EU Sees ‘Limited’ Effects of Court Ruling on ING’s Bailout Terms

ING Groep NV’s victory in a court case on the European Union’s terms of its state bailout will have “limited” consequences for reviews of other bank rescues, according to the EU’s antitrust chief.

“I don’t think the consequences of this decision will go beyond the need” to formally re-examine the terms for the Dutch lender’s 2008 bailout, EU Competition Commissioner Joaquin Almunia told reporters today. There is a “high probability” that regulators would appeal the ruling, he said.

The EU’s General Court said the European Commission wrongly considered a revision of repayment terms as 2 billion euros ($2.6 billion) of additional aid to ING on top of 10 billion euros it received in 2008. The court struck down part of the EU’s decision, which forces regulators to re-open their assessment of part of the Dutch government’s bailout to the bank.

EU governments spent 1.6 trillion euros to shore up banks from 2008 to 2010 amid the financial crisis that followed the collapse of Lehman Brothers Holdings Inc., according to the commission, most of that in loan guarantees and fresh capital. The EU must approve large state subsidies and can impose conditions on the aid.

ING is still studying the judgment and its consequences, Raymond Vermeulen, spokesman of the Amsterdam-based bank, said in an interview today. He declined to comment on Almunia’s statement.

Balance Sheet

ING was ordered by the commission to sell units to shrink its balance sheet by 45 percent by the end of 2013 and avoid undercutting rivals on prices for some banking products for three years or until it repaid the aid. The lender returned 5 billion euros of aid in 2009 after agreeing with the Netherlands on revised terms. The EU regulator determined that change amounted to extra aid of about 2 billion euros.

Almunia said the Dutch government must still resubmit its request for the EU to start re-examining the aid for ING.

Belgium’s KBC Groep NV is one of three other financial services providers that mirrored ING’s actions in seeking to change the terms of government aid repayments, Almunia said.

The Belgian government and the bank are “complying very smoothly” with the EU, he said, and Aegon NV and SNS Reaal NV have settled their cases.

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