The agency expects a Q3 net loss of around EUR500m
Fitch, the ratings agency, said it views positively the Dutch government's EUR10bn capital injection into ING Group.
However, Fitch also noted that it expected ING Group to announce a Q3 net loss of approximately EUR500m, following EUR1.6bn of pre-tax write-downs.
ING Group and its subsidiaries are under review by Fitch. In addition to the capital injection, the review will take into consideration the deterioration in the Dutch and global economic environment and the potential impact on the group's franchise and profits.
What Fitch said about the capital injection?
The announced injection of EUR10bn of core Tier 1 securities would bring ING Bank's Tier 1 capital ratio to 10%, ING Verzekeringen's regulatory solvency to over 300% and reduce ING Group's Debt/Equity ratio to 10%.
ING Group has two main subsidiaries: ING Bank, which contains most of the banking businesses, and ING Verzekeringen, which contains most of the insurance activities.
The Tier 1 securities are perpetual, non-transferable and non-cumulative. They rank equally with ordinary shares and pay the higher of 8.5% and a 110% of the dividend paid on the ordinary share in 2009, 120% of the dividend paid on the ordinary share in 2010 and 125% of the dividend paid on the ordinary share in 2011. This move is in line with the government's plans to make capital available to financial institutions.
In addition, the government's plan to guarantee new unsecured bank debt, for an amount of up to EUR200bn, further demonstrates a strong commitment to underpin the stability of the financial sector.
