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ING wins court victory in EC state aid dispute

by Laura Board | Published March 2, 2012 at 8:48 AM

An EU court on Friday, March, 2, ruled that the European Commission erred in its calculation of aid granted by the Dutch government to ING Groep SA, upholding an appeal by ING and the Dutch government and partly annulling a 2009 EC decision on the lender's restructuring plan.

Investors welcomed the news, sending ING shares up 2.82% on the NYSE Euronext Exchange in Amsterdam to €6.96.

The case, before the Luxembourg-based General Court, stems from the Commission's November 2009 decision ordering ING to trim its balance sheet by 45% by the end of 2013 and relates to fees payable on the early repayment of bailout financing.

Aid granted by the Dutch government to ING and subsequently approved by the Commission included a €10 billion ($13.3 billion) capital injection and €12 billion in liquidity guarantees, as well as an illiquid back-up facility covering 80% of a portfolio of $39 billion.

ING repaid €5 billion of aid ahead of schedule in December 2009 after agreeing with the Netherlands on new repayment terms, including a reduction in the repayment premium. However, the Commission found that the arrangement constituted €2 billion in additional aid, which also needed to be repaid. ING and the Dutch government disputed that finding in their court challenge.

The tribunal upheld the appeal. It found that the Commission failed to establish that the new repayment terms for a capital injection constituted an unfair advantage for ING that it would have not have received from a private investor in the same situation.

"The court thus annuls the Commission decision in so far as it is based on the finding that the amendment to the repayment terms for the capital injection constitutes additional aid of approximately €2 billion," it said.

ING said it will "carefully assess the full judgment and its consequences."

In a research note ahead of Friday's decision, analyst Lemer Salah of SNS Securities in Amsterdam predicted that a positive ruling for ING could prompt the company to renegotiate with the Commission on deadlines for completing the divestments of its insurance activities and of Westland Utrecht Hypotheekbank.

The court's decision may be appealed on points of law only before the EU's highest court, the European Court of Justice, within two months at the latest.

As part of its November 2009 state aid ruling, regulators had also ordered ING to shun acquisitions and avoid undercutting rivals for some banking products for three years, until it repaid the aid.

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ING wins court victory in EC state aid dispute

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