ING Posts Loss After Writing Down 1.51 Billion Euros

By Martijn van der Starre

Nov. 12 (Bloomberg) -- ING Groep NV, the financial-services firm that got a 10 billion-euro ($12.6 billion) lifeline from the Netherlands last month, said writedowns amounted to 1.51 billion euros in the third quarter and may extend through year end.

The third-quarter loss, the first since the company was created in 1991, was 478 million euros, or 22 cents a share, the Amsterdam-based company said today in a statement. That was less than the 500 million-euro loss ING the company forecast last month and compared with net income of 2.31 billion euros, or 1.08 euros, in the year-earlier period.

ING wrote down the value of stocks, bonds, Alt-A and subprime mortgages and assets related to the bankruptcy of Lehman Brothers Holdings Inc. Chief Executive Officer Michel Tilmant, who agreed last month to sell non-voting securities to the Dutch state, said asset prices will still be under pressure in the fourth quarter, and the weakening economy will hurt next year's results.

``There are still risks, and the Alt-A mortgage assets are one of them,'' said Folmer Pietersma, who helps oversee about $300 million as a fund manager at Robeco NV in Rotterdam, in an interview before the results were released. ``The question continues to be how many writedowns will follow.''

ING, which traces its roots to 1743, fell 6.2 percent yesterday to 8.08 euros in Amsterdam trading, valuing the firm at 16.7 billion euros. The stock is down 70 percent this year, underperforming the 69-member Bloomberg Europe 500 Banks and Financial Services Index, down 58 percent.

Boosting Capital

ING was the first to draw on money set aside by the Dutch government to prop up financial firms, lifting core Tier 1 capital, an indicator of a company's ability to absorb losses, to about 8 percent. It will use half of the 10 billion euros to boost shareholders' equity at the banking unit and 2 billion euros to bolster the insurance business.

The remaining 3 billion euros will reduce ING's debt-equity ratio to 10 percent from 15 percent, the company said on Oct. 19.

The 10 billion euros are ``more than enough,'' Chief Financial Officer John Hele said in an interview today with Bloomberg. ``We are in quite a storm this quarter, but we're very happy to have the extra buffer to help us ride this through.''

Governments from Washington to London to Brussels have rushed to shore up banks' capital and unlock lending since credit markets froze up following the Sept. 15 bankruptcy of Lehman Brothers. In the U.S., Treasury Secretary Henry Paulson has set aside $250 billion to buy preferred shares in financial companies in an effort to stimulate lending.

Worldwide Writedowns

Financial institutions worldwide have posted about $920 billion of credit losses and markdowns since the start of last year, according to data compiled by Bloomberg.

Aegon NV, which owns San Francisco-based Transamerica Corp., received a 3 billion-euro lifeline from the Netherlands on Oct. 28. The Dutch government also bought local units of Fortis and ABN Amro Holding NV last month for 16.8 billion euros before starting the recapitalization fund.

To contact the reporter on this story: Martijn van der Starre in Amsterdam at vanderstarre@bloomberg.net