Dutch bancassurer ING will repay €5 billion in state support on December 21st, confirming its announced plans and raising hopes it can secure better terms on the remainder of its government aid.
ING shares rose 6 per cent after it said the government was ready to negotiate more favourable terms on the other €5 billion it owes following its October 2008 bailout.
ING has said all along that it wants to repay the state as fast as possible to escape government oversight and give it more freedom on acquisitions, pay and dividends.
Under the current terms, ING has to pay a 50 per cent penalty to repay any of its aid within the first three years.
It obtained a better deal on the €5 billion it will repay this month, but until today it was not clear whether the government was open to changing terms on the rest.
"We believe renegotiation in favour of ING will succeed," SNS Securities said in a research note, adding that it expects the penalty to be revised to about 30 per cent.
ING, one of the top five insurers in Europe, said the total repayment would be €5.61 billion euros, including an accrued coupon of €259 million and a repayment premium of €347 million. The Dutch central bank has approved the repayment.
ING launched a rights issue last month to repay the government and for other purposes. It has called the rights issue a one-off and said future repayments would come from retained earnings and divestments.
The biggest of those divestments is the pending sale of ING's insurance business, a consequence of its state bailout negotiated with the European Commission.
Evolution Securities, in a note today, called ING "an excellent buying opportunity" and said it was likely to repay the rest of its aid with an IPO for a minority of the unit.
KBW and Cheuvreux both upgraded ING to "market perform" as well.