The ratings reflect ING Bank’s relatively strong and resilient retail and commercial banking franchise in the Benelux as well as progress made in restructuring since the financial crisis. The ratings do not apply to debt issued or guaranteed by ING Groep NV.

In line with Scope’s bank rating methodology, the ratings on ING Bank do not incorporate any additional notches for government support, as the agency considers a potential state-bailout scenario to be increasingly unlikely as European Union banking systems move towards a resolution and recovery framework which includes creditor bailin.

In its research, Scope notes that ING Bank has continued to be profitable despite restructuring, impairments on financial assets and elevated credit costs. In 2013, the Bank generated EUR 3.0bn in net earnings compared to a low of EUR 0.7bn in 2009. The Bank’s funding and capital positions have also improved to satisfactory levels. Nevertheless, ING Bank remains part of ING Group NV and continues to be impacted by the changes happening at the group level. The Group is in a period of transition, divesting all of its insurance businesses as required by the European Commission (EC) in order to gain approval for the State aid it received in 2008/2009.

As a positive rating-change driver for ING Bank, Scope mentions the successful completion of the EC required restructuring. From 2015/2016, State aid should be fully repaid and the Group will be comprised primarily of banking operations. The drag on ING Bank’s performance from restructuring costs is expected to decline and enable the Bank to retain earnings, further supporting its capital position. At year-end 2013, the reported fully-loaded CRD 4 CET1 ratio was 10%, with a leverage ratio of 3.9%.

As management begins to fully focus on managing the banking operations, Scope would view negatively a change in strategy and business model that increases the risk profile of ING Bank. It noted that the Bank has refocused its financial markets activities in areas where it has the strongest franchises and where it can support its clients as a universal bank. Another potential negative driver for ING Bank’s credit profile would be a meaningful deterioration in asset quality as about one-third of the loan portfolio is exposed to the relatively weak economic environment in the Netherlands.

Both the rating drivers and the rating-change drivers are detailed in Scope’s research on ING Bank which supports the ratings.

The following ratings were assigned:

ING Bank NV
- Issuer Credit-Strength Rating (ICSR) at A. The ICSR represents a credit opinion on a bank’s ability to meet its contractual financial commitments on a timely basis and in full while remaining a going concern.
- Senior unsecured debt rating at A.

In the near future Scope will rate ING Bank’s short-term debt, as well as subordinated securities and capital instruments.

Scope said that the ratings assigned today to ING Bank, as well as to 17 other large European banks, represent the first step in its rating coverage of the banking industry. The ratings assigned to ING Bank are (i) based on public information, (ii) not solicited by the issuer and (iii) without issuer participation in the process.

The methodology used for the rating assessment is “Bank Rating Methodology” published in February 2014. The methodology used for the financial forecasts of the rating analysis is “Forecasting Bank Financials” published also in February 2014. These methodologies are available on www.scoperatings.com.