AMSTERDAM Nov 1 The Dutch state said on Friday it will sell a 6.4 billion euro ($8.7 billion) portfolio of U.S. mortgage securities that it took over from ING during the financial crisis, paving the way for the bank to repay its state aid ahead of schedule.
The original arrangement between the government and ING, set up in 2009, was intended to reduce risk and uncertainty for ING stemming from its portfolio of U.S. Alt-A mortgage securities, and was provided by the state on top of a 10 billion euro capital injection.
"Market developments now allow the unwinding of the facility, including selling the securities, with a cash profit for the Dutch State," ING said in a statement.
The agreement removes one aspect of ING's state ties, leaving the repayment of the rest of the state aid, analysts said.
Bailed out by the Dutch state in 2008, ING has been shedding its insurance, investment management and other assets through disposals or listings and is cutting thousands of jobs to raise funds with which to repay state aid and bolster its capital.
"This is positive for ING," said Cor Kluis, an analyst at Rabobank.
"ING had two lines of state involvement, Alt A and state capital. Now we have this agreement on Alt A, ING has a bigger motivation to pay back the government ahead of schedule. I think that by the middle of next year they will have paid back the government in full, one year ahead of the 2015 deadline."
ING shares were up 1.5 percent at 9.523 euros by 0914 GMT.
ING said earlier this week it would repay another 1.125 billion euros to the state on Nov. 6, including premiums and interest, bringing the total amount repaid to the state to 11.3 billion euros.
"With this payment we will have paid the Dutch State over 11 billion euros in principal, interest and premiums and we intend to make our final payments within the next 18 months, resulting in a total annualised overall return for the Dutch state of 12.5 percent," said Ralph Hamers, CEO of ING Group.
Another tranche was due to be paid in March 2014 and the final tranche due in May 2015, ING said.