ING staock

ING stock

As Citykid wrote: “I do not believe in Socialism for the Banks and Capitalism for the rest of us”. So true. But it can be handled differently too. Now, for those of you who read this blog now and then and see me trying to connect some dots between my tiny country and the US, those tries probably look a bit “mouse and elephant walk over bridge-mouse says: oh my how we stomp!” like, and actually, I agree. Still, Dutch ING bank (who some of you might know as ING-direct in the US and the UK) is the one but largest consumer bank and one of the top 20 financial institutions in the world. It’s core tier one ration dropped below the minimum requirements and they knocked on this tiny countries door. Here is the deal that came out of it:

  • The state will inject 10 bln Euro’s in ING ($13.5 bln).
  • The state will get two board seats, having veto rights on important issues such as divident, board salaries and acquisitions.
  • The board members will not get any bonuses (and you and I know these bonuses are far far bigger than regular salaries).
  • The board members will get severely limited step down packages (maxed to one year salary).
  • The bank needs to repay this with an 8.5% interest rate, where the state acquires this money through secure and now very wanted state loans paying out 4%.

Most people seem to think this is a pretty good deal for the taxpayer. What do you think, especially when compared with the Paulson’s bailout plan?

What’s kinda funny is that the state has now a serious stake in two competing bank and insurance heavyweights.