ING Bank has comfortably passed the Asset Quality Review (AQR) and stress test which were part of the Comprehensive Assessment as conducted by the European Central Bank (ECB) and the European Banking Authority (EBA). The outcome reflects ING's strong capital position and resilient balance sheet.
In the AQR exercise, the ECB - based on its own non-IFRS methodology- concluded that ING Bank does not have a capital deficit, with its adjusted CET1 ratio being revised down by 29 basis points to 10.1% as of 31 December 2013. This is well above the threshold CET1 ratio of 8%. ING Bank's starting CET1 ratio for this exercise of 10.4% is lower than its 31 December 2013 reported CT1 ratio of 11.7%, principally because of the impact of the previously announced pension transaction in the Netherlands which was included in the first quarter results of 2014, as well as previously disclosed Basel III impacts.
In the stress test that followed the AQR exercise, participating banks were tested against a baseline and an adverse scenario based on the EBA common methodology and assumptions. Using the starting point of the AQR adjusted CET1 ratio of 10.1%, ING Bank's CET1 ratio would increase to 10.4% in the baseline scenario and decrease to 8.7% in the adverse scenario. Both are comfortably above the threshold CET1 ratios of 8% and 5.5% respectively for the scenarios in this exercise.
Ralph Hamers, CEO of ING said: "The clear results of the AQR and stress test represent a confirmation of ING's prudent management approach. We are confident the Comprehensive Assessment, which is unprecedented in both scope and scale, will increase transparency, will enhance trust in the European banking system and will set the ECB off to a good start directly supervising Europe's largest banks."
After passing the AQR and stress test, ING has started the process for the repayment of the final tranche of core Tier 1 securities to the Dutch State. ING aims to finalize this repayment in 2014, subject to regulatory approval.