to trading on the NYSE or any other stock exchange. It cannot be guaranteed that active trading in the Tradable Rights will develop on either Euronext Amsterdam or Euronext Brussels during this period or that significant liquidity will be available during the period of trading in Tradable Rights. The stock exchange price of the Tradable Rights depends on a variety of factors, including the performance of our share price, but may also be subject to more intense price fluctuations than ING shares. The ADS Rights will not be transferable and will not be admitted to trading on the NYSE or any other exchange. See “— The ADS Rights will not be admitted to trading on any exchange and will not be transferable”.

 

The ADS Rights will not be admitted to trading on any exchange and will not be transferable.

 

The ADS Rights will not be admitted to trading on the NYSE or any other exchange and will not be transferable. Unless you surrender your ADS Rights for delivery of underlying Tradable Rights or instruct the ADS Rights Agent to sell Tradable Rights underlying your ADS Rights for you, you will be unable to sell your ADS Rights. We cannot assure you that the ADS Right Agent will have adequate time to arrange purchasers for ADS Rights.

 

We cannot assure you that the listing and admission to trading of the New ADSs on the NYSE, or the issuance of the New ADSs, will occur when ING expects.

 

Until the New ADSs are admitted to trading on the NYSE, you will not be issued any New ADSs for which you subscribed. See “The Offering” for further information on the expected dates of these events. We cannot assure you that the listing and admission to trading of the ordinary shares underlying the New ADSs will take place when anticipated.

 

We cannot assure you that the listing of the New BDRs on Euronext Amsterdam or Euronext Brussels, or the issuance of the New BDRs, will occur when ING expects.

 

Until the New BDRs are admitted to trading on Euronext Amsterdam and Euronext Brussels, you will not be issued any New BDRs for which you subscribed. See “The Offering” for further information on the expected dates of these

events. We cannot assure you that the listing and admission to trading of the ordinary shares underlying the New BDRs will take place when anticipated.

 

The exercise of ADS Rights is subject to exchange rate risk.

 

If the US dollar weakens against the Euro, holders of Existing ADSs subscribing for New ADSs will be required to pay more than the estimated ADS Subscription Price of US$6.42 per New ADS.

 

The estimated ADS Subscription Price is US$6.42 per New ADS subscribed. The estimated ADS Subscription Price is the US dollar equivalent of the BDR Subscription Price, using an exchange rate of US dollar 1.5134 per EUR (as published by Bloomberg at close of business (New York time) on November 25, 2009). A subscriber of the New ADSs must deposit US$7.06 per New ADS subscribed, which represents 110% of the estimated ADS Subscription Price, upon exercise of each ADS Right. The purpose of this additional amount over and above the estimated ADS Subscription Price is to increase the likelihood that the ADS Rights Agent will have sufficient funds to pay the final ADS Subscription Price in the event of a possible appreciation of the Euro against the US dollar between the date hereof and the end of the ADS Rights Exercise Period, and currency conversion expenses. If the actual US dollar price (which will be the ADS Rights Agent’s cost of the BDR Subscription Price in US dollars on or about December 15, 2009, is less than the ADS deposit amount, the ADS Rights Agent will refund such excess US dollar ADS Subscription Price to the subscribing ADS Rights holder without interest. However, if there is a deficiency as a result of such conversion, the ADS Rights Agent will not deliver the New ADSs to such subscribing ADS Rights holder until it has received payment of the deficiency. The ADS Rights Agent may sell a portion of your New ADSs to cover the deficiency if not paid by a specified date.

 

Certain holders of ING shares may not be able to participate in future equity offerings with subscription rights.

 

We may undertake future equity offerings with subscription rights. Holders of ING shares in certain jurisdictions, however, may not be entitled to exercise such rights unless the rights and the related shares are registered or qualified for sale under the relevant legislation or regulatory framework. Holders of ING shares in these jurisdictions may suffer dilution of their shareholding should they not be permitted to participate in future equity offerings with subscription rights.

 

It may be difficult for investors outside the Netherlands to serve process on or enforce foreign judgments against us in connection with the Offering.

 

We are incorporated in the Netherlands. As a result it may be difficult for investors outside the Netherlands to serve process on or enforce foreign judgments against us in connection with the Offering.

 

We file annual reports on Form 20-F with, and furnish other reports and information on Form 6-K to, the Securities and Exchange Commission, or the SEC. You may also read and copy any document we file or furnish at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the public reference rooms. Our filings with the SEC are also available through the SEC’s Internet site at http://www.sec.gov and through the New York Stock Exchange, Inc., 11 Wall Street, New York, New York 10005, on which our ADSs are listed.

 

We have filed a registration statement on Form F-3 under the Securities Act of 1933, as amended, with the SEC covering the securities. For further information on the securities of ING Groep N.V., you should review our registration statement and its exhibits. This prospectus supplement and accompanying prospectus is a part of the registration statement and summarizes material provisions of the contracts and other documents to which we refer you. Since this prospectus supplement and accompanying prospectus may not contain all the information that you may find important, you should review the full text of these documents. We have included copies of these documents as exhibits to our registration statement.

 

The SEC allows us to “incorporate by reference” the information we file with them, which means:

 

 

We incorporate by reference the following documents or information which we filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):

 

 

You may request, orally or in writing, a copy of any filings referred to above, excluding exhibits, other than those specifically incorporated by reference into the documents you request, at no cost, by contacting us at the following address: ING Groep N.V., Attention: Investor Relations, Amstelveenseweg 500, 1081 KL Amsterdam, P.O. Box 810, 1000 AV Amsterdam, The Netherlands, telephone: 011-31-20-541-54-11.

 

Certain of the statements contained in this prospectus supplement and in information we may incorporate by reference as described under “Available Information” that are not historical facts, including, without limitation, certain statements made in the sections hereof entitled “Recent Developments — Business,” are statements of future expectations and other forward-looking statements that are based on management’s current views and assumptions and involve known and unknown risks and uncertainties that could cause actual results, performance or events to differ materially from those expressed or implied in such statements. Actual results, performance or events may differ materially from those in such statements due to, without limitation,

 

 

ING is under no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or for any other reason. See “Risk Factors”.

 

The following table shows the actual capitalization of the ING Group as at September 30, 2009 and its capitalization as of September 30, 2009 as adjusted for the receipt and use of the net proceeds of the Offering, as described under “Reasons for the Offering and Use of Proceeds — Use of Proceeds”.

 

The information in the following table is derived from the unaudited consolidated financial statements of ING Groep N.V. as of September 30, 2009 prepared in accordance with IFRS-EU and included in this prospectus supplement. This table should be read together with such unaudited consolidated interim financial information and the notes thereto. The adjusted figures in the table below have been prepared for illustrative purposes only assuming that the Rights Offering is fully subscribed at the BDR Subscription Price, and do not necessarily give a true picture of the Group’s financial condition following the Offering.

 

 

 

 

History and Overview

 

ING Groep N.V. was incorporated as a Naamloze Vennootschap (public limited liability company) under the laws of the Netherlands on January 21, 1991 to effect the merger between Nationale-Nederlanden, which was the largest insurer in the Netherlands, and NMB Postbank Group, which was one of the largest banks in the Netherlands, by way of a public offering for the shares of the latter companies. This public offering was successfully completed on March 4, 1991. ING operates under several commercial names, including “ING Groep N.V.”, “ING Groep”, “ING Group” and “ING”. ING has its statutory and its head office in Amsterdam, the Netherlands. ING Groep N.V. is registered as number 33231073 in the Company Registry and our Articles of Association are available there. ING operates under Dutch law.

 

Our profile

 

ING is a global financial institution of Dutch origin offering banking, investments, life insurance and retirement services. As of September 30, 2009, we served more than 85 million private, corporate and institutional customers in Europe, North and Latin America, Asia and Australia. We draw on our experience and expertise, our commitment to excellent service and our global scale to meet the needs of a broad customer base, comprising individuals, families, small businesses, large corporations, institutions and governments. On October 26, 2009, ING announced the Restructuring Plan. For more information about the Restructuring Plan see “— Recent Developments — Insurance and other Divestments, EC Agreement”.

 

Following the completion of the Restructuring Plan, ING Bank will be a mid-sized European retail and commercial bank, anchored in the Benelux with strong ING Direct and Central Europe franchises, and will pursue attractive growth prospects outside Europe.

 

Our stakeholders

 

ING conducts business on the basis of clearly defined business principles. In all our activities, we carefully weigh the interests of our various stakeholders: customers, employees, communities and shareholders. ING strives to be a good corporate citizen.

 

Our corporate responsibility

 

ING wants to pursue profit on the basis of sound business ethics and respect for its stakeholders. Corporate responsibility is therefore a fundamental part of ING’s strategy: ethical, social and environmental factors play an integral role in our business decisions.

 

Recent Developments

 

Insurance and other Divestments, EC Agreement

 

On October 26, 2009, ING announced that it plans to divest all of its insurance operations, including its investment management business by the end of 2013. This represents the next step in the Back to Basics program announced in April 2009, under which ING had already begun the process of restructuring its banking and insurance businesses (together with the investment management business) so that they are operated separately under the ING umbrella. The envisaged divestment forms part of ING’s Restructuring Plan which was approved by the EC on November 18, 2009. Negotiations with the EC on the Restructuring Plan acted as a catalyst to accelerate the strategic decision to completely separate ING’s banking and insurance operations. Under the Restructuring Plan, ING has also agreed to divest ING Direct US, which operates the Group’s direct banking business in the United States, by the end of 2013, and to divest certain portions of its Dutch retail banking business. ING will consider a range of options to carry out these divestments including through initial public offerings, sales, spin-offs or combinations thereof.

ING prepared the proposed Restructuring Plan in connection with the EC’s review under its state aid rules of the Dutch State’s purchase of the Core Tier-1 Securities in November 2008 and creation of the Illiquid Assets Back-Up Facility in the first quarter of 2009. As a result of these transactions, ING was required to submit a restructuring plan to the EC. For more information about ING’s transactions with the Dutch State, see “— Transactions with the Dutch State”. The Restructuring Plan was developed in close cooperation with the EC as one of the conditions for the EC granting definitive authorization for the Dutch State’s purchase of the Core Tier-1 Securities and creation of the Illiquid Assets Back-Up Facility.

 

Until the completion of the divestments, ING intends to continue to manage its insurance and investment management businesses as though it will be the long-term owner, investing in growth opportunities when they are attractive and can be supported by the capital and management of the business. Similarly, ING intends to continue its efforts to grow the US direct banking business until its divestment. The divestment is expected to take several years and is not anticipated before the end of 2013. ING also remains committed to the ING Direct franchise, which ING expects to be an important contributor to ING’s growth going forward.

 

The divestment of certain of ING’s Dutch retail banking business will be achieved through the formation of a new company to include the existing consumer lending portfolio of the Dutch retail banking business and ING’s Interadvies banking division, including the Westland Utrecht banking business and the mortgage operations of Nationale-Nederlanden. The newly formed company is expected to have total assets of EUR 37 billion, including approximately 200,000 mortgage contracts, 320,000 consumer lending accounts, 500,000 savings accounts and 76,000 securities contracts. ING expects the new business to have a mortgage portfolio of approximately EUR 33 billion, which would amount to an approximately 6% share of the Dutch retail mortgage market and approximately 25% of ING’s Dutch retail mortgage business. This newly formed company is expected to either be sold to a buyer that is acceptable to the EC and ING or floated on the stock market.

 

In order to obtain the approval of the EC for the Restructuring Plan, ING also committed to making a series of additional payments to the Dutch State, corresponding to adjustments to the net fees payable under the Illiquid Assets Back-Up Facility. These additional payments will amount to a net present value of EUR 1.3 billion, which will be reflected in a one-off pre-tax charge in the fourth quarter of 2009. For more information about these additional payments, see “— Agreement on Additional Payments to the Dutch State, Corresponding to Adjustments to the Illiquid Assets Back-Up Facility”.

 

In addition, under the Restructuring Plan, ING has agreed to certain limitations on price leadership and to refrain from acquisitions of financial institutions and of businesses that would delay its repurchase of the Core Tier-1 Securities held by the Dutch State. These restrictions apply until the earlier of: (1) November 18, 2012 and (2) the date upon which ING has fully repaid the Core Tier-1 Securities held by the Dutch State (including the relevant accrued interest and exit premium fees). The price leadership limitation requires ING to refrain from offering more favorable prices on standardized ING products than its three best-priced direct competitors with respect to EU-markets in which ING has a market share of more than 5%. This condition is limited to ING’s standardized products on the following product markets: (1) retail savings market, (2) retail mortgage market, (3) private banking insofar as it involves mortgage products or savings products, and (4) deposits for SMEs. Moreover, ING Direct is required to refrain from price-leadership with respect to standardized ING products on the retail mortgage and retail savings markets within the EU. The EC has agreed not to require ING to defer coupon payments on its outstanding hybrid securities as a condition to its approval of the Dutch State Transactions if ING completes a rights offering with proceeds sufficient to repurchase EUR 5 billion issue amount of Core Tier-1 Securities (including the relevant accrued interest and exit premium fee). Furthermore, in connection with the Restructuring Plan, ING agreed to propose the calling of Tier-2 capital and Tier-1 hybrid debt instruments in the future on a case by case basis subject in each case to a request for EC authorization, for the period the restrictions described above apply.

 

In order to implement the Restructuring Plan, ING expects to negotiate agreements between the retained banking businesses and the banking and insurance businesses scheduled for divestment to allocate costs for core Group corporate functions and other services and infrastructure, as well as agreements to separate the retained and divested businesses’ components of collective bargaining agreements, pension plans and other employee benefit plans.

 

The implementation of the Restructuring Plan will require various approvals from insurance and bank regulators and ING’s works councils in the coming months and years. The strategic decision to split and divest all insurance

and investment management operations was approved by the extraordinary General Meeting on November 25, 2009. Further approval of shareholders will be sought if so required under Dutch law or our Articles of Association.

 

Composition of ING upon Completion of the Restructuring Plan

 

On completion of the Restructuring Plan, the banking businesses remaining following the divestments described above will result in ING becoming a mid-sized European bank, based in the Netherlands and Belgium, predominantly focused on the European retail market, particularly the Netherlands, Belgium, Luxembourg, Germany and Central and Eastern Europe, as well as selected other areas, in particular in Asia where ING believes strong growth opportunities are available. ING currently expects the business to consist of: (1) Benelux Retail & Commercial Banking, (2) Central and Eastern Europe Retail & Commercial Banking, (2) Direct Banking (outside the US), (3) Financial Markets, (4) European Specialized Finance and (5) selected positions in Asian markets.

 

ING is considering merging the Group and the top-level bank into a bank holding company, pending approval from the DNB, with any remaining insurance operations becoming subsidiaries of the bank holding company. Following the creation of a bank holding company, ING would no longer be able to benefit from double leverage in the calculation of its capital ratios, and the shareholders’ equity of the Group would form the capital base for the new bank. In addition, upon a merger into a bank holding company, ING expects to become subject to capital regulations requiring it to deduct the capital of any remaining insurance subsidiaries in full from the new bank’s regulatory capital. Subject to modifications to remain in line with similarly placed companies in the banking industry, ING aims to maintain a Core Tier-1 capital ratio of approximately 7.5%. Measures to implement the Restructuring Plan, including steps that ING has taken as part of the Back to Basics program, are expected to result — without taking any other effects into account — in a reduction by 2013 of approximately EUR 600 billion in total assets from the 1,376 billion in total assets at September 30, 2008, or approximately 45% of the Group’s total assets at 30 September 2008. ING expects to achieve this reduction in the balance sheet primarily through the divestments described above. Including estimated organic growth of the retained businesses, ING estimates that its total assets at the end of 2013 will be approximately 30% smaller than at September 30, 2008. ING expects to use any proceeds from the divestment of the insurance operations to reduce or eliminate the net debt issued at the Group level that is injected as capital and thereby creates equity in ING Verzekeringen N.V. and ING Bank N.V. (“Core Debt”), and to the extent of any remaining proceeds repurchase from the Dutch State the Core Tier-1 Securities that remain after the partial repurchase described below under “— Repurchase of a Portion of the Core Tier-1 Securities Held by the Dutch State” and following the repurchase, to use any remaining proceeds to finance growth or to return to shareholders. As of September 30, 2009, the new strategic direction under the Back to Basics program has resulted in the completed divestment of ING Canada, which released EUR 1.2 billion in capital, a 16% decrease in assets of ING Bank compared with September 30, 2008, a reduction of ING Bank asset leverages ratio from 43.9 as of September 30, 2008 to 28.7 as of September 30, 2009, a EUR 1.0 billion reduction of costs as of and for the first nine months of 2009 (calculated on a consistent basis with the first nine months of 2008) and the elimination of 10,239 full-time equivalent positions during the first nine months of 2009.

 

Repurchase of a Portion of the Core Tier-1 Securities Held by the Dutch State

 

ING announced on October 26, 2009 that it reached an agreement with the Dutch State to alter the repayment terms of the Core Tier-1 Securities issued in November 2008, in order to facilitate early repayment. This early repayment option is valid until the end of January 2010. ING intends to fund the repurchase of the EUR 5 billion in issue amount of the Core Tier-1 Securities in December 2009 with the proceeds of the Offering. For a description of the terms of the Core Tier-1 Securities, see “— Transactions with the Dutch State”.

 

The original terms of the Core Tier-1 Securities allowed ING to repurchase some or all of the one billion Core Tier-1 Securities at any time at a price of EUR 15 per Core Tier-1 Security plus accrued interest to the date of repurchase or convert the Core Tier-1 Securities into ING shares on a one-to-one basis in 2011. ING and the Dutch State have agreed, however, that up to EUR 5 billion of the EUR 10 billion Core Tier-1 Securities may be repurchased at any time until January 31, 2010 at the original issue price of EUR 10 per Core Tier-1 Security, plus a repurchase

premium and accrued interest. The repurchase premium will be at least EUR 346 million and will increase if the average of the daily volume-weighted average price of ING’s ordinary shares on the Bloomberg page INGA NA Equity VWAP over the five trading days preceding the repurchase date is more than EUR 11.20 per ordinary share. A maximum amount of EUR 705 million, corresponding to a share price of EUR 12.45 or higher, will be payable as a repurchase premium. The repurchase premium for one-half of the Core Tier-1 Securities will therefore range from approximately 6.5% to approximately 13% of the original issue price on an annualized basis, compared to the 50% premium built into the original repurchase price. Accrued interest at a rate of 8.5% to the December 2009 repurchase date is estimated to be approximately EUR 260 million. Under these terms, the Dutch State is expected to receive a 15% to 21.5% annualized return on its investment in the repurchased Core Tier-1 Securities. In addition, if ING pays in 2010 a dividend on its ordinary shares in respect of the 2009 financial year, then ING will be required to pay to the Dutch State any difference between the 8.5% interest paid upon repurchase and 110% of the dividend paid on 500 million ordinary shares. The Dutch State has indicated that, if ING repurchases the first EUR 5 billion in issue amount of the Core Tier-1 Securities before January 31, 2009, it is open to discussing modification of the repayment terms for the remaining EUR 5 billion in issue amount of the Core Tier-1 Securities. Any modification to the repayment terms would need to comply with EC State aid rules.

 

ING intends to use the proceeds from the Offering primarily to fund the repurchase of the EUR 5 billion in issue amount of the Core Tier-1 Securities in December 2009, plus accrued interest and any premium due at time of payment. ING anticipates that it will finance the repurchase of the remaining Core Tier-1 Securities from internal resources, including retained earnings and supplemented by potential proceeds from the divestment of the insurance operations described above. The other terms of the Core Tier-1 Securities, including restrictions on remuneration and corporate governance, will remain unchanged. See “—Transactions with the Dutch State”.

 

Agreement on Additional Payments to the Dutch State, Corresponding to Adjustments to the Illiquid Assets Back-Up Facility

 

The Illiquid Assets Back-Up Facility transferred to the Dutch State the economic risks and rewards of 80% of the approximately EUR 30 billion par value Alt-A RMBS portfolios of ING Direct US and Insurance Americas. Under the Illiquid Assets Back-Up Facility, the Dutch State agreed to pay to ING a funding fee and a management fee, while ING agreed to pay to the Dutch State a guarantee fee. For more information about the Illiquid Assets Back-Up Facility, see “—Transactions with the Dutch State”.

 

In order to obtain approval of the EC for the Restructuring Plan, ING committed to make a series of additional payments to the Dutch State, corresponding to adjustments to the net fees payable under the Illiquid Assets Back-Up Facility. ING will make additional annual payments to the Dutch State reflecting an increase of 82.6 basis points of the annual guarantee fee paid by ING to the Dutch State. ING will also make additional monthly payments to the Dutch State reflecting a reduction of 50 basis points in the monthly funding fee paid by the Dutch State to ING. These additional payments will amount to a net present value of EUR 1.3 billion, which will be reflected in a one-time pre-tax charge in the fourth quarter of 2009. The additional payments will be borne by ING entities other than the Group’s US subsidiaries. The other terms of the Illiquid Assets Back-Up Facility, including restrictions on remuneration and corporate governance, will remain unchanged. See “—Transactions with the Dutch State”.

 

Changes to the Management Boards

 

In connection with ING’s announcement that it plans to separate its banking and insurance operations while integrating its banking operations into one bank, on October 26, 2009 ING announced a number of changes to its Management Boards. These changes are subject to approval by the DNB and, if approved, will take effect on January 1, 2010.

 

The changes within the Management Board for Banking are as follows: Eric Boyer de la Giroday, who is currently the Chief Executive Officer of Commercial Banking, will also serve as Vice-Chairman of the Management Board for Banking, with responsibility for the day-to-day management of the banking business. As part of ING’s strategy to combine its retail and direct banking operations, Eli Leenaars, who is currently a member of the Management Board for Banking in his capacity as Chief Executive Officer of Retail and Private Banking, will continue to serve on the Management Board for Banking in the newly created position of Chief Executive Officer of Retail Banking

Direct and International. Hans van der Noordaa, who is currently Chief Executive Officer of Insurance Europe and Asia/Pacific and a member of the Management Board for Insurance, will step down from the Management Board for Insurance and join the Management Board for Banking in the newly created position of Chief Executive Officer of Retail Banking Benelux. Dick Harryvan will retire as Chief Executive Officer of ING Direct and as a member of the Management Board for Banking.

 

The changes within the Management Board for Insurance are as follows: Tom McInerney, who is currently the Chairman and Chief Executive Officer of Insurance Americas and a member of the Management Board for Insurance, will serve as Chief Operating Officer of Insurance, with responsibility for the day-to-day operation of the insurance and investment management businesses. Matt Rider, who is currently Chief Financial Officer for ING’s global insurance operations, will join the Management Board for Insurance as Chief Administrative Officer. Jacques de Vaucleroy retired as Chief Executive Officer of Investment Management and as a member of the Management Board for Insurance with effect from October 26, 2009; however he will remain as an advisor to the Management Board for Insurance until January 1, 2010.

 

Transactions with the Dutch State

 

In October 2008, the Dutch State announced measures to protect the financial sector. ING benefited from such measures as described below.

 

On November 12, 2008, ING Group issued one billion Core Tier-1 Securities to the Dutch State against payment of EUR 10 per Core Tier-1 Security, resulting in an increase of ING Group’s core tier-1 capital of EUR 10 billion. The Core Tier-1 Securities do not form part of ING Group’s share capital; accordingly they do not carry voting rights in the General Meeting. A coupon on the Core Tier-1 Securities is payable at the higher of: (1) EUR 0.85 per security, payable annually in arrears (a first coupon of EUR 0.425 per security paid on May 12, 2009); and (2) 110% of the dividend paid on each ordinary share over 2009 (payable in 2010); 120% of the dividend paid on each ordinary share over 2010 (payable in 2011); and (3) 125% of the dividend paid on each ordinary share over 2011 onwards (payable from 2012 onwards). Since ING had already paid an interim dividend of EUR 0.74 in August 2008, ING recognized a dividend payable of EUR 425 million to the Dutch State as of December 31, 2008. This dividend was paid out on May 12, 2009. ING Group has the right to repurchase all or some of the Core Tier-1 Securities at EUR 15 per security at any time together with the pro-rata coupon, if due, accrued to such date. ING and the Dutch State have agreed, however, that up to EUR 5 billion of the EUR 10 billion Core Tier-1 Securities may be repurchased at any time until January 31, 2010 at the original issue price of EUR 10 per Core Tier-1 Security, plus a repurchase premium and accrued interest. See “Business — Recent Developments — Repurchase of a Portion of the Core Tier-1 Securities Held by the Dutch State”. The Dutch State also has the right to convert all or some of the Core Tier-1 Securities into ordinary shares on a one-for-one basis from three years after the issue date onwards, subject to certain conditions. The financial entitlements of the Core Tier-1 Securities are described in more detail under “Information Relating to ING Shares and Applicable Legal Provisions — Capital Structure, Shares — Core Tier-1 Securities” below. In addition, in connection with the issue of the Core Tier-1 Securities, it was agreed between ING Group and the Dutch State that the Dutch State could recommend candidates for appointment to the Supervisory Board in such a way that upon appointment of all recommended candidates by the General Meeting, the Supervisory Board would have two State nominees among its members. The State nominees have approval rights in respect of certain matters.

 

In addition, ING Group and the Dutch State reached an agreement on the Illiquid Assets Back-Up Facility on January 26, 2009. The transaction closed on March 31, 2009. The Illiquid Assets Back-Up Facility covers the Alt-A RMBS portfolios of both ING Direct US and Insurance Americas, with a par value of approximately EUR 30 billion. Under the Illiquid Assets Back-Up Facility, ING transferred 80% of the economic ownership of its Alt-A portfolio to the Dutch State. As a result, an undivided 80% interest in the risk and rewards on the portfolio was transferred to the Dutch State. ING retained 100% of the legal ownership of its Alt-A portfolio. The transaction price was 90% of the par value with respect to the 80% proportion of the portfolio of which the Dutch State has become the economic owner. The transaction price remains payable by the Dutch State to ING and will be redeemed over the remaining life. Furthermore, under the Illiquid Assets Back-Up Facility, ING pays a guarantee fee to the State and receives a funding fee and a management fee. As a result of the transaction, ING derecognized 80% of the Alt-A portfolio from its balance sheet and recognized a receivable from the Dutch State. In connection with entering into the Illiquid

Assets Back-Up Facility, ING committed, among other things, to support the growth of the Dutch lending business for an amount of EUR 25 billion on market conforming conditions. The Dutch State also acquired certain consent rights with respect to the sale or transfer of the 20% proportion of the Alt-A RMBS portfolio that is retained by ING.

 

The overall sales proceeds from the Illiquid Assets Back-Up Facility amounted to EUR 22.4 billion. The amortized cost (after prior impairments) at the date of the transaction was also approximately EUR 22.4 billion. The transaction (the difference between the sales proceeds and amortized cost) resulted in a loss of EUR 109 million after tax. The fair value under IFRS-EU at the date of the transaction was EUR 15.2 billion. The difference between the sales proceeds and the fair value under IFRS-EU is an integral part of the transaction and therefore accounted for as part of the result on the transaction. The transaction resulted in a reduction of the negative revaluation — and therefore an increase of equity — by approximately EUR 5 billion (after tax).

 

The valuation method of the 20% Alt-A securities in the balance sheet is not impacted by the Illiquid Asset Back-Up Facility. The methodology used to determine the fair value for these assets in the balance sheet under IFRS-EU is disclosed in the Financial Statements.

 

In order to obtain the approval of the EC for the Restructuring Plan, ING committed to make a series of additional payments to the Dutch State, corresponding to adjustments to the net fees payable under the Illiquid Assets Back-Up Facility. For a description of these additional payments, see “—Recent Developments — Business — Recent Developments — Agreement on Additional Payments to the Dutch State, Corresponding to Adjustments to the Illiquid Assets Back-Up Facility”.

 

As part of the measures adopted to protect the financial sector, the Dutch State implemented a EUR 200 billion guarantee scheme for the issuance of medium term bank debt (the “Credit Guarantee Scheme”). The program is scheduled to run through December 31, 2009. The Credit Guarantee Scheme targets (1) certificates of deposit or commercial paper which carry (i) no interest (zero coupon), or (ii) interest at a fixed interest rate; and (2) medium term notes which by their terms are expressed to be redeemed in one single payment (bullet) and which carry (i) no interest (zero coupon), or (ii) interest at a fixed interest rate or a floating interest rate, with maturities ranging from three to 60 months. Fees depend on creditworthiness of the banks involved and are based on historical credit default swap spreads (or an approximation if necessary), with an addition of 50 basis points. Maturities of less than a year will have a fixed fee of 50 basis points. The Credit Guarantee Scheme includes loans denominated in euros, US Dollars and British Pounds, covers both principal and interest and is executed by the Dutch State Treasury Agency.

 

On January 30, 2009, ING Bank N.V. announced that it had issued under the Credit Guarantee Scheme three-year USD 6 billion government guaranteed senior unsecured bonds. In February 2009, it issued a 5 year EUR 4 billion fixed rate government-guaranteed senior unsecured bond, and in March 2009 it issued a 5 year USD 2 billion government guaranteed senior unsecured bond (the “Government Guaranteed Bonds” or the “Bonds”).

 

Recent Acquisitions, Disposals and Combinations

 

In October 2008, ING announced that it had reached agreement to sell its entire Taiwanese life insurance business, ING Life Taiwan, to Fubon Financial Holding Co. Ltd. for approximately EUR 447 million. At December 31, 2008 ING Life Taiwan qualified as a disposal group held for sale. The sale was completed on February 13, 2009. Consequently ING Life Taiwan was deconsolidated in the first quarter 2009. ING was paid in a fixed number of shares with the difference between the fair value of those shares at the closing date and sale prices being paid in subordinated debt securities of the acquirer. The shares have a lock-up period of one year. ING Life Taiwan is included in the segment Insurance Asia/Pacific. This transaction resulted in a loss of EUR 292 million. The loss was recognized in 2008 in “Net gains/losses on disposal of group companies” in the profit and loss account.

 

On February 19, 2009, ING Group announced that it completed the sale of its 70% stake in ING Canada, the largest provider of property and casualty insurance products and services in Canada, via a private placement and a concurrent “bought deal” public offering for net proceeds of approximately EUR 1,265 million (CAD 2,163 million). ING no longer owns an interest in ING Canada. This transaction resulted in a decrease in total assets of EUR 5,471 million and a decrease of total liabilities of EUR 3,983 million.

On July 1, 2009, ING announced that the separate organizations of Nationale-Nederlanden, RVS and ING Verzekeren Retail (formerly Postbank Verzekeren) will be combined into one customer-oriented organization under the Nationale-Nederlanden brand, which will be reinforced. The decision is in line with the “Back to Basics” strategy to simplify the organization, reduce costs and improve customer focus. The new insurance organization will have dedicated business units for retail customers, small and medium-sized enterprises (“SMEs”) and corporate clients. ING expects the program to lead to a reduction of the workforce by approximately 800 positions over the coming three years. ING expects this reduction to be mainly realized through natural attrition, internal reallocation and by discontinuing temporary contracts. The workforce measures will be made in accordance with applicable regulations and will be discussed with the unions and respective works councils. See “— Group Strategy” below.

 

ING announced on September 25, 2009 that it had reached an agreement to sell its life insurance and wealth management venture in Australia and New Zealand to ANZ, its joint venture partner. Under the terms of the agreement, ING has agreed to sell its 51% equity stakes in ING Australia and ING New Zealand to ANZ, who now will become the sole owner of these businesses. ING will receive EUR 1.1 billion in cash from ANZ. The transaction is expected to generate a net profit for ING of EUR 300 million. The cash proceeds and the estimated net profit are expected to improve the debt/equity ratio of ING Insurance by 345 basis points. The transaction is expected to free up EUR 900 million of capital. ING remains active in Australia with ING Direct, ING Investment Management, Commercial Banking and ING Real Estate, which are not impacted by this transaction. The deal is subject to regulatory approvals and is expected to be booked and closed in the fourth quarter of 2009.

 

ING announced on October 7, 2009 that it had reached an agreement to sell its Swiss Private Banking business to Julius Baer Group Ltd. for a consideration of CHF 520 million (EUR 344 million) in cash. The transaction is expected to generate an estimated net profit for ING of EUR 150 million and is expected to free up EUR 200 million of capital. The agreement of ING and Julius Baer is subject to regulatory approval and is expected to close in the first quarter of 2010.

 

On October 15, 2009, ING announced that it had reached an agreement to sell its Asian Private Banking business to Overseas-Chinese Banking Corporation Limited (“OCBC Bank”) for a consideration of USD 1,463 million (approximately EUR 1 billion) in cash. The transaction is expected to generate an estimated net profit for ING of approximately EUR 300 million and is expected to free up approximately EUR 370 million of capital. Completion of the transaction between ING and OCBC Bank is subject to a number of regulatory approvals and is expected to occur around year end 2009.

 

ING announced on October 16, 2009 that it had reached an agreement to transfer its US group reinsurance business, ING Reinsurance U.S., to Reinsurance Group of America, Inc. (“RGA”). The transaction is structured as a reinsurance agreement between RGA and ING The transaction is expected to release nearly EUR 100 million in capital and improve the debt/equity ratio of ING Insurance by around 60 basis points. After the agreement, ING will continue to retain a reinsurance portfolio in the US that has been in run-off since 2002. The transaction is subject to regulatory approvals and is expected to close in the first quarter of 2010.

 

On November 3, 2009, ING announced that it had reached an agreement to sell three of its US independent retail broker-dealer units, which comprise three-quarters of ING Advisors Network, to Lightyear Capital LLC. Under this agreement, ING will divest Financial Network Investment Corporation, based in El Segundo, California, Multi-Financial Securities Corporation, based in Denver, Colorado, PrimeVest Financial Services, Inc., based in St. Cloud, Minnesota, and ING Brokers Network LLC, the holding company and back-office shared services supporting those broker dealers, which collectively do business as ING Advisors Network. The transaction is subject to regulatory approvals and is expected to close in the first quarter of 2010.

 

On November 10, 2009, ING announced that it had closed the sale of its non-core Annuity and Mortgage businesses in Chile to Corp Group Vida Chile, S.A. In 2008, the Annuity and Mortgage businesses in Chile had generated combined pre-tax earnings of approximately EUR 35 million.

Group Strategy

 

Our long term goal is to be a leading European bank with strong financial performance, superior customer satisfaction, leading operating efficiency and a strong capital position. We will seek to achieve these ambitions over time, as we pursue implementation of the Restructuring Plan, including the separation of our banking and insurance operations (including investment management) and the divestment of the insurance operations by way of initial public offerings, sales or other means (e.g., spin-off). See “— Recent Developments — Insurance and other Divestments, EC Agreement” for a description of our Restructuring Plan and related matters arising out of the EC’s decisions of November 18, 2009 with respect thereto. Over the next several years, we intend to operate our insurance businesses in a way to enhance their financial performance to create an optimal base for either independent futures or divestitures. Following the divestiture of the insurance operations and completion of the other elements of the Restructuring Plan, we have targeted a return on equity of 13-15% and a long-term credit rating target of AA (or equivalent), in each case assuming a core Tier 1 target ratio of approximately 7.5%, as discussed below.

 

There are four major components of our strategy to reach our long-term goals:

 

 

We refer to this strategy as “Ambition 2013”. This strategy represents a further development of our Back to Basics transformation program announced in April 2009, in light of the EU state aid and restructuring issues discussed above under “— Recent Developments — Insurance and other Divestments, EC Agreement”. The core elements of our Back to Basics program are:

 

 

We believe that we have made good progress towards achieving the targets set in the first phase of our Back to Basics program:

 

 

 

The following describes the four major components of our Ambition 2013 strategy:

 

Standalone Bank Strategy

 

Following the restructuring, ING Bank will be a European retail and commercial bank, anchored in the Benelux with strong ING Direct and Central Europe franchises, and management believes, attractive growth prospects outside Europe. We will seek to deliver superior performance through operational and commercial excellence, building on our market positions.

 

Our Ambition 2013 includes a financial goal for ING Bank to achieve annualized revenue growth through 2013 of approximately 5% and to realize a target return on equity of 13-15% by 2013, assuming markets have normalized over such period, and that required capital ratios applicable to ING Bank remain consistent with current requirements. We believe this goal is achievable taking into account related income from an estimated annual balance sheet growth of 5% and improved margins expected on savings and current accounts and increased cross selling. We assume risk cost levels will return to an annualized over-the-cycle level of 40 to 45 basis points of our credit risk-weighted assets. We believe additional cost-saving potentials beyond those identified in connection with our Back to Basics program should allow us to reduce our cost/income ratio to a 50% level, after taking into account the costs of additional investments and organic cost increases to support business growth.

 

The implementation of our Ambition 2013 program will vary by region and product line, and includes the following broad elements:

 

 

Divestitures from ING Bank

 

We have announced that we will divest certain banking activities as part of our Restructuring Plan agreed with the EC:

 

 

Earnings Enhancement Plan for Insurance

 

We are committed to improving the financial performance of our various insurance businesses, in order to support the divestiture strategy. These improvements take into account our presence in a favorable combination of mature and growth markets, customer and market trends, and our belief that we have significant capacity to capture synergies and best practices across our businesses. In each of our geographic markets and product lines, we are examining further cost-savings and product rationalization measures, including the integration of brands and a new focus on specific clients and markets; emphasising the core businesses and exiting unprofitable markets or product lines; and optimizing the various distribution channels available to us. Our cost measures will include the streamlining and standardization of processes and systems, procurement savings and increasing the effectiveness and efficiency of our IT systems.

 

Strategy by Region

 

Our strategy for improving the financial performance of our insurance businesses will be implemented on a regional basis, taking into account the particular strengths and opportunities we see in each of our markets.

 

 

Cost Leadership in Insurance

 

Our core processes and systems will be streamlined and standardized across business units where possible. Lean process redesign and implementation will be executed in full and our procurement capabilities will be strengthened to capture cost savings. Moreover, we plan to increase the effectiveness and efficiency of our IT systems and we intend to build management skills and capabilities to manage closed-book business.

 

Separation Plan for the Insurance Assets of the Group

 

The Group has a number of attractive insurance franchises. We are the leading insurance group in the Benelux region, have a top three position in retirement services in the US based on assets under management and a strong investment management arm. We also have highly attractive businesses in the growth markets of Central Europe, Latin America and Asia. In Central Europe, ING is the market leader in the combined life and pensions market and we are the second largest provider of retirement services in Latin America. In Asia, we are the third largest international life insurer.

We plan to divest our insurance operations by 2013. Given our strong market positions, management feels confident in its ability to sell these businesses at attractive valuations. We have not determined final plans regarding the structure of these divestitures, and will consider a range of options, including initial public offerings of the business in whole or in part, divestitures of the business in whole or in part, spin-offs or combinations of these strategies. Considerations which we will take into account include: valuation levels attainable, timing, clarity of execution, and tax impacts. In light of our 2013 target for divestiture, we will also review changes in market conditions in both public and private markets over the implementation period. We remain highly focused on ensuring high quality operational and financial performance in our insurance businesses over the remaining period of our ownership, and will accordingly focus strongly on employee retention and customer satisfaction going forward.

 

Financial Plan to Eliminate Double Leverage and Repay Outstanding Core Tier-1 Securities

 

We plan to operate our banking business with a strong capital base. Accordingly, we plan to use the proceeds from the divestitures of our insurance businesses to repay various borrowings and the remaining outstanding Core Tier-1 Securities held by the Dutch State. We would plan to reduce the double leverage at the holding company. We also intend to repay the Core Tier-1 Securities held by the Dutch State which will remain outstanding at EUR 5 billion after the initial repayment contemplated through the use of proceeds, if any, from the Offering. See “Reasons for the Offering and Use of Proceeds — Use of Proceeds”. ING management believes that the combination of the proceeds of the various insurance divestitures and retained earnings over the coming years will more than cover amounts to be repaid between now and 2013. We would also anticipate returning to shareholders any excess capital generated during such period and going forward, subject to our capital needs including for growth of the business and dividend policies at the time.

 

Corporate Organization

 

ING Groep N.V. has a Supervisory Board and an Executive Board. The Executive Board is responsible for the day-to-day management of the Group and its business lines (Insurance Europe, Insurance Americas, Insurance Asia/Pacific, Commercial Banking, Retail Banking and ING Direct), each of which is discussed further below.

 

Further to ING’s “Back to Basics” strategy announced in April 2009, pursuant to which ING announced its intention to operate its banking and insurance operations separately under one Group umbrella, ING Bank and ING Insurance now each have their own Management Boards consisting of the Group CEO, CFO and CRO and positions for three other members. For more information about the Supervisory, Executive and Management Boards, see “Item 6. Directors, Senior Management and Employees” of our Annual Report on Form 20-F for the fiscal year ended December 31, 2008 filed on March 19, 2009 and “Directors, Senior Management and Employees” below. ING announced on October 26, 2009 certain changes to its Management Boards. See also “— Recent Developments — Changes to the Management Boards”.

 

On October 26, 2009, ING announced the Restructuring Plan pursuant to which it intends to divest significant portions of its business. See “— Recent Developments — Insurance and other Divestments, EC Agreement”.

 

In October 2008, the Dutch State purchased EUR 10 billion Core Tier-1 Securities of ING as part of its measures to protect the Dutch financial sector during the global financial crisis. See “Recent Developments — Business — Transactions with the Dutch State”. The original terms of the one billion Core Tier-1 Securities allowed ING to repurchase some or all of the Core Tier-1 Securities at any time at a price of EUR 15 per Core Tier-1 Security plus accrued interest to the date of repurchase. In connection with the Restructuring Plan, ING and the Dutch State have agreed that up to EUR 5 billion of the EUR 10 billion Core Tier-1 Securities may be repurchased at any time until January 31, 2010 at the original issue price of EUR 10 per Core Tier-1 Security, plus a repurchase premium ranging from EUR 346 million to EUR 705 million and accrued interest. ING plans to use the proceeds from the Offering primarily to fund the repurchase of the EUR 5 billion in issue amount of the Core Tier-1 Securities. For more information about the proposed repurchase of the Core Tier-1 Securities, see “Recent Developments — Business — Recent Developments — Repurchase of a Portion of the Core Tier-1 Securities Held by the Dutch State”.

 

On March 31, 2009, ING Groep N.V. and the Dutch State completed the Illiquid Assets Back-Up Facility covering the Alt-A Residential Mortgage-Backed securities portfolios of both ING Direct US and Insurance Americas with a par value of approximately EUR 30 billion. Under the Illiquid Assets Back-Up Facility, ING transferred 80% of the economic ownership of its Alt-A portfolio to the Dutch State. In order to obtain the approval of the EC for the Restructuring Plan, ING committed to make a series of additional payments to the Dutch State, corresponding to adjustments to the net fees payable under the Illiquid Assets Back-Up Facility. These additional payments will amount to a net present value of EUR 1.3 billion, which will be reflected in a one-off pre-tax charge in the fourth quarter of 2009. For more information about these additional payments, see “Recent Developments — Business — Recent Developments — Agreement on Additional Payments to the Dutch State, Corresponding to Adjustments to the Illiquid Assets Back-Up Facility”. For more information about the Restructuring Plan, see “Recent Developments — Business — Recent Developments — Insurance and other Divestments, EC Agreement”. ING plans to use the remaining proceeds from the Offering to strengthen its capital position, including by offsetting the EUR 1.3 billion charge.

 

Use of Proceeds

 

ING intends to use the proceeds of the Offering primarily to fund the repurchase of EUR 5 billion in issue amount of the Core Tier-1 Securities held by the Dutch State plus accrued interest and the repurchase premium. The repurchase premium payable in respect of the repurchased Core Tier-1 Securities will range from EUR 346 million to EUR 705 million, based on the market price of the ING shares at the time of the repurchase. Accrued interest at a rate of 8.5% on the repurchased Core Tier-1 Securities is estimated to be approximately EUR 260 million (assuming a repayment on the Closing Date). Accordingly, the amount necessary to repurchase the EUR 5 billion issue amount is expected to be between EUR 5,605 million and EUR 5,963 million. See “Recent Developments — Business — Recent Developments — Repurchase of a Portion of the Core Tier-1 Securities Held by the Dutch State”.

 

ING intends to use the remaining proceeds of the Offering to strengthen its capital position, including to offset the EUR 1.3 billion one-off pre-tax charge that will be taken in the fourth quarter of 2009 as a result of the additional payments to the Dutch State in the form of fee adjustments to the Illiquid Assets Back-Up Facility as described under “Recent Developments — Business — Recent Developments — Transactions with the Dutch State”, and to allocate the remaining proceeds partially to coupon payments due in December 2009 on its outstanding hybrid securities, as required by the EC in order not to be required to defer coupons on hybrid securities.

 

General

 

The Offering relates to a total of 1,768,412,544 New Ordinary Shares and an equal number of New BDRs, which may be represented by New ADSs, and consists of the Rights Offering and the Global Offering. The Rights Offering will be made by way of (1) public offerings in the Netherlands, Belgium, Luxembourg, Germany, France, Spain, Switzerland and the United Kingdom, in reliance on Regulation S under the Securities Act, (2) private placements to certain institutional investors outside the United States in reliance on Regulation S under the Securities Act and in accordance with applicable securities laws and (3) a public offering in the United States under the Securities Act. The Global Offering will be made by way of (1) private placements to certain institutional investors outside the United States in reliance on Regulation S under the Securities Act and in accordance with applicable securities laws and (2) a public offering in the United States under the Securities Act. In the Rights Offering, the Tradable Rights will be allocated by the Company to holders of Existing Shares (other than the Trust), with one Tradable Right being allocated per Existing Share held at the BDR Record Date, and the ADS Rights will be granted to holders of Existing ADSs, with one ADS Right being allocated per Existing ADS held of record at the ADS Record Date. The total amount of the Offering will be approximately EUR 7.5 billion. The exercise of 7 ADS Rights entitles the exercising holder to subscribe for 6 New ADSs against payment of the ADS Subscription Price of US$6.42 (subject to adjustment) per New ADS. The exercise of 7 Tradable Rights entitles the exercising holder to subscribe for 6 New BDRs against payment of the BDR Subscription Price of EUR 4.24 per New BDR. New BDRs for which Tradable Rights (including any Tradable Rights received by holders of ADS Rights upon exchange of their ADS Rights) have not been validly exercised during the Tradable Rights Exercise Period (i.e., the Rump Shares) may be sold by the Joint Global Coordinators and Joint Bookrunners, acting on behalf of the Underwriters, in their sole discretion in the Global Offering and/or in open market transactions.

 

The Offering of the New Shares and New ADSs is based on an underwriting agreement between the Company and the Underwriters dated as of October 25, 2009, which was supplemented by a pricing agreement dated November 26, 2009 (together, the “Underwriting Agreement”).

 

ADS Rights

 

Timetable

 

We may adjust the dates, times and periods set out in the timetable and throughout this prospectus supplement. If we should decide to adjust the dates, times and/or periods, we will notify, among other entities, the ADS Rights Agent, and issue a press release accordingly.

 

The below relates to the offering of ADS Rights to acquire New ADSs. For information relating to Tradable Rights, see “— Tradable Rights”.

 

Subject to acceleration or extension of the timetable for the Offering, the timetable for the offer of ADS Rights is envisaged as follows:

 

 

 

 

The last date and/or time before which notification of exercise instructions may be validly given by you may be earlier than the date and/or time specified above as the end of the ADS Rights Exercise Period, depending on the financial intermediary through which your ADS Rights are held.

 

New ADSs

 

The New ADSs are American depositary shares representing certain of the New BDRs representing New Ordinary Shares, which are ordinary shares of ING Groep N.V. with a par value of EUR 0.24 each. The New ADSs will be evidenced by American depositary receipts issued by the Depositary. The New Ordinary Shares will be fully fungible and rank pari passu in all respects with the other Existing Ordinary Shares.

 

The New Ordinary Shares (to be issued in the Offering) will represent approximately 46.2% of the total issued share capital of the Company immediately after completion of the Offering.

 

The ADS Rights are to be issued under the terms of a supplemental agreement relating to the ADS Rights between us and JPMorgan Chase Bank, N.A., which is acting as ADS Rights Agent. JPMorgan Chase Bank, N.A., is also Depositary for the ADSs. We have filed a copy of the supplemental agreement as an exhibit to the registration statement of which this prospectus supplement forms a part.

 

ADS Subscription Price

 

The final ADS Subscription Price per New ADS will be the ADS Rights Agent’s cost of the BDR Subscription Price of EUR 4.24 in US dollars on or about December 15, 2009. On November 26, 2009, the closing price of the ING shares was EUR 8.92 per share on Euronext Amsterdam, and EUR 8.92 per share on Euronext Brussels, and on November 25, 2009, the closing price of the Existing ADSs was US$12.28 per ADS on the NYSE. The ADS Rights Agent will need to convert all or part of the ADS Subscription Price received into Euro in order to pay the BDR Subscription Price to the Company on the Closing Date, which is expected to be on or about December 21, 2009.

 

In order to increase the likelihood that the ADS Rights Agent will have sufficient funds to pay the final ADS Subscription Price in light of a possible appreciation of the Euro against the US dollar between the date hereof and the end of the ADS Rights Exercise Period, and to pay any currency conversion expenses, holders of Existing ADSs will be required to deposit the preliminary US dollar equivalent of the BDR Subscription Price, plus a margin of 10%, with any excess to be refunded following final calculation of the US dollar equivalent of the BDR Subscription Price. The preliminary ADS Subscription Price is the US dollar equivalent of the BDR Subscription Price, using an

exchange rate of US dollar 1.5134 per EUR (as published by Bloomberg at close of business (New York time) on November 25, 2009). A subscriber of the New ADSs must deposit the preliminary ADS Subscription Price, plus US$0.64, which represents 10% of the estimated ADS subscription price per new ADS subscribed upon the exercise of each ADS Right. The preliminary ADS Subscription Price plus such additional amount are together referred to as the ADS deposit amount.

 

The actual ADS Subscription Price per New ADS will be the ADS Rights Agent’s cost of the BDR Subscription Price of EUR 4.24 in US dollars on or about December 15, 2009. If the actual US dollar price (equal to the Euro BDR Subscription Price converted into US dollars on or about December 15, 2009) plus any currency conversion expenses, governmental charges or taxes and the issuance fee of US$0.05 per New ADS issued is less than the ADS deposit amount, the ADS Rights Agent will refund such excess to the subscribing ADS Rights holder without interest. However, if the actual US dollar price plus any currency conversion expenses, governmental charges or taxes and the issuance fee of US$0.05 per New ADS issued, exceeds the ADS deposit amount, the ADS Rights Agent will not deliver the New ADSs to such subscribing ADS Rights holder until it has received payment of the deficiency from the subscriber. The ADS Rights Agent may sell a portion of the New ADSs that is sufficient to pay any shortfall that is not paid by January 8, 2010. In that event, the ADS Rights Agent will then send promptly any remaining New ADSs to such holder together with a check in the amount of excess proceeds, if any, from such sale provided.

 

Allocation of ADS Rights

 

On November 30, 2009, before commencement of trading of the Existing ADS on the NYSE, holders of record of Existing ADS will be granted one ADS Right per Existing ADS held as of the ADS Record Date (i.e., November 27, 2009 after close of business in New York). 7 ADS Rights will grant the holder thereof the right to subscribe for 6 New ADSs at the estimated ADS Subscription Price of US$6.42 per New ADS.

 

For Existing ADSs held in the DTC system through custody accounts with custodian banks or brokers, every Existing ADS will be allocated one non-transferable ADS Right on the first day of the ADS Rights Exercise Period before start of trading. Allocation and notification to holders of Existing ADSs will be made by DTC through the respective custodian bank or broker.

 

Trading of ADS Rights

 

The ADS Rights are not transferable and will not be admitted to trading on the NYSE or any other exchange. From November 30, 2009, the Existing ADSs will be traded on the NYSE “ex subscription right”.

 

Exercise of ADS Rights

 

In accordance with the subscription rights ratio of 7:6, the exercise of 7 ADS Rights entitles the exercising holder to subscribe for 6 New ADSs against payment of the ADS Subscription Price.

 

In order to avoid being excluded from being exercised, ADS Rights must be validly exercised vis-à-vis the Company during the ADS Rights Exercise Period that will run from November 30, 2009 to 5:00 p.m. (New York time) on December 11, 2009.

 

The exercise of ADS Rights is irrevocable and may not be withdrawn, cancelled or modified.

 

Each eligible registered holder of Existing ADSs will be sent a subscription form showing its ADS Rights entitlement and instructions relating to the exercise of these ADS Rights, instructions relating to the cancellation of the ADS Rights, the sale by the ADS Rights Agent at the request of such holder of the Tradable Rights underlying such ADS Rights, and the exchange of the ADS Rights for delivery of underlying Tradable Rights. Each eligible beneficial owner of ADSs held within DTC will receive a book-entry credit of ADS Rights in its DTC participant account and instructions relating to the exercise of the ADS Rights, instructions relating to the sale by the Depositary of ADS Rights at the request of such holder, and the exchange of the ADS Rights for delivery of underlying Tradable Rights.

ADS Rights may only be exercised in multiples of 7. The instructions for exercising ADS Rights are as follows:

 

 

 

The ADS Rights Agent must receive the ADS subscription form and payment of the ADS deposit amount on or before the end of the ADS Rights Exercise Period. Deposit in the mail will not constitute delivery to the ADS Rights Agent. ING has discretion to refuse to accept any improperly completed or unexecuted ADS subscription form.

 

You will elect the method of delivering the ADS subscription form and paying the ADS deposit amount to the ADS Rights Agent and you will bear any risk associated with it. If you send the ADS subscription form and payment by mail, you should use registered mail, properly insured, with return receipt requested, and allow sufficient time to ensure delivery to the ADS Rights Agent.

 

Subscriptions and full payment must be received by the ADS Rights Agent prior to 5:00 p.m. (New York City time) on December 11, 2009.

 

ING Bank N.V. is acting as principal subscription agent.

 

JPMorgan Chase Bank, N.A., is acting as the ADS Rights Agent and Depositary.

 

ING Bank N.V. reserves the right to treat as invalid any acceptance or purported exercise of ADS Rights or acceptance of the offer of New ADSs which appears to ING Bank N.V. or its agents to have been executed, effected or dispatched in a manner which may involve a breach of the securities laws or regulations of any jurisdiction or if ING Bank N.V. or its agents believe that the same may violate applicable legal or regulatory requirements.

On completion of the Rights Offering, we will announce the results of the Rights Offering and the commencement of the Global Offering, if any, by means of a press release. Such announcement is currently intended to take place on December 16, 2009. After the Global Offering has ended, and the placement of Rump Shares, if any, has taken place, we will announce the results of the Global Offering by means of a press release, including the aggregate number of Rump Shares validly subscribed and paid for, and any Excess Amount to be distributed. Such announcement is currently intended to take place on December 16, 2009.

 

Partial Exercise of ADS Rights

 

Subject to the requirements for the exercise of ADS Rights contained herein, if a registered holder of ADS Rights wishes to exercise only a portion of its total ADS Rights, such holder will need to so indicate on the ADS subscription form; and if a beneficial owner of ADS Rights wishes to exercise only a portion of its total ADS Rights, such holder will need to instruct the financial intermediary through which it holds its ADS Rights to debit the ADS Rights from the applicable book-entry account and deliver the ADS Rights to the ADS Rights Agent, and further instruct the ADS Rights Agent to subscribe only for the number of ADS Rights that it wishes to exercise.

 

Exchange of ADS Rights for Tradable Rights

 

If an ADS Rights holder wishes to surrender any ADS Rights and receive the underlying Tradable Rights, such holder must instruct the ADS Rights Agent to cancel its ADS Rights before 5:00 p.m. (New York City time) on December 11, 2009. After accounting for the ADS Rights Agent’s fees of up to $0.05 per ADS Right in respect of which such instruction was given, expenses, and any applicable taxes, the ADS Rights Agent will deliver the underlying Tradable Rights to an account in the Euroclear Netherlands, Clearstream or Euroclear systems specified by such holder. Should you decide to so cancel any ADS Rights held by you, you will be solely responsible for providing a securities brokerage account in the Euroclear Netherlands, Clearstream or Euroclear systems that can accept the rights for your benefit. To the extent Tradable Rights represented by the ADS Rights surrendered cannot be delivered due to incomplete or erroneous instructions or to the extent the delivery of the Tradable Rights is rejected by the broker, custodian or intermediary to whom the ADS Rights Agent is instructed to deliver such Tradable Rights, the ADS Rights will lapse. Furthermore, you will be solely responsible for causing any actions to be taken (or not) with respect to those Tradable Rights, including the timely exercise or sale of the Tradable Rights. ADS Rights may be surrendered for delivery of BDR Rights through the DTC system or by completing and returning an ADS subscription form. None of ING, JPMorgan Chase Bank, N.A., or any of their respective agents (including, without limitation, the custodian for the Depositary) assumes any responsibility for the required securities brokerage account in the Euroclear Netherlands, Clearstream or Euroclear systems or elsewhere or for the execution of any such actions.

 

Sales of Tradable Rights by the ADS Rights Agent

 

Assuming ADS Rights have not been exercised or exchanged as described under “— Exercise of ADS Rights” and “— Exchange of ADS Rights for Tradable Rights”, Tradable Rights underlying ADS Rights may be sold by the ADS Rights Agent in one of two ways:

 

Rights may be given through the DTC system or by completing and returning an ADS subscription form.

 

 

Payment, Delivery, Clearing and Settlement of the New ADSs

 

The New ADSs have been accepted for clearance through DTC. Delivery of the New ADSs is expected to take place on or about December 23, 2009, or on such other date as ING Groep N.V. may determine. Delivery of the New ADSs against payment will take place through the book-entry systems of DTC. The Depositary will receive the New BDRs to be represented by the New ADSs on or about December 21, 2009. The Depositary will then deliver to your broker’s account or register in your name the New ADSs subscribed for as soon as practicable thereafter, provided that you have paid the ADS Rights Agent any shortfall arising from the conversion of the US dollar payment and your payment of the ADS Subscription Price has cleared.

 

ADS Information Agent

 

Georgeson is acting as information agent for the Rights Offering for holders of ADS Rights. If you have any questions on the offering of ADS Rights or would like a copy of this prospectus supplement, please telephone (888) 877-5426 (from 9:00 a.m. to 9:00 p.m. (New York time) Monday to Friday), or, if you are a bank or broker, (212) 440-9800 (from 9:00 a.m. to 9:00 p.m. (New York time) Monday to Friday). If you lose your subscription form, please telephone JPMorgan Chase Bank, N.A. at (800) 990-1135.

 

Please note that, for legal reasons, the helpline will only be able to provide you with information contained in or incorporated by reference into the prospectus supplement, and will not be able to give advice on the merits of the Rights Offering or to provide financial advice.

 

Tradable Rights

 

Timetable

 

We may adjust the dates, times and periods set out in the timetable and throughout this prospectus supplement. If we should decide to adjust the dates, times and/or periods, we will notify Euronext Amsterdam N.V. and the Netherlands Authority for the Financial Markets (Stichting Autoriteit Financiële Markten) (the “AFM”) and issue a press release accordingly.

 

The below relates to the offering of Tradable Rights to acquire New BDRs. For information relating to ADS Rights, see “— ADS Rights” above.

 

Subject to acceleration or extension of the timetable for the offering of Tradable Rights is envisaged as follows:

 

 

 

The last date and/or time before which notification of exercise instructions may be validly given by you may be earlier than the date and/or time specified above as the end of the Tradable Rights Exercise Period, depending on the financial intermediary through which your Tradable Rights are held.

 

New BDRs

 

The New BDRs will be 1,768,412,544 bearer depositary receipts representing an equal number of New Ordinary Shares, which are ordinary shares of ING Groep N.V. with a par value of EUR 0.24 each. The New Ordinary Shares will be fully fungible and rank pari passu in all respects with the other Existing Ordinary Shares. The New BDRs may be represented by New ADSs.

 

The New Ordinary Shares (to be issued in the Offering) will represent approximately 46.2% of the total issued share capital of the Company immediately after completion of the Offering.

 

BDR Subscription Price

 

The BDR Subscription Price will be EUR 4.24 per New BDR. The BDR Subscription Price was established on November 26, 2009, together with the subscription ratio. On November 26, 2009, the closing price of the ING shares was EUR 8.92 per share on Euronext Amsterdam and on Euronext Brussels. The BDR Subscription Price is to be paid to the Company on the Closing Date, which is expected to be on or about December 21, 2009.

 

Allocation of Tradable Rights

 

On November 30, 2009, before commencement of trading of the Existing BDRs or Existing Ordinary Shares on Euronext Amsterdam, holders of Existing BDRs or Existing Ordinary Shares (other than the Trust) will be granted by the Company one Tradable Right per Existing BDR or Existing Ordinary Share held as of the Record Date (i.e., November 27, 2009 after close of business). 7 Tradable Rights will grant the holder thereof the right to subscribe for 6 New BDRs at the Subscription Price of EUR 4.24 per New BDR.

 

Tradable Rights will be allotted to holders of Existing BDRs or Existing Ordinary Shares (other than the Trust) as follows:

 

 

 

Trading and Sale of Tradable Rights

 

From November 30, 2009, the Existing BDRs will be traded on Euronext Amsterdam and Euronext Brussels “ex subscription right”, at which time the Tradable Rights will start trading on Euronext Amsterdam and Euronext Brussels.

 

In connection with the Offering of the New Shares, the Tradable Rights (ISIN NL0009307941) will be traded on Euronext Amsterdam and Euronext Brussels during the period from November 30, 2009 (inclusive) to 1:15 p.m. (Amsterdam time) on December 15, 2009 (inclusive). Trades in the Tradable Rights on Euronext Amsterdam and Euronext Brussels are expected to be settled three trading days after execution (T+3).

 

During the period during which Tradable Rights are to be traded, shareholders who hold their ING shares in the Euroclear system will have the opportunity (but are under no obligation) to trade their Tradable Rights and, accordingly, may instruct their custodian bank or broker to sell part or all of their Tradable Rights or buy additional Tradable Rights on Euronext Amsterdam or Euronext Brussels.

 

The Underwriters may take suitable measures in order to create the liquidity required for orderly trading in the Tradable Rights, such as buying and selling Tradable Rights. In so doing, the Underwriters reserve the right to carry out hedging transactions in ING shares or corresponding derivatives. See “— General — Market-making and other trading activities”.

 

Exercise of Tradable Rights

 

In accordance with the subscription rights ratio of 7:6, the exercise of 7 Tradable Rights entitles the exercising holder to subscribe for 6 New BDRs against payment of the BDR Subscription Price.

 

In order to avoid being excluded from being exercised, Tradable Rights must be validly exercised vis-à-vis the Company during the Tradable Rights Exercise Period that runs from November 30, 2009 to 3:00 pm (Amsterdam time) on December 15, 2009.

 

The exercise of Tradable Rights is irrevocable and may not be withdrawn, cancelled or modified, except in circumstances where permitted under applicable law and the Underwriting Agreement.

 

Tradable Rights may only be exercised in multiples of 7. The instructions for exercising Tradable Rights are as follows:

 

 

 

ING Bank N.V. is acting as principal subscription agent.

 

ING Bank N.V. reserves the right to treat as invalid any acceptance or purported exercise of Tradable Rights or acceptance of the offer of New Shares which appears to ING Bank N.V. or its agents to have been executed, effected or dispatched in a manner which may involve a breach of the securities laws or regulations of any jurisdiction or if ING Bank N.V. or its agents believe that the same may violate applicable legal or regulatory requirements.

 

Persons holding Tradable Rights wishing to exercise statutory withdrawal rights in accordance with Dutch law, must do so by lodging a written notice of withdrawal (which shall not include a notice sent by facsimile or any other form of electronic communication) with its depositary bank for immediate transmittal to ING Groep N.V. so as to be received by ING Groep N.V. no later than two business days after the date on which the prospectus supplement is published. Notices of withdrawal given by any other means or which are deposited with or received by ING Groep N.V. after the expiry of such period will not constitute a valid withdrawal.

 

After the Tradable Rights Exercise Period has ended, we will announce the results of the Rights Offering and the commencement of the Global Offering, if any, by means of a press release. Such announcement is currently intended to take place on December 16, 2009. After the Global Offering has ended, and the placement of Rump Shares, if any, has taken place, we will announce the results of the Global Offering by means of a press release, including the aggregate number of Rump Shares validly subscribed and paid for, and any Excess Amount to be distributed. Such announcement is currently intended to take place on December 16, 2009.

 

Payment, Delivery, Clearing and Settlement of the New BDRs

 

The New BDRs have been accepted for clearance through Euroclear Netherlands, Clearstream and Euroclear. Delivery of the New BDRs against payment of the BDR Subscription Price or the Global Offering Price, as the case may be, is expected to take place on or about December 21, 2009, or on such other date as ING Groep N.V. may determine. Delivery of the New BDRs against payment will take place through the book-entry systems of Euroclear Netherlands, Euroclear and Clearstream Luxembourg.

General

 

Unexercised Tradable Rights and the Global Offering

 

Tradable Rights can no longer be exercised after the expiration of the Tradable Rights Exercise Period. At that time, any unexercised Tradable Rights (including any Tradable Rights received by ADS Rights holders upon exchange of their ADS Rights) will continue to be reflected in your securities account, or, in the case of ADS Rights holders that have not exchanged their ADS Rights for Tradable Rights, the account of the Depositary or its custodian, solely for the purpose of the distribution of the Excess Amount, if any. New BDRs for which Tradable Rights have not been validly exercised prior to the end of the Tradable Rights Exercise Period (i.e., the Rump Shares) may be sold by the Joint Global Coordinators and Joint Bookrunners, acting on behalf of the Underwriters, in their sole discretion, in the Global Offering by way of (1) private placements to certain institutional investors outside the United States in reliance on Regulation S under the Securities Act and in accordance with applicable securities laws and (2) a public offering in the United States under the Securities Act.

 

Global Offering Price

 

The Global Offering Price, if applicable, is expected to be determined following an institutional bookbuilding procedure commencing on or about December 16, 2009 and is expected to be published in the electronic media on or about December 16, 2009. The Global Offering Price, if any, will be denominated in Euro.

 

In any event, including in the case of a Global Offering, the issue price for the New Shares and New ADSs will be the BDR Subscription Price and as described under “— Excess Amount” below, the Company will not be entitled to receive any part of the Excess Amount, if any.

 

Excess Amount

 

Upon the completion of the Offering, if the aggregate proceeds for the Rump Shares offered and sold in the Global Offering, after deduction of selling expenses (including any value added tax) exceed the aggregate BDR Subscription Price for such Rump Shares, this Excess Amount will be paid in the following manner:

 

Each holder of a Tradable Right (including any Tradable Rights received by ADS Rights holders upon exchange of their ADS Rights) that is not exercised at the end of the Tradable Rights Exercise Period will be entitled to receive a part of the Excess Amount in cash proportional to the number of unexercised Tradable Rights reflected in such holder’s securities account, but only if that amount exceeds €0.01 per unexercised Tradable Right. In respect of Tradable Rights underlying ADS Rights that have not been exercised, the Depositary will convert these proceeds to US dollars and remit the proceeds pro rata to the holders of such ADS Rights. Payments will be made following the withholding of any applicable taxes.

 

If it has been announced that an Excess Amount is available for payment to holders of unexercised Tradable Rights and you have not received payment thereof within a reasonable time following the closing of the Global Offering, you should contact the financial intermediary through which you hold unexercised Tradable Rights.

 

We cannot guarantee that the Global Offering will be successfully completed. None of us, the Joint Global Coordinators and Joint Bookrunners, the Underwriters, the Subscription Agent or any person procuring subscriptions for Rump Shares will be responsible for any lack of Excess Amount arising from any placement of the Rump Shares in the Global Offering. The Excess Amount, if any, will only be available if the Rump Shares are placed within two business days of the end of the Tradable Rights Exercise Period.

 

ING Group will not be entitled to receive any part of the Excess Amount.

 

Pre-emptive Rights

 

The statutory pre-emptive rights (wettelijke voorkeursrechten) in respect of the Rights Offering have been excluded for the purpose of the Rights Offering. Both the New BDRs and New Ordinary Shares and the Tradable Rights will be created and issued under Dutch law.

Existing Shares held in Treasury

 

As of October 31, 2009, the Company directly or indirectly held a total of 35,041,271 Existing Shares. Such shares are held, inter alia, to hedge awards granted under employee equity compensation plans, including employee options. Additionally, ING shares are used for market making and hedging purposes. Existing Shares held in treasury will be allocated Tradable Rights in the Rights Offering. The Company will sell the Tradable Rights allocated to such shares.

 

Voting Rights

 

The New Ordinary Shares will carry the same voting rights as the Existing Ordinary Shares.

 

The New BDRs will carry the same entitlement to a voting proxy as the Existing BDRs.

 

The New ADSs will carry the same entitlement as the Existing ADSs to instruct the Depositary as to the exercise of a voting proxy associated with the ADSs.

 

Distributions

 

The New Ordinary Shares underlying the New BDRs and the New ADSs will be fully fungible and rank pari passu with the Existing Ordinary Shares. As such, they will be entitled to any distributions declared after the closing of the Offering.

 

Dilution

 

We expect to issue 1,768,412,544 New Ordinary Shares (and an equal number of New BDRs, including New ADSs underlying New BDRs) pursuant to the Offering. A holder of Rights that has not exercised such Rights at the end of the ADS Rights Exercise Period or Tradable Rights Exercise Period, as applicable, will experience dilution of approximately 46.2% to its interest in the Company as a result of the issue of the New Shares (including New ADSs underlying New BDRs) pursuant to the Offering. A holder who exercises the total number of Rights granted to it with respect to the New Shares or New ADSs, as applicable, and, accordingly, subscribes to the number of New Shares or New ADSs offered to it in the Offering, will not experience dilution to its interests in the Company as a result of the Offering upon its completion.

 

Lock-Up

 

The Company has agreed with the Underwriters that, except for the issue of ING shares in the Offering, for a period ending 90 days after the Closing Date, it will not directly or indirectly issue, sell, offer or otherwise dispose of any ING shares or other securities convertible or exchangeable into ING shares or representing rights to subscribe for ING shares or enter into a transaction with similar economic effect, subject to certain exceptions including (1) the issuance by the Company of bearer depositary receipts or ordinary shares upon the exercise of an option, right, warrant or the conversion of a security outstanding on the date of the Underwriting Agreement, (2) transactions by any person other than the Company relating to bearer depositary receipts or ordinary shares of ING Groep N.V. or other securities acquired in open market transactions after the completion of the offering of the New Shares to be sold in the Offering, (3) sales of treasury shares (or derivative transactions directly related thereto) carried out in a manner consistent with the Company’s normal treasury activity, (4) market making, hedging, brokerage and asset management activities in the ordinary course of trading, and (5) hedging by the Company of its exposures under existing employee option and long-term incentive programs.

 

Stock Exchange Listing, ISINs, Common Codes, Ticker Symbols

 

Applications have been or will be made for listing the New BDRs on Euronext Amsterdam and Euronext Brussels and for listing of the New ADSs representing the New BDRs on the NYSE. The listings are expected to become effective on December 21, 2009. The first trading day for the New BDRs is scheduled to be December 21, 2009. Upon commencement of trading, the New BDRs will be included in the existing listing of ING shares and the New ADSs will be included in the existing listing of ADSs. All dealings in Rights, New Shares and New ADSs are at the sole risk of the parties concerned. Euronext Amsterdam N.V., the Company, the Joint Global Coordinators and Joint

Bookrunners, the Underwriters, the Listing Agent, the ADS Rights Agent and the Subscription Agent do not accept any responsibility or liability by any person as a result of the withdrawal of the Offering or (the related) annulment of any transactions in Rights, New Shares or New ADSs.

 

The securities identification numbers for the Tradable Rights and the New BDRs are as follows:

 

 

Withdrawal of the Offering

 

The Offering is underwritten by the Underwriters based on an underwriting agreement from which the Underwriters can withdraw under certain circumstances. If the underwriting agreement is terminated, the Offering will be cancelled, and the Company will not receive the proceeds expected to be generated by the Offering. See “Underwriting”.

 

If the Offering is withdrawn, both the exercised and unexercised Rights will be forfeited without compensation to their holders and subscription for and allotments of New ADSs and New BDRs that have been made will be disregarded. Any subscription payments received by ING Groep N.V., the Subscription Agent, the ADS Rights Agent, the Paying Agent or the Underwriters will be returned without interest. Any such forfeiture of Rights will be without prejudice to the validity of any settled trades in the Rights. There will be no refund of any Rights purchased in the market. All trades in Rights, New Shares and New ADSs are at the sole risk of the parties concerned. The Underwriters, the Company, the Subscription Agent, the ADS Rights Agent, the Listing Agent, the Paying Agent and Euronext Amsterdam N.V. do not accept any responsibility or liability with respect to any person as a result of the withdrawal of the Offering or (the related) annulment of any transactions in Rights, New BDRs or New ADSs on Euronext Amsterdam, Euronext Brussels or on the NYSE, as applicable. See “Risk Factors — Risks Related to the Offering — If the Offering does not take place, the credit ratings and funding costs could be adversely affected, and the price of ING shares could drop sharply. In either case, the Rights could become worthless”.

 

Resolutions

 

The Offering was authorized by resolutions of the Executive Board and the Supervisory Board prior to the date hereof. On November 25, 2009, the General Meeting granted the authority to the Executive Board to issue the new Ordinary Shares and to limit or exclude the statutory pre-emptive rights in respect of the Offering.

Paying Agent

 

ING Bank N.V. is the global paying agent with respect to the bearer depository receipts.

 

Listing Agent

 

ING Bank N.V. is the listing agent with respect to the Tradable Rights and the New BDRs.

 

Fees and Expenses

 

In connection with the Offering, we anticipate that we will receive total gross proceeds of EUR 7.5 billion. After deducting fees and expenses of EUR 235,206,000, we anticipate that we will receive net proceeds of EUR 7,262,863,187. See ‘‘— Expenses of the Offering”.

 

Information Agent

 

ING has appointed Georgeson as its information agent for the Offering. Georgeson will receive inquiries regarding the Offering, prospectus supplement and accompany prospectus requests via telephone as of November 27, 2009 at (888) 877-5426 or (212) 440-9800 (if you are a bank or broker) from 9:00 a.m. to 9:00 p.m. (New York City time) Monday to Friday.

 

Market-making and other trading activities

 

Certain of the underwriters have advised the Company that they are currently making a market for the Existing Shares and they intend to make a market in the Rights inside and outside of the United States. The Underwriters may also engage in transactions for the accounts of others in the Existing Shares and the Rights and certain derivatives linked to the Existing Shares of the Company.

 

In addition, in connection with the Offering, the Underwriters may engage in trading activity with respect to the Rights and the Existing Shares during the applicable Rights Exercise Period for the sole purpose of hedging their commitments under the Underwriting Agreement. Such activity may include purchases and sales of the Rights and the Existing Shares and related or other securities and instruments. These transactions may include short sales of the Existing Shares and purchases of the Rights which cover the positions created by short sales.

 

If these market-making and other activities are commenced, they may be discontinued at any time at the sole discretion of the relevant Underwriter and without notice. These activities may occur on Euronext Amsterdam, Euronext Brussels and the NYSE, in the over-the-counter market or elsewhere outside the United States in accordance with applicable law and regulation.

 

During the distribution of BDRs representing ING shares (including in the form of ADSs) in the Rights Offering and the Global Offering, if applicable, ING and certain of its affiliates intend to engage in various dealing and brokerage activities involving BDRs representing ING shares (including in the form of ADSs) when and to the extent permitted by applicable law. Among other things, ING and certain of its affiliates, as the case may be, intend (1) to make a market in BDRs representing ING shares by purchasing and selling BDRs representing ING shares for their own account or to facilitate customer transactions; (2) to make a market, from time to time, in derivatives (such as options, warrants, convertible securities and other instruments) relating to BDRs representing ING shares for their own account and the accounts of their customers; (3) to engage in trades in BDRs representing ING shares for their own account and the accounts of their customers for the purpose of hedging their positions established in connection with the derivatives market making described above; (4) to market and sell to customers funds which include BDRs representing ING shares; (5) to provide to customers investment advice and financial planning guidance which may include information about BDRs representing ING shares, (6) to engage in unsolicited brokerage transactions in BDRs representing ING shares and derivatives thereon with their customers; (7) to trade in BDRs representing ING shares and derivatives thereon as part of their asset management activities for the accounts of their customers; (8) to lend BDRs representing ING shares, as well as accept BDRs representing ING shares as collateral for loans; and (9) to trade in ING BDRs representing ING shares in connection with employee incentive and pension plans. These activities may occur on Euronext Amsterdam, Euronext Brussels, Chi-X, Turquoise, in the over-the-counter market in The Netherlands or elsewhere outside the United States.

In addition, certain ING affiliates intend (1) to engage in unsolicited brokerage transactions in BDRs representing ING shares (including in the form of ADSs) and derivatives thereon with their customers; (2) to trade in BDRs representing ING shares (including in the form of ADSs) and derivatives thereon as part of their asset management activities for the accounts of their customers; (3) to lend BDRs representing ING shares (including in the form of ADSs), as well as accept BDRs representing ING shares (including in the form of ADSs) as collateral for loans; and (4) to trade in ING BDRs representing ING shares (including in the form of ADSs) in connection with employee incentive plans, in each case in the United States.

 

ING and its affiliates are not obliged to make a market in or otherwise purchase BDRs representing ING shares (including in the form of ADSs) or derivatives on BDRs representing ING shares (including in the form of ADSs) and any such market making or other purchases may be discontinued at any time. These activities could have the effect of preventing or retarding a decline in the market price of BDRs representing ING shares.

 

Expenses of the Offering

 

The following are the expenses, other than fees payable to the Underwriters, expected to be incurred by ING in connection with the issuance and distribution of the Rights, the New Shares and the New ADSs.

 

 

All amounts other than the SEC registration fee and the NYSE, Euronext Amsterdam and Euronext Brussels listing fees are estimates.

 

Adjustments to Employee Benefit Plans

 

ING intends to amend the strike price of options and/or the number of options or shares or to otherwise adjust the parameters of the various outstanding employee compensation and benefit plans, in each case as allowed under such plans or instruments, to adjust for the effects of the Offering.

 

This section describes the material US federal income tax consequences of the acquisition, ownership and disposition of the Rights, the New Shares and the New ADSs. This section applies to you only if you are a US Holder (as defined below), receive the Rights, the New Shares or the New ADSs pursuant to the Offering, and hold those Rights, New Shares or New ADSs as capital assets for US federal income tax purposes. This section does not apply to you if you are a member of a special class of holders subject to special rules, including:

 

 

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings, court decision, and the income tax convention between the United States and the Netherlands (“the Treaty”), all as of the date hereof. These laws are subject to change, possibly on a retroactive basis. In addition, this section is based in part upon the representations of the Depositary and the assumption that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms.

 

You are a US Holder if you are a beneficial owner of the Rights, the New Shares or the New ADSs, and you are, for U.S. federal income tax purposes:

 

 

You should consult your own tax advisor regarding the US federal, state, local and other tax consequences of receiving, owning and disposing of the Rights, the New Shares or the New ADSs in your particular circumstances.

 

In general, for US federal income tax purposes, (i) holders of the New BDRs or the New ADSs will be treated as the owners of the New Ordinary Shares represented by those New BDRs or New ADSs, and (ii) exchanges of the New Ordinary Shares for the New BDRs and then for the New ADSs, and exchanges of the New ADSs for the New BDRs and then for the New Ordinary Shares, will not be subject to US federal income tax.

Taxation of the Rights

 

 

The distribution of the Rights to a US Holder should not constitute a taxable event to the US Holder for US federal income tax purposes. The remainder of this US federal income tax discussion assumes the distribution of the Rights will not constitute a taxable event to the US Holder for US federal income tax purposes.

 

 

The tax basis of the Rights received by a US Holder will be zero, unless either (i) the fair market value of the Rights on the date the Rights are distributed is 15% or more of the value of the underlying Existing Shares with respect to which the Rights are distributed, or (ii) the US Holder elects to allocate to the Rights a portion of its basis in the underlying Existing Shares with respect to which the Rights were distributed. If either of these applies, basis will be allocated in proportion to the relative fair market values of the Existing Shares and the Rights on the date the Rights are distributed. A US Holder who wishes to make the election to allocate a portion of its basis to the Rights must attach a statement to this effect to its US federal income tax return for the taxable year in which the Rights are received. The election will apply to all of the Rights received by the US Holder pursuant to the Offering and, once made, will be irrevocable. In the event that the value of the Rights is less than 15% of the value of the underlying Existing Shares, US Holders should consult their own tax advisors regarding the advisability of making such an election and the specific procedures for doing so.

 

A US Holder’s holding period for the Rights will include the US Holder’s holding period in the underlying Existing Shares with respect to which the Rights were distributed (whether or not basis is allocated to the Rights).

 

 

Subject to the passive foreign investment company rules (the “PFIC rules”) described below, a US Holder will recognize capital gain or loss on the sale or other disposition of the Rights in an amount equal to the US dollar value of the difference between the amount realized on the disposition and the US Holder’s tax basis in the Rights. A US Holder generally will not recognize taxable income upon the receipt of the Tradable Rights through a surrender of ADS Rights.

 

Subject to the PFIC rules described below, if a US Holder does not dispose of or exercise the Rights and, as a result, receives a part of the Excess Amount, the US Holder should recognize capital gain or loss in an amount equal to the US dollar value of the difference between the amount the US Holder receives and the US Holder’s tax basis in the Rights. If a US Holder does not dispose of or exercise the Rights but does not receive any amount as a part of the Excess Amount, the US Holder should not recognize a loss for US federal income tax purposes. Instead, if the US Holder previously allocated to those Rights a portion of its tax basis in the underlying Existing Shares, that basis will be re-allocated to the Existing Shares.

 

Capital gain of a non-corporate US Holder that is recognized in taxable years beginning before January 1, 2011 generally will be taxed at a maximum rate of 15% if the US Holder has a holding period greater than one year, or at the same rates as ordinary income if the US Holder has a holding period of one year or less. A US Holder’s ability to deduct any capital losses may be subject to limitations. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

 

 

A US Holder will not recognize taxable income upon the receipt of the New Shares or the New ADSs through an exercise of the Rights.

 

Taxation of the New Shares and the New ADSs

 

 

A US Holder’s tax basis in the New Shares or the New ADSs received through an exercise of the Rights will equal the US dollar value of the sum of (i) the ADS Subscription Price or the BDR Subscription Price, as applicable,

determined at the spot rate on the date of exercise and (ii) the US Holder’s basis in the Rights exercised to obtain the New Shares or the New ADSs.

 

A US Holder’s holding period for the New Shares or the New ADSs received through an exercise of the Rights will not include the US Holder’s holding period for the underlying Rights.

 

 

Subject to the PFIC rules described below, a US Holder will include in gross income the gross amount of any distribution (other than certain stock distributions) paid by the Company out of its current or accumulated earnings and profits (as determined for US federal income tax purposes) as dividend income when the distribution is actually or constructively received by the US Holder (or, in the case of the New ADSs, the Depositary). Any distribution paid by the Company in excess of its current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of the US Holder’s tax basis in the New Shares or the New ADSs and thereafter as a capital gain. Because the Company does not keep account of its earnings and profits (as determined for US federal income tax purposes), any distribution should generally be treated as dividend income for US federal income tax purposes.

 

The gross amount of the distribution includes any Dutch tax withheld from the distribution even if the US Holder does not in fact receive the withheld amount.

 

Subject to certain limitations, the Dutch tax withheld in accordance with the Treaty and paid over to the Netherlands will be creditable or deductible against the US Holder’s US federal income tax liability. However, any Dutch tax withheld from distributions will not be eligible for a foreign tax credit to the extent a refund of the tax withheld is available to the US Holder. Further, any Dutch tax withheld may not be eligible for a foreign tax credit to the extent that the Company reduces the amount of dividend withholding tax paid over to the Dutch tax administration by crediting withholding tax imposed on certain dividends paid to the Company. Currently, the Company may, with respect to certain dividends received from qualifying non-Dutch subsidiaries, credit taxes withheld from those dividends against Dutch withholding tax imposed on dividends paid by the Company, up to a maximum of the lesser of (i) 3% of the portion of the gross amount of the dividends paid by the Company that is subject to Dutch withholding tax; and (ii) 3% of the gross amount of certain dividends received from qualifying non-Dutch subsidiaries during a certain period. The credit reduces the amount of dividend withholding tax that the Company is required to pay to the Dutch tax administration but does not reduce the amount of tax the Company is required to withhold from dividends paid by the Company.

 

Dividends paid to a non-corporate US Holder in taxable years beginning before January 1, 2011 that constitute qualified dividend income generally will be subject to a maximum tax rate of 15% provided certain holding period requirements are met. Dividends the Company pays with respect to the New Shares or the New ADSs generally will be qualified dividend income. Dividends paid to a corporate US Holder will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations.

 

For foreign tax credit limitation purposes, distributions that are dividends for US federal income tax purposes will generally be income from sources outside the United States and will, depending on the US Holder’s circumstances, be “passive category income” or “general category income”.

 

The amount of the dividend includible in the income of a US Holder will be the US dollar value of the payment made, determined at the spot rate on the date the dividend is includible in the income of the US Holder, regardless of whether the payment is in fact converted to US dollars. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend is includible in income to the date the payment is converted into US dollars will be treated as ordinary income or loss and will not be eligible for the special tax rate applicable to qualified dividend income. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

 

Subject to the PFIC rules described below, a US Holder will recognize capital gain or loss on the sale or other disposition of the New Shares or the New ADSs in an amount equal to the US dollar value of the difference between the amount realized on the disposition and the US Holder’s tax basis in the New Shares or the New ADSs.

 

Capital gain of a non-corporate US Holder that is recognized in taxable years beginning before January 1, 2011 generally will be taxed at a maximum rate of 15% if the US Holder has a holding period greater than one year, or at the same rates as ordinary income if the US Holder has a holding period of one year or less. A US Holder’s ability to deduct any capital loss may be subject to limitations. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes.

 

Passive foreign investment company rules

 

The Company believes that it should not be a “passive foreign investment company” (a “PFIC”) for US federal income tax purposes, but this conclusion is made annually and thus may be subject to change. If the Company is treated as a PFIC and you are a US Holder that did not make a mark-to-market election, you will be subject to special rules with respect to (i) any gain you realize on the disposition of your Rights (under proposed regulations), New Shares or New ADSs, and (ii) any excess distribution that the Company makes to you. With certain exceptions, your Rights (under proposed regulations), New Shares or New ADSs will be treated as stock in a PFIC if the Company was a PFIC at any time during your holding period in the Rights, New Shares or New ADSs. In addition, dividends that you receive from the Company will not constitute qualified dividend income to you if the Company is deemed to be a PFIC either in the taxable year of the distribution or the preceding taxable year, but instead will be taxable at rates applicable to ordinary income.

 

US information reporting and backup withholding

 

For a non-corporate US Holder, information reporting requirements, on Internal Revenue Service Form 1099, generally will apply to dividends or other taxable distributions made to the US Holder within the United States or through certain US-related financial intermediaries, and to the payment of proceeds to the US Holder from the sale of the Rights, the New Shares or the New ADSs effected at a US office of a broker. Additionally, backup withholding may apply to such payments if the non-corporate US Holder fails to provide an accurate taxpayer identification number, is notified by the Internal Revenue Service that the US Holder has failed to report all interest and dividends required to be shown on the US Holder’s US federal income tax returns, or in certain circumstances, fails to comply with applicable certification requirements.

 

A US Holder subject to backup withholding generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed the US Holder’s US federal income tax liability by filing a refund claim with the Internal Revenue Service.

 

General

 

The information set out below is a general summary of certain Dutch tax consequences in connection with the acquisition, ownership and transfer of New Shares, New ADSs and/or Rights and the exercise of Rights. The summary does not purport to be a comprehensive description of all the Dutch tax considerations that may be relevant for a particular holder of New Shares, New ADSs and/or Rights. Such holders may be subject to special tax treatment under any applicable law and this summary is not intended to be applicable in respect of all categories of holders of New Shares, New ADSs and/or Rights. The summary is based upon the tax laws of the Netherlands as in effect on the date of the date hereof, including official regulations, rulings and decisions of the Netherlands and its taxing and other authorities available in printed form on or before such date and now in effect. These tax laws are subject to change, which could apply retroactively and could affect the continuing validity of this summary. As this is a general summary, we recommend investors and shareholders to consult their own tax advisors as to the Dutch or other tax consequences of the acquisition, ownership and transfer of New Shares, New ADSs and/or Rights and the exercise of Rights, including, in particular, the application of their particular situations of the tax considerations discussed below.

 

The Company is of the opinion that the ultimate beneficial owners of the New BDRs and the New ADSs will be treated for Dutch tax purposes as the absolute beneficial owners of the New Ordinary Shares represented by the New BDRs and the New ADSs and any references to New Shares and New ADSs should be read accordingly. In addition, it is anticipated by the Company that the ultimate beneficial owners of the ADS Rights will be treated for Dutch tax purposes as the absolute beneficial owners of the Tradable Rights represented by the ADS Rights and any references to Rights should be read accordingly.

 

The following summary does not address the tax consequences arising in any jurisdiction other than the Netherlands in connection with the acquisition, ownership and transfer of New Shares, New ADSs and/or Rights and the exercise of Rights.

 

Dividend Withholding Tax

 

Dividends paid on New Shares and/or New ADSs to a holder of such New Shares and/or New ADSs are generally subject to withholding tax of 15% imposed by the Netherlands. Generally, the dividend withholding tax will not be borne by us, but will be withheld by us from the gross dividends paid on the New Shares and/or New ADSs. The term “dividends” for this purpose includes, but is not limited to:

 

 

A holder of New Shares and/or New ADSs who is, or who is deemed to be, a resident of the Netherlands can generally credit the withholding tax against his Dutch income tax or Dutch corporate income tax liability and is generally entitled to a refund of dividend withholding taxes exceeding his aggregate Dutch income tax or Dutch corporate income tax liability, provided certain conditions are met, unless such holder of New Shares and/or New ADSs is not considered to be the beneficial owner of the dividends.

A holder of New Shares and/or New ADSs, who is the recipient of dividends (the “Recipient”) will not be considered the beneficial owner of the dividends for this purpose if:

 

 

If dividends are distributed to a corporate holder of the New Shares and/or New ADSs that qualifies in respect of the New Shares and/or New ADSs for the participation exemption, as defined in the Dutch Corporate Income Tax Act 1969 (Wet op de vennootschapsbelasting 1969), and if such New Shares and/or New ADSs are attributable to an enterprise carried out in the Netherlands, such dividends are exempt from Dutch dividend withholding tax provided that the recipient of the dividends can be considered the beneficial owner of the dividends. In addition, subject to certain conditions, a legal entity resident in the Netherlands that is not subject to Dutch corporate income tax may request a refund of the tax withheld, provided it is the beneficial owner — as defined by the Dutch Dividend Withholding Tax Act 1965 — of the dividends.

 

With respect to a holder of New Shares and/or New ADSs , who is not and is not deemed to be a resident of the Netherlands for purposes of Dutch taxation (including, if he is an individual, a holder who opts to be taxed as a resident of the Netherlands for purposes of Dutch taxation) and who is considered to be a resident of the Netherlands Antilles or Aruba under the provisions of the Tax Arrangement for the Kingdom of the Netherlands (Belastingregeling voor het Koninkrijk), or who is considered to be a resident of a country other than the Netherlands under the provisions of a double taxation convention the Netherlands has concluded with such country, the following may apply. Such holder of New Shares and/or New ADSs may, depending on the terms of and subject to compliance with the procedures for claiming benefits under the Tax Arrangement for the Kingdom of the Netherlands or such double taxation convention, be eligible for a full or partial exemption from or a reduction or refund of Dutch dividend withholding tax.

 

In addition, subject to certain conditions and based on Dutch legislation implementing the Parent Subsidiary Directive (Directive 90/435/EEC, as amended) an exemption from Dutch dividend withholding tax will generally apply to dividends distributed to certain qualifying entities (that have a legal form mentioned in the annex to the Parent Subsidiary Directive and that are subject to a profit-based tax as mentioned in the relevant provision in the Parent-Subsidiary Directive — the “Legal Form Requirement” and “Subject to Tax Requirement”, respectively) that are residents in another EU Member State and that hold an interest of at least 5% of the nominal paid-in capital or, in relation to certain jurisdictions, of the voting power of the distributing entity. Furthermore, certain entities resident in an EU Member State and not subject to tax on their profits in such EU Member State might be entitled to obtain a full refund of Dutch dividend withholding tax provided they would not have been subject to Dutch corporate income tax had they been resident in the Netherlands. Following recent case law by the Court of Justice of the European Communities, a law proposal has been published on September 15, 2009, which is intended to be effective as per January 1, 2010 and which purports to make an exemption from or refund of Dutch dividend withholding tax also available to certain qualifying entities tax resident within the European Economic Area under the same conditions that apply to entities that are tax resident within the EU. In the same law proposal, it is proposed to abolish both the Legal Form Requirement and Subject to Tax Requirement for the above exemption. It should be noted that, notwithstanding the proposed abolishment of the Subject to Tax Requirement, the exemption of dividend withholding tax will remain inapplicable for cross border dividend payments to entities that perform a similar function to Dutch fiscal investment institutions and exempt investment institutions, as domestic dividend payments to these institutions will also not benefit from the exemption.

 

The concept of Dividend Stripping, described above, is applicable to determine whether a holder of New Shares and/or New ADSs may be eligible for a full or partial exemption from, reduction or refund of Dutch dividend withholding tax, as described in the preceding paragraphs.

Rights issued by the Company and payments in cash of the Excess Amount, if any, made by the Joint Global Coordinator(s) to holders of Rights that were not exercised at the end of the Rights Exercise Period, should not be subject to Dutch dividend withholding tax.

 

Taxes on Income and Capital Gains

 

General

 

The description of taxation set out in this section of this prospectus supplement is not intended for any holder of New Shares, New ADSs and/or Rights, who:

 

 

Generally a holder of New Shares, New ADSs and/or Rights will have a substantial interest in us (a “Substantial Interest”) if he holds, alone or together with his partner (statutorily defined term), whether directly or indirectly, the ownership of, or certain other rights (including the New Shares and/or New ADSs) over, shares representing 5% or more of our total issued and outstanding capital (or the issued and outstanding capital of any class of shares), or rights to acquire shares, whether or not already issued, that represent at any time 5% or more of our total issued and outstanding capital (or the issued and outstanding capital of any class of shares) or the ownership of certain profit participating certificates that relate to 5% or more of the annual profit and/or to 5% or more of our liquidation proceeds. A holder of New Shares, New ADSs and/or Rights will also have a Substantial Interest in us if one of certain relatives of that holder or of his partner has a Substantial Interest in us. If a holder of New Shares, New ADSs and/or Rights does not have a Substantial Interest, a deemed Substantial Interest will be present if (part of) a Substantial Interest has been disposed of, or is deemed to have been disposed of, without recognizing taxable gain.

 

Residents of the Netherlands

 

Individuals

 

An individual who is resident or deemed to be resident in the Netherlands, or who opts to be taxed as a resident of the Netherlands for purposes of Dutch taxation (a “Dutch Resident Individual”) and who holds New Shares, New ADSs and/or Rights is subject to Dutch income tax on income and/or capital gains derived from the New Shares, New ADSs and/or Rights at the progressive rate (up to 52%; rate for 2009) if:

 

 

If neither condition (i) nor condition (ii) applies to the holder of New Shares, New ADSs and/or Rights, taxable income with regard to the New Shares, New ADSs and/or Rights must be determined on the basis of a deemed return

on income from savings and investments (sparen en beleggen), rather than on the basis of income actually received or gains actually realized. At present, this deemed return on income from savings and investments has been fixed at a rate of 4% (rate for 2009) of the average of the individual’s yield basis (rendementsgrondslag) at the beginning of the calendar year and the individual’s yield basis at the end of the calendar year, insofar as the average exceeds a certain threshold. The average of the individual’s yield basis is determined as the fair market value of certain qualifying assets held by the holder of the New Shares, New ADSs and/or Rights less the fair market value of certain qualifying liabilities on January 1 and December 31, divided by two. The fair market value of the New Shares, New ADSs and/or Rights will be included as an asset in the individual’s yield basis. The deemed return on income from savings and investments of 4% (rate for 2009) will be taxed at a rate of 30% (rate for 2009).

 

Entities

 

An entity that is resident or deemed to be resident in the Netherlands (a “Dutch Resident Entity”) will generally be subject to Dutch corporate income tax with respect to income and capital gains derived from the New Shares, New ADSs and/or Rights. The Dutch corporate income tax rate is 20% for the first €200,000 of taxable income and 25.5% for taxable income exceeding €200,000 (rates applicable for 2009 and 2010).

 

Non-Residents of the Netherlands

 

A person that is not a Dutch Resident Individual or Dutch Resident Entity (a “Non-Dutch Resident”) and that holds New Shares, New ADSs and/or Rights is generally not subject to Dutch income or corporate income tax (other than dividend withholding tax described above) on the income and capital gains derived from the New Shares, New ADSs and/or Rights, provided that:

 

 

Gift, Estate or Inheritance Taxes

 

Residents of the Netherlands

 

Generally, gift, estate and inheritance tax will be due in the Netherlands in respect of the acquisition of the New Shares, New ADSs and/or Rights by way of a gift by, or on the death of, a holder who is a resident or deemed to be a resident of the Netherlands for the purposes of Dutch gift, estate and inheritance tax at the date of the gift or his or her death.

 

Non Residents of the Netherlands

 

No Dutch gift, estate or inheritance taxes will be levied on the transfer of New Shares, New ADSs and/or Rights by way of gift by or on the death of a holder, who is neither a resident nor is deemed — including based upon

request — to be a resident of the Netherlands for the purpose of the relevant provisions (“Non-Dutch Resident for Purposes of Gift, Estate or Inheritance Tax”), unless:

 

 

For purposes of Dutch gift, estate and inheritance tax, an individual who is of Dutch nationality will be deemed to be a resident of the Netherlands if he has been resident in the Netherlands at any time during the 10 years preceding the date of the gift or his death. In addition, for purposes of Dutch gift tax, an individual will, regardless of his nationality, be deemed to be resident of the Netherlands if he has been a resident in the Netherlands at any time during the 12 months preceding the date of the gift.

 

For purposes of Dutch gift, estate and inheritance tax, if an individual transfers the New Shares, New ADSs and/or Rights by way of a gift while he is not and is not deemed to be a resident of the Netherlands and dies within 180 days after the date of such gift, while being resident or deemed to be resident in the Netherlands, such New Shares, New ADSs and/or Rights are construed as an inheritance or bequest at the time of the death of such holder.

 

At present, a law proposal to amend the Inheritance Tax Act 1956, published on April 28, 2009 and intended to be effective as per January 1, 2010, is pending before Dutch parliament, which proposal intends to abolish the levy of Dutch gift, estate and inheritance tax in respect of domestic assets of Non-Dutch Residents for Purposes of Gift, Estate or Inheritance Tax. In addition, this law proposal contains an amendment to the effect that for purposes of the Inheritance Tax Act a gift that is completed after the death of an individual making such gift, will be construed as an inheritance or bequest at the time of the death of the giver.

 

Value-Added Tax

 

There is no Dutch value-added tax payable by a holder of New Shares, New ADSs and/or Rights in respect of payments in consideration for the Offer of the New Shares, New ADSs and/or Rights (other than value-added tax payable in respect of services not exempt from Dutch value-added tax).

 

Other Taxes and Duties

 

There is no Dutch registration tax, capital tax, customs duty, stamp duty or any other similar tax or duty other than court fees payable in the Netherlands by a holder of New Shares, New ADSs and/or Rights in respect of or in connection with the execution, delivery and enforcement by legal proceedings (including any foreign judgment in the courts of the Netherlands) of the New Shares, New ADSs and/or Rights.

 

Residence

 

A holder of New Shares, New ADSs and/or Rights will not become or be deemed to become a resident of the Netherlands solely by reason of holding these New Shares, New ADSs and/or Rights.

 

Underwriters; Underwriting Agreement

 

The Underwriters for the Offering are listed in the table below. The Company, ING Bank N.V. and the Underwriters have entered into the Underwriting Agreement. In the Underwriting Agreement, the Underwriters have, severally and not jointly, agreed, subject to certain terms and conditions, to underwrite the New Shares (the “Underwritten Shares”) at the Subscription Price (the “Underwriting Commitment”). With respect to purchases under the Underwriting Agreement, the Underwriters will subscribe for the Underwritten Shares in the percentages and amounts indicated in the table below.

 

 

According to the Underwriting Agreement, the Underwriters will pay the Company the BDR Subscription Price for the New BDRs with respect to which Tradable Rights are not exercised. Such New BDRs may include New BDRs underlying New ADSs with respect to which Tradable Rights underlying ADS Rights are not exercised. Subject to certain conditions, the Underwriters will also pay to each holder of a Tradable Right that was not exercised at the end of the Tradable Rights Exercise Period a part of the Excess Amount in cash proportional to the number of unexercised Tradable Rights reflected in such holder’s securities account, but only if that amount exceeds €0.01 per unexercised Tradable Right. See “The Offering — Excess Amount”.

 

According to the Underwriting Agreement, the Company has agreed to pay certain commissions as follows: (1) to the Joint Global Coordinators and Joint Bookrunners a management fee of 0.60% of the gross proceeds of the Offering payable at the closing date, (2) to the Representatives for distribution to the Underwriters, an underwriting commission of 1.90% of the gross proceeds of the Offering, payable at the closing date, and (3) to the Joint Global Coordinators and Joint Bookrunners and/or the Underwriters at the Company’s absolute discretion, after consultation with ING Bank N.V., payable up to six months after the closing date an incentive fee of up to 0.50% of the gross proceeds of the Offering, including any amount of VAT. The Company also agreed in the Underwriting Agreement to indemnify the Underwriters against certain liability obligations, including liabilities under applicable securities laws.

 

The Underwriting Agreement also provides that the obligations of the Underwriters to consummate the Offering are subject to the reservation that certain conditions are satisfied, including, among others, (1) the absence of a downgrading, or notice of a potential downgrading or review, of the rating assigned to the Company’s securities (other than any “perpetual” or “hybrid” securities) to below BBB+ or equivalent, (2) a material adverse change in the results of operations, financial condition, shareholders’ equity, management or business of ING (excluding the effects of the Restructuring Plan), (3) the receipt of customary confirmations and legal opinions meeting the Underwriters’ requirements, and (4) the making of necessary filings and the receipt of necessary approvals in connection with the Offering.

 

The Underwriting Agreement may also be terminated by the Representatives on behalf of the Underwriters, by giving notice to the Company at any time prior to the closing date if certain events occur, including customary termination events such as, among others, a material adverse change in the results of operations, financial condition, shareholders’ equity, management or business of ING (excluding the effects of the Restructuring Plan), a material adverse change in the financial markets, suspension of trading of the Company’s securities and material disruptions in trading and settlement more generally or if the closing has not occurred before March 31, 2010.

 

One or more of the Underwriters may be unable to make offers or sales of New Shares otherwise than through an agent, which may be an affiliate of such Underwriter, that is a broker-dealer registered as such under the US Securities Exchange Act of 1934.

Other Relations Between the Underwriters and the Company

 

Certain of the Underwriters and their respective affiliates have performed, and may in the future perform, various financial advisory, investment banking, commercial banking or other services for, or together with, the Company or its affiliates, for which they have received and are likely to continue to receive customary fees and expenses. The Company or its affiliates have performed, and may also in the future perform, various financial advisory, investment banking, commercial banking or other services for, or together with, certain of the Underwriters or their respective affiliates, for which they have received and are likely to continue to receive customary fees and expenses.

 

In connection with the Offering, each of the Underwriters and any affiliate acting as an investor for its own account may receive Rights (if they are current shareholders of the Company) in connection with the Rights Offering, and may exercise its right to take up such Rights and acquire New Shares, or may take up Rump Shares, if any, as part of the Global Offering and in that capacity, may retain, purchase or sell Rights, New Shares or Rump Shares and any other securities of the Company or other investments for its own account and may offer or sell such securities (or other investments) otherwise than in connection with the Offering. References in this prospectus supplement to the Rump Shares being offered or placed should be read as including any offering or placement of New Shares to any of the Underwriters and any affiliate acting in such capacity. The Underwriters do not intend to disclose the extent of any such investments or transactions otherwise than in accordance with any legal or regulatory obligation to do so.

 

During the distribution of BDRs representing ING shares (including in the form of ADSs) in the Rights Offering and the Global Offering, if applicable, ING and certain of its affiliates intend to engage in various dealing and brokerage activities involving BDRs representing ING shares (including in the form of ADSs) when and to the extent permitted by applicable law. Among other things, ING and certain of its affiliates, as the case may be, intend (1) to make a market in BDRs representing ING shares by purchasing and selling BDRs representing ING shares for their own account or to facilitate customer transactions; (2) to make a market, from time to time, in derivatives (such as options, warrants, convertible securities and other instruments) relating to BDRs representing ING shares for their own account and the accounts of their customers; (3) to engage in trades in BDRs representing ING shares for their own account and the accounts of their customers for the purpose of hedging their positions established in connection with the derivatives market making described above; (4) to market and sell to customers funds which include BDRs representing ING shares; (5) to provide to customers investment advice and financial planning guidance which may include information about BDRs representing ING shares, (6) to engage in unsolicited brokerage transactions in BDRs representing ING shares and derivatives thereon with their customers; (7) to trade in BDRs representing ING shares and derivatives thereon as part of their asset management activities for the accounts of their customers; (8) to lend BDRs representing ING shares, as well as accept BDRs representing ING shares as collateral for loans; and (9) to trade in ING BDRs representing ING shares in connection with employee incentive and pension plans. These activities may occur on Euronext Amsterdam, Euronext Brussels, Chi-X, Turquoise, in the over-the-counter market in The Netherlands or elsewhere outside the United States.

 

In addition, certain ING affiliates intend (1) to engage in unsolicited brokerage transactions in BDRs representing ING shares (including in the form of ADSs) and derivatives thereon with their customers; (2) to trade in BDRs representing ING shares (including in the form of ADSs) and derivatives thereon as part of their asset management activities for the accounts of their customers; (3) to lend BDRs representing ING shares (including in the form of ADSs), as well as accept BDRs representing ING shares (including in the form of ADSs) as collateral for loans; and (4) to trade in ING BDRs representing ING shares (including in the form of ADSs) in connection with employee incentive plans, in each case in the United States.

 

ING and its affiliates are not obliged to make a market in or otherwise purchase BDRs representing ING shares (including in the form of ADSs) or derivatives on BDRs representing ING shares (including in the form of ADSs) and any such market making or other purchases may be discontinued at any time. These activities could have the effect of preventing or retarding a decline in the market price of BDRs representing ING shares.

 

Sullivan & Cromwell LLP, our US counsel, and Davis Polk & Wardwell, US counsel for the underwriters, will pass on certain matters relating to the securities with respect to New York law. Stibbe N.V., Amsterdam, The Netherlands, and Allen & Overy LLP, The Netherlands, will pass on certain matters relating to the securities under Dutch law. Sullivan & Cromwell LLP and Davis Polk & Wardwell LLP may rely upon the opinion of Stibbe N.V. and Allen & Overy LLP, as applicable, with respect to all matters of Dutch law.

 

The consolidated financial statements of ING Groep N.V., appearing in ING Groep N.V.’s Report of Foreign Private Issuer (Form 6-K) filed with the Securities and Exchange Commission on October 23, 2009 (including schedules appearing therein), have been audited by Ernst & Young Accountants LLP, independent registered public accounting firm, as set forth in their report thereon, included therein and incorporated herein by reference. The report of Ernst & Young Accountants LLP for the years 2007 and 2006 is based in part on the report of KPMG Accountants N.V., independent registered public accounting firm, whose report, in turn, is based upon the report of Ernst & Young Réviseurs d’Entreprises SCCRL, independent registered public accounting firm. The reports of KPMG Accountants N.V. and Ernst & Young Réviseurs d’Entreprises SCCRL are also included in the above referenced Form 6-K, and are incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such reports given on the authority of such firms as experts in accounting and auditing.

PROSPECTUS

 

 

ING GROEP N.V.

(Amsterdam, The Netherlands)

 

 

 

 

Debt Securities

Ordinary Shares

American Depositary Shares

Rights to Purchase Bearer Depositary Receipts

 

 

 

 

ING Groep N.V. from time to time may offer to sell debt securities, bearer depositary receipts of Stichting ING Aandelen in respect of ordinary shares, par value EUR 0.24 per share, American depositary shares (“ADSs”), and rights to purchase bearer depositary receipts of Stichting ING Aandelen in respect of ordinary shares. Bearer depositary receipts representing our ordinary shares are traded on Euronext Amsterdam by NYSE Euronext, which we refer to as Euronext Amsterdam. Euronext Amsterdam is the principal trading market for the bearer depositary receipts representing our ordinary shares. The bearer depositary receipts representing our ordinary shares are also listed on Euronext Brussels. ADSs, representing bearer depositary receipts representing our ordinary shares, are listed on the New York Stock Exchange under the symbol “ING.”

 

When we offer securities, we will provide you with a prospectus supplement describing the terms of the specific issues of securities including the offering price of the securities and the specific manner in which they may be offered. You should read this prospectus and the accompanying supplement carefully before you invest. We may offer and sell the securities directly to purchasers, through underwriters, dealers or agents, including ING Financial Markets LLC, one of our affiliates, or through any combination of these methods, on a continuous or delayed basis.

 

Investing in the securities involves risks. Please see the risk factors set forth in our Annual Report on Form 20-F for the year ended December 31, 2008, and in other reports incorporated herein by reference. We may include specific risk factors in an applicable prospectus supplement under the heading “Risk Factors”.

 

 

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

We may use this prospectus in the initial sale of these securities. In addition, one or more of our subsidiaries may use this prospectus in a market-making transaction involving any of these securities after our initial sale. Unless we or our agent inform the purchaser otherwise in the confirmation of sale, this prospectus is being used in a market-making transaction.

 

 

 

 

ING WHOLESALE

 

 

 

 

Prospectus dated October 27, 2009

 

TABLE OF CONTENTS

 

 

PROSPECTUS SUMMARY

	•	debt securities;
	•	bearer depositary receipts in respect of ordinary shares;
	•	American depositary shares; and
	•	rights, entitling the holder to purchase bearer depositary receipts in respect of ordinary shares.

 

We file annual reports on Form 20-F with, and furnish other reports and information on Form 6-K to, the Securities and Exchange Commission, or the SEC. You may also read and copy any document we file or furnish at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for more information about the public reference rooms. Our filings with the SEC are also available through the SEC’s Internet site at http://www.sec.gov and through the New York Stock Exchange, Inc., 11 Wall Street, New York, New York 10005, on which our ADSs are listed.

 

We have filed a registration statement on Form F-3 under the Securities Act of 1933, as amended, with the SEC covering the securities. For further information on the securities of ING Groep N.V., you should review our registration statement and its exhibits. This prospectus is a part of the registration statement and summarizes material provisions of the contracts and other documents to which we refer you. Since this prospectus may not contain all the information that you may find important, you should review the full text of these documents. We have included copies of these documents as exhibits to our registration statement.

The SEC allows us to “incorporate by reference” the information we file with them, which means:

 

 

We incorporate by reference the following documents or information which we filed with the SEC (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules):

 

 

You may request, orally or in writing, a copy of any filings referred to above, excluding exhibits, other than those specifically incorporated by reference into the documents you request, at no cost, by contacting us at the following address: ING Groep N.V., Attention: Investor Relations, Amstelveenseweg 500, 1081 KL Amsterdam, P.O. Box 810, 1000 AV Amsterdam, The Netherlands, telephone: 011-31-20-541-54-11.

 

You should rely only on the information contained or incorporated by reference in this prospectus or any applicable prospectus supplement(s). We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer to sell these securities in any jurisdiction where the offer or sale is prohibited. You should assume that the information appearing in this prospectus or any applicable prospectus supplement(s), as well as information we previously filed with, or furnished to, the SEC and incorporated by reference, is accurate as of the date on the front cover of such documents only. Our business, financial condition, results of operations and prospects may have changed since that date.

 

Some of the information contained or incorporated by reference in this prospectus may constitute “forward-looking statements” within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995. Although we have based these forward-looking statements on our expectations and projections about future events, it is possible that actual results may differ materially from our expectations. In many cases, we include a discussion of the factors that are most likely to cause forward-looking statements to differ from actual results together with the forward-looking statements themselves.

 

Information regarding important factors that could cause actual results to differ, perhaps materially, from those in our forward looking statements is contained under “Cautionary Statement with Respect to Forward-Looking Statements” in our Annual Report on Form 20-F for 2008, which is incorporated in this prospectus by reference (and will be contained in our annual reports for any subsequent year that are so incorporated). See “Available Information” above for information about how to obtain a copy of this annual report.

In light of the factors described in the applicable Annual Report on Form 20-F and the other factors described in this prospectus or any applicable prospectus supplement(s), events which are described might not occur at all or may occur differently than as described. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events or for any other reason.

 

Unless otherwise specified, in this prospectus “ING Groep N.V.,” refers to ING Groep N.V., the holding company incorporated under the laws of The Netherlands; and “we,” “our” and “us”, as well as “ING,” “ING Group,” or the “Group” refers to ING Groep N.V. and its consolidated subsidiaries. ING Groep N.V.’s primary insurance and banking subholdings are ING Verzekeringen N.V. and ING Bank N.V., respectively. When we refer to “ING Bank,” we mean ING Bank N.V., together with its consolidated subsidiaries. The “Trust” refers to the Stichting ING Aandelen, an administrative trust that holds approximately 99.9% of the outstanding ordinary shares of ING Groep N.V. and that issues bearer depositary receipts for such shares.

 

Except as may be described in your prospectus supplement, we will use the net proceeds from the initial sales of the securities offered under this prospectus and your prospectus supplement to provide additional funds for our operations and for other general corporate purposes. Our general corporate purposes may include the repayment or reduction of indebtedness, acquisitions and working capital requirements.

 

Please note that in this section entitled “Description of Debt Securities We May Offer,” references to “ING Groep N.V.,” “we,” “our” and “us” refer only to ING Groep N.V. and not to ING’s consolidated subsidiaries. Also, in this section, references to “holders” mean those who own debt securities registered in their own names, on the books that we or the trustee maintain for this purpose, and not those who own beneficial interests in debt securities registered in street name or in debt securities issued in book-entry form through one or more depositaries. Owners of beneficial interests in the debt securities should read the section below entitled “Legal Ownership and Book-Entry Issuance.”

 

This section and your prospectus supplement will summarize all the material terms of each indenture and your debt security. They do not, however, describe every aspect of each indenture and your debt security. For example, in this section and your prospectus supplement, we use terms that have been given special meaning in the indenture, but we describe the meaning for only the more important of those terms. As you read this section, please remember that the specific terms of your debt security as described in your prospectus supplement will supplement and, if applicable, may modify or replace the general terms described in this section. If there are any differences between your prospectus supplement and this prospectus, your prospectus supplement will control. Thus, the statements we make in this section may not apply to your debt security. The indentures and their associated documents, including your debt security, contain the full legal text of the matters described in this section and your prospectus supplement. We have filed a copy of the indentures with the SEC as exhibits to our registration statement. See “Available Information” above for information on how to obtain a copy.

 

General

 

The debt securities are not deposits and are not insured by any regulatory body of the United States or The Netherlands.

 

Because our assets consist principally of interests in the subsidiaries through which we conduct our businesses, our cash flow and our consequent ability to service our debt, including the debt securities, are largely dependent upon the cash flow and earnings of our subsidiaries, including dividends we receive from some of those subsidiaries. Since we also guarantee certain obligations of some of our subsidiaries, any liability we may incur for our subsidiaries’ obligations could reduce the assets that are available to satisfy claims of our direct creditors, including

investors in the debt securities. Additionally, our right to participate as an equity holder in any distribution of assets of any of our subsidiaries upon the subsidiary’s liquidation or otherwise, and thus the ability of our security holders to benefit from the distribution, is junior to the rights of creditors of the subsidiary, except to the extent that any claims we may have as a creditor of the subsidiary are recognized. In addition, dividends, loans and advances to us from some of our subsidiaries may be restricted by the net capital requirements of our various regulators.

 

Your prospectus supplement will describe the specific terms of your debt security, which will include some or all of the following: