Source: New York Times

The Dutch financial services group ING, which has a commercial banking office in Ulaanbaatar, said last week that it would not pay a dividend to shareholders until it had repaid all of the state aid it received during the recent financial crisis. The move is part of an overall plan to reduce exposure to the sovereign debt crisis, which includes a decision not to pursue an initial public offering (IPO) for its Asian-European banking services.

Last Thursday, ING announced that it was abandoning plans for an IPO of its combined Asian and European business, citing turbulence in the equity markets. The firm said it was not considering a sale of its Asian business, but still planned to pursue a separate IPO for its European arm.

Chief Executive Jan Hommen said ING was focused on repaying the bailout it received in 2008 of EUR 10 billion (USD 12.8 billion) from the Dutch government. ING said it would pay the state aid owed, which currently stands at EUR 3 billion, “as soon as possible.” It also has to split up its banking and insurance assets by the end of 2013 to comply with requirements attached to the bailout.

“Given the ongoing crisis in the euro zone and increasing regulatory capital requirements, we need to take a cautious approach and pay special attention to liquidity, funding and capital,” Hommen said in a statement. “In 2011, market circumstances became increasingly difficult and volatile, and we expect that to remain the case in the near future.”

The company's stock has fallen 2 percent by the close of trading in Amsterdam on Friday, the day ING made its announcement, and 20.5 percent over the last 12 months. The Dutch company expects to save EUR 300 million a year by 2015 through so-called procurement initiatives, which will look to centralize purchasing across the firm to reduce costs. It also wants to reduce its cost-income ratio—a measure of a bank's profitability—to 50 to 53 percent by 2015 compared to 55.8 percent at the end of the 2011 third quarter.