ING May Have to Repay Billions of Euros to Dutch Government - by David Jolly
ING, the large financial services group, faced the unwelcome prospect of having to pay back as much as several billion euros to the Dutch state after European regulators said Tuesday that they were considering whether a bailout of the bank had been too generous. The European Commission, the executive arm of the European Union, said in Brussels that it would extend an investigation into whether the Netherlands had violated state aid rules in providing security for a $39 billion pool of illiquid assets. The investigation hinges on whether the government’s agreement with ING, which is based in Amsterdam, properly valued troubled assets and shared the burden fairly between the bank and taxpayers.
With credit markets frozen, the Dutch government had bought 80 percent of a portfolio of U.S. residential real estate securities from ING at a 10 percent discount to face value, gaining the right to 80 percent of the cash flows from the investments. The portfolio is backed by 590,000 mortgages, mostly rated Alt-A, a level between prime and the lowest rated subprime. The commission said it suspected the government paid too much, in effect giving the bank a subsidy not enjoyed by its competitors.
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