Sunday, January 25, 2009

ING Gets Massive Dutch Bailout.... Dumping € 27.7 Billion Alt-A RMBS On The Dutch Taxpayer........

They call it "illiquid"... I call it "toxic"..... A fantastic deal for ING and a lousy one for the taxpayer..... The loss assumptions for the transfered ALT-A is overly optimistic and the structure of the deal is just another poorly hidden bailout postponing a nationalization with no upside for the taxpayer.....Looks like they have adopted the UBS, Citi, Merrill/Bank Of America structure leaving the taxpayer with a massive disatvantage ( no equity stake ) ..... I think the term "looting" is not a massive overstatement.....

Ziemlich dreist. ING nennet die Position "illiquide", eine bessere Bezeichnung währe sicher " toxisch"...... ING mußte offensichtlich erneut gerettet werden. Für ING ein fantastischer Deal der den Steuerzahler ziemlich teuer zu stehen kommen dürfte. Die Verlustprognosen der ALT-A Positionen sind überaus rosig und stehen im totalen Kontrast zu den jüngsten Bewertungen bei anderen Instituten. Alles in allem ein peinlicher Versuch eine weiter direkte Mrdschwere Kapitalbeteiligung die dem Steuerzahler zumindest einen massiven Aktienanteil ( sprich ne verkappte Verstaatlichung) und damit die Chance bei einer Erholung zumindest einen Teil der Verluste zurückzuerwerben..... Das ganze ähnelt der UBS, Citi, Merrill/Bank Of America Variante (bei denen allerdings der Schrott größtenteils bei den jeweiligen Notenbanken gelandet ist ) die man guten Gewissens als "Plünderung" der Steuerzhaler betiteln kann....


ING update on results and measures to reduce risk and costs
ILLIQUID ASSETS BACK-UP FACILITY
ING and the Dutch government have reached an agreement on an Illiquid Assets Back-up Facility covering 80% of ING’s Alt-A mortgage securities. Market prices for these securities have become depressed as liquidity dried up, which had an impact on ING’s results and equity far in excess of reasonably expected credit losses. The transaction will significantly reduce the uncertainty regarding the impact on ING of any future losses in the portfolio.
Under the terms of the Back-up Facility, a full risk transfer to the Dutch State will be realized on 80% of ING’s EUR 27.7 billion portfolio of Alt-A RMBS at ING Direct USA and ING Insurance Americas. The Dutch State therefore will participate in 80% of any results of the portfolio. This risk transfer will take place at a discount of 10% of par value.
ING will remain the legal owner of 100% of the securities and will remain exposed to 20% of any results on the portfolio. > For more details from todays "taxpayer looting" see the ING Presentation

> If you want to see the details of the "illiquid" ALT-A RMBS visist page 56 - 63 Third Quarter 2008 Results . It´s the latest update i could find. Probably no coincidence that there was no update in todays release...... Wouldn´t be surprised if we will very soon see other "illiquid" assets like corporates bonds, CMBS etc being dumped under similar terms.......

> Wer mehr Details zu den "illiquiden" ALT-A Portfolio sehen möchte empfehle ich die Seiten 56-63 Third Quarter 2008 Results. Sind bis heute die aktuellsten Daten die verfügbar sind. Sicher kein Zufall das es dazu heute kein Update gegeben hat........ Würde mich nicht wundern wenn wir demnächst ähnliche Versuche in anderen sog. "illiquiden" Bilanzpositionen sehen werden ( denke hier besonders an Unternehmensanleihen und Positionen die mit gewerblichen Immobilien zu tun haben )......

As a consequence of the transaction, the Dutch State will be entitled to receive 80% of the cash flows of the total portfolio. ING will pay to the Dutch state an annual Guarantee Fee consisting of a fixed amount plus a percentage of the payments received on the securities. The net present value of this fee is EUR -0.6 billion. ING will receive from the Dutch State payments representing a net present value of EUR 0.5 billion. In addition ING will receive from the Dutch State a management fee with a net present value of EUR 0.7 billion. As a consequence of the factors above, the transaction will have a limited impact on ING’s first quarter profit & loss.

The effects of the transaction on ING’s capital and balance sheet will include a reduction of equity volatility, a positive impact on shareholders’ equity of EUR 5 billion through a reduction of the negative revaluation reserve. Risk-weighted assets will be reduced by approximately EUR 15 billion, raising ING Bank’s Tier-1 ratio by approximately 40 basis points to 9.5% and the core Tier-1 by 32 basis points to 7.4%, both on a pro forma basis. The transaction is expected to close in the first quarter of 2009, subject to further documentation and regulatory approval.

ING will earmark part of the capital released by the Back-up Facility to support the growth of the Dutch lending business for an amount of EUR 25 billion at market conforming conditions. Under the terms of the agreement, ING commits itself to pro-actively use EUR 10 billion of the Credit Guarantee Scheme of the State of the Netherlands to support the scheme.

For the duration of the Back-up Facility, ING will maintain the corporate governance measures agreed upon issuing core Tier-1 securities to the State in November 2008. In addition, the government-nominated members of the ING Supervisory Board will have approval rights on certain executive appointments. The Executive Board of ING has agreed to forego all bonuses until a reviewed remuneration policy will be completed. (LOL)!!!!This policy will include criteria on sustainability for the Executive Board and is expected to be proposed to the annual General Meeting of Shareholders in 2010.

“With this agreement, we take a firm stride to reduce the risks on our balance sheet. We much appreciate the measures the Dutch government is taking in this phase to restore confidence in the financial sector and stimulate the economy and thank them for reaching this agreement,” said Jan Hommen.

> No wonder the stock is now up almost 25 percent.....Time to renegotiate the stock options / bonus programms....... More bailout news out of Europe France to support Airbus via banks: source & Schaeffler and Continental in aid talks ( even more outrageous than ING )

> Kein Wunder das die Aktie mal eben satte 25% höher springt......Höchste Zeit fürs Management die Aktienoptionsprogramme sowie die Boniprogramme nachzuverhandeln.... Mehr in Sachen Bailout die einem die einem zumindest mit dem Kopf schüttel lassen kommt aus Frankreich ( siehe France to support Airbus via banks: source ) sowie aus Deutschland Staatshilfe für Schaeffler und Conti geplant. Besonders der Fall Fall Conti/Schaeffler is ein klares Anzeichen dafür das selbst größte Inkompetenz momentan erstklassige Chancen hat vom Steuerzahler rausgehauen zu werden.....

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3 Comments:

Anonymous Anonymous said...

Good day.

Sorry never read your post 'till now.

I think someone owes the tax payer a simple question: How the heck did we find ourselves in this mess.

Just as front running stocks in the 1920s make a very few very rich, so has the front running of credit made a few as rich. The loss will be shared by all.

I think, and I could be very wrong, there will be a few shifts in the social space which will redefine who we are and what a nation state is. Part of this might well be casting aside free market principles and welcoming a world dominated by oligarchs. My big question is how will the average Joe feel about slavery and servitude?

7:49 PM  
Anonymous Barley said...

oh, sorry that was me

Barley

7:50 PM  
Blogger jmf said...

Moin,

the relative calm from the public is amazing.

Most of them just don´t understand what is going on ( like 99 percent of politicians )

I have zero hope that this will change when "bad banks" around the world or more deals like the ING one will transfet trillions of taxpayers money in excahnge for toxic paper and no wonership of banks.

The entire topic that there are still any bonux payments and dividends are being payed out is outrageous.

Sometimes i wish more would behave like Icelanders.... :-)

But obviously the pain isn´t great enough so far.....

1:34 AM  

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