Dutch state profits from ING deal on risky US mortgages
The Dutch state said Friday it will end an arrangement to help the country's largest bank ING with risky US-based mortgage securities and earn a profit of around 400 million euros ($540 mn).
The Dutch state launched the programme in 2009 to prop up the then-floundering bank by taking over four-fifths of its portfolio of Alt-A mortgage securities in the United States.
The Dutch state temporarily took over from ING some 21.6 billion euros of the Alt-A mortgage securities, which are riskier than top-rated or prime securities, under the so-called Illiquid Assets Back Up Facility (IABF).
The assets had plunged in value and were illiquid due to the collapse of the mortgage-backed securities market in the United States in late 2008, and under accounting rules the bank would have had to book massive losses unless the state had taken the assets over until the markets recovered.
"I foresee the state booking a profit of 400 million euros," after the sale of the remaining securities back to ING, which the state hopes to conclude within a year, Finance Minister Jeroen Dijsselbloem said.
"With the sale the end of state support to ING is in sight," he said adding that "this is an important step in the further normalisation of the financial sector after the 2008-09 financial crisis."
Friday's agreement is separate however from moves by ING to sell off its US-based insurance arm ING USA to help pay back a separate 10-billion-euro loan in state aid it took during the height of the financial crisis, ING spokesman Raymond Vermeulen said.
© 2013 AFP