Wellink Says European Growth May Be `Closer to' Zero

By Jurjen van de Pol and Marcel van de Hoef

Oct. 30 (Bloomberg) -- European Central Bank Governing Council member Nout Wellink said economic growth in Europe may stagnate next year as the global financial crisis bites.

``Growth is more likely to be closer to 0 percent than 1 percent next year,'' Wellink told the Dutch Parliament in The Hague today. ``I don't think we've seen the end'' of the financial turmoil, he said to reporters, adding that the global economy ``is looking worse than a month ago.''

Companies and consumers across the continent are feeling the pressure as the financial crisis that has prompted interest- rate cuts and bank bailouts spreads to the wider economy. European confidence in the economic outlook is at a 15-year low after falling by a record this month, data today showed.

``We see the effects'' of the financial crisis ``on the real economy worldwide, also in developing countries,'' said Wellink, who heads the Dutch central bank.

The Dutch government on Oct. 3 bought assets from Fortis in the Netherlands, including its stake in ABN Amro, for 16.8 billion euros ($22 billion) to boost confidence and bank lending. The government also has come to the aid of Aegon NV and ING Groep NV with injections of capital totaling 13 billion euros.

``ING is a healthy bank,'' Wellink said today. ``The government capital injection will benefit ING shareholders in the end.''

`Too Much'

He said ``too much attention'' is being paid to the value of ING shares. ING's stock price is down more than 70 percent this year.

``ING is a good, diversified bank,'' Wellink said. ``We need to go back to healthy banking.''

Wellink said he will consider additional measures if bank lending remains slow. Money-market conditions are improving, he said.

Wellink said he is ``not unsatisfied'' with the capitalization of Dutch banks. ``In these difficult external circumstances, the picture is that we still have a strong, solid financial sector,'' he said.

The so-called coverage ratio of Dutch retirement plans has fallen to 109 percent, he said. That ratio is the value of assets compared with future benefit payments.

``Compared with other countries, Dutch pension funds are in a much better position,'' Wellink said.

To contact the reporters on this story: Jurjen van de Pol in Amsterdam jvandepol@bloomberg.net; Marcel van de Hoef in Amsterdam at mvandehoef@bloomberg.net.