ING trims to size by riding on momentum

Singapore

IN paying down the last of its debt to the Dutch government this month, ING Group has mostly emerged from a six-year bailout scheme that forced deep restructuring.

It also came with sharp timing of sales of its non-core assets, with the bank taking advantage of strong appetite in emerging markets to quickly offload its insurance arm in Latin America and its private bank in Asia, said Ralph Hamers, global CEO of ING, in an interview. OCBC bought ING Asia's private bank, now known as Bank of Singapore, in 2009.

"Honestly, you have to be a bit opportunistic," he said. "It made a lot of sense that we didn't start with selling the European insurance company, but we did it as the last one, going by where's the economic momentum."

In July, ING raised about 1.54 billion euros (S$2.5 billion) from the initial public offering in its European insurer NN Group that had the offering size expanded to meet investor demand. But this was not before the largest Dutch retail bank won some significant concessions. The regulators, who forced the bank to split off its insurance business, extended ING's full-divestment deadline by a few years, and allowed the lender to merge its European arm with its life-insurance business in Japan for the share sale, with ING struggling to find a buyer for the latter.

The pressure is still on, though. The bank has until the end of next year to bring its stake in NN down from 68 per cent to under 50 per cent.

"If we haven't deconsolidated (by then), we'll have a problem with Brussels," said Mr Hamers, who was appointed CEO last year.

The final repayment of the full 10 billion euros - excluding interest - will mean that the bank can start to pay dividends, and a bonus to its board members.

To seek out growth, ING will focus on its European banking franchise, where it has a clear foothold. It's the third-largest bank in Germany, and continues to gain market share, said Mr Hamers.

"In a country like Germany, we get 1,000 new clients a day," he said, adding that the bank is growing its mortgage loans, and plans to boost its consumer finance, SME and commercial lending. ING earlier told BT it expects revenue from its commercial banking operations in Asia to contribute 20 per cent to the group's commercial banking unit in 3-5 years' time, up from 13 per cent now.

This comes even as Mr Hamers notes the economic challenges in the eurozone, where a triple-dip recession looms, due in part to a failure of structural reform in countries.

"If they don't (reform), (European Central Bank president Mario) Draghi is there, by himself - and however good he is, it's going to be very difficult, from a monetary perspective."

A big part of ING's strategy comes from its branchless model through ING Direct. The bank was among the first movers in offering an online-only bank in Europe. "We're growing market share because we have a disruptive model," said Mr Hamers.

It has also introduced some digital elements to Thailand's TMB Bank, in which it holds a 30 per cent stake, and that remains a "strategic" unit of ING, said Mr Hamers.

At a time when Silicon Valley is competing with banks for deposits, ING stands out. It also claims credit through innovation, as ING is barred from competing on price in Europe.

"I was invited for dinner with six CEOs of startups. I said, 'there's only one reason I took the invitation, because I want to learn from you, how you disrupt, and beyond that, how do you make it a lasting model'. And they said, 'well, that's exactly why we invited you here'," said Mr Hamers.

ING is pushing ahead with mobile banking - which, in the Netherlands, has become more popular than online banking over a period of just two years.

"The older people hated the menu-driven way of online banking. But they love the intuitive way of mobile, and the tablet," he said. "We reinvented all the time."

But while it has picked up deposits in Europe successfully, regulations still hinder the flow of liquidity.

"In Europe, where we're just moving to a European banking union, we still deal with a local German regulator that doesn't allow us to use the euros that we generate as part of our savings franchise in Germany," said Mr Hamers.

"We have a German euro, we have a Dutch euro, we have an Italian euro, we have a Spanish euro. So, there is no euro."