[FONT="]UPDATE 1-EU blocks ING call for early debt redemption[/FONT][FONT="]
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320 Words
30 November 2010
07:44 GMT
Reuters News
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English
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[FONT="]* EU blocks early repayment of hybrid[/FONT]
[FONT="]* EU says state aid needs to be repaid first[/FONT]
[FONT="]* ING reiterates aims to repay state before end-2011[/FONT]
[FONT="](Adds details)[/FONT]
[FONT="]AMSTERDAM, Nov 30 (Reuters) - The European Commission has rejected a request by Dutch bank ING to repay a $1.5 billion debt instrument because the financial group has not yet repaid its state aid.[/FONT]
[FONT="]ING had wanted to call the instrument <44978NAA3=> on Dec. 31 as the hybrid will not qualify as Tier I capital under Basel III solvency rules.[/FONT]
[FONT="]"ING cannot repay its private hybrid capital holders until it has repaid the capital it received from the Dutch State in full. This is to ensure a fair distribution of the rescue burden in the first place," said Joaquin Almunia, Commission vice-president in charge of competition policy.[/FONT]
[FONT="]ING received a 10 billion euro ($13.15 billion) capital injection from the Dutch State in October 2008, of which 5 billion euros were repaid a year later.[/FONT]
[FONT="]It also received 12 billion euros in liquidity guarantees.[/FONT]
[FONT="]The Dutch government, at the beginning of 2009, also provided ING with a back-up facility covering 80 percent of a portfolio of $39 billion in illiquid assets.[/FONT]
[FONT="]"It remains our ambition to repay the state before the end of next year," ING spokesman Frans Middendorff said.[/FONT]
[FONT="]"We are not surprised but deplore the (Commission's) decision," he added.[/FONT]
[FONT="]It will now have to pay an interest rate of 3.9 percent on the 8.439 percent non-cumulative guaranteed trust preferred securities paper, made up of three-month LIBOR plus 360 basis points.[/FONT]
[FONT="]ING will be able to call the hybrid loan after repaying the state or after Nov. 18, 2010. (Reporting by Marcel Michelson; Editing by Will Waterman) ($1=.7606 Euro)[/FONT]