Overview -- In our view, Dutch banks are exposed to the potential of a more protracted downturn in The Netherlands and the wider eurozone. -- We are therefore revising our economic risk score for The Netherlands and our Banking Industry Country Risk Assessment to '3' from '2'. -- As a result, we are revising to negative from stable the outlooks on ING Groep, ING Bank, and some of the bank's subsidiaries. We are affirming the long- and short-term counterparty credit ratings. -- At the same time, we are lowering by one notch the entities' subordinated and hybrid debt ratings as a result of their lower stand-alone credit profiles. -- The negative outlooks mirror that on The Netherlands because we would reduce the ratings uplift from government support that we currently factor into the ratings on the entities if the sovereign were downgraded. Rating Action On Nov. 16, 2012, Standard & Poor's Ratings Services revised to negative from stable its outlooks on Dutch bank ING Bank N.V., its holding company ING Groep N.V., and banking subsidiaries ING Belgium SA/NV, ING Financial Markets LLC, and ING Bank (Australia) Ltd. At the same time, we affirmed the long- and short-term counterparty credit ratings at 'A+/A-1' for ING Bank, ING Belgium, and ING Financial Markets, and 'A/A-1' for ING Groep and ING Bank (Australia). In addition, we lowered the ratings on the hybrid capital instruments of ING Groep to 'BBB-' from 'BBB'. We also lowered the ratings on nondeferrable subordinated debt issued by ING Bank N.V. to 'BBB+' from 'A-', and to 'BBB' from 'BBB+' for that issued by ING Groep. Rationale The outlook revision reflects our view of the effect of moderately higher economic risk on ING Bank's stand-alone credit profile (SACP) and the fact that we would likely reduce the ratings uplift from government support that we currently factor into the ratings if the sovereign were downgraded. This follows our review of the Banking Industry Country Risk Assessment (BICRA) on The Netherlands. Against the backdrop of a potentially more protracted downturn in The Netherlands and wider eurozone, we have revised our economic risk score for The Netherlands and our BICRA assessment to '3' from '2'. (For more information, see "Various Rating Actions Taken On Dutch Banks Due To Increased Economic Risks," published Nov. 16, 2012 on RatingsDirect on the Global Credit Portal). We have revised downward ING Bank's SACP to 'a-' from 'a', but we have increased the ratings uplift for potential government support to two notches from one, in line with our bank criteria. The downward revision of ING Bank's SACP resulted from our view of moderately higher economic risks in The Netherlands and the wider eurozone, which led us to lower our anchor--or starting point for our ratings--for ING Bank to 'bbb+' from 'a-'. The uplift we have factored into our ratings on ING Bank is based on our view of the bank's "high" systemic importance in The Netherlands, a country we assess as "supportive" of its banking system. The starting point for our ratings on ING Bank is its 'bbb+' anchor, which is in line with the anchor for purely Dutch commercial banks, although it takes into consideration the mix of countries in which the bank operates. We continue to consider its business position as "strong", as defined by our criteria, primarily reflecting its strong franchise in the Benelux countries and good diversification of its revenue by product and geography. We maintain an "adequate" assessment of the bank's capital and earnings, based on our expectation that the Standard & Poor's risk-adjusted capital (RAC) ratio will be 8.0%-8.5% by end-2014. Our assessment takes into account the repayment of the last EUR3 billion tranche of government capital securities but benefits, among other things, from our assumption of earnings retention, the recent sale of its Capital One stake and disposals of its ING Direct businesses in Canada and the U.K. Our assessment of ING Bank's risk position is "adequate" due largely to the sound diversification of its exposures and sound track record in retail and corporate lending. Our view of the bank's funding as "average" and its liquidity as "adequate" is underpinned by its large deposit base and sound liquidity buffer. We rate ING Groep one notch below ING Bank as a result of its status as a nonoperating holding company. The ratings on ING Financial Markets and ING Bank (Australia) are based on our view of their positions as, respectively, "core" and "highly strategic" subsidiaries of ING Bank. Outlook The negative outlook on ING Bank mirrors that on The Netherlands. Under our criteria, with all other factors remaining the same, one of the two notches of government support currently factored into the long-term counterparty credit rating on ING Bank would be removed if the long-term unsolicited rating on The Netherlands were lowered by one notch (for further details, see table 22 in "Banks: Rating Methodology And Assumptions," published on Nov. 9, 2011). We would revise the outlook on ING Bank to stable if we were to take a similar action on the outlook on The Netherlands. We consider an upgrade unlikely within the next two years. According to our government support methodology and in light of our 'AAA' rating on The Netherlands, we would not raise our 'A+' long-term rating on ING Bank following a one-notch improvement in its SACP, as we would then remove one of the two notches of government support currently factored into the rating. Related Criteria And Research -- No Pain, No Gain: How The Housing Market Correction Is Affecting Dutch Banks, June 27, 2012 -- Banks: Rating Methodology And Assumptions, Nov. 9, 2011 -- Banking Industry Country Risk Assessment Methodology And Assumptions, Nov. 9, 2011 -- Bank Capital Methodology And Assumptions, Dec. 6, 2010 -- Bank Hybrid Capital Methodology And Assumptions, Nov. 1, 2011 -- Group Methodology, April 22, 2009 -- Various Rating Actions Taken On Dutch Banks Due To Increased Economic Risks, Nov. 16, 2012 Ratings List Downgraded To From ING Bank N.V. Subordinated BBB+ A- ING Capital Funding Trust III Preferred Stock BBB- BBB ING Groep N.V. Junior Subordinated BBB- BBB Ratings Affirmed ING Bank N.V. Certificate Of Deposit Foreign Currency A+ Local Currency A-1 ING Bank (Australia) Ltd. Certificate Of Deposit A ING Belgium S.A./N.V. Certificate Of Deposit A+ Internationale Nederlanden (U.S.) Funding Corp. Counterparty Credit Rating --/--/A-1 ING Bank N.V. Senior Unsecured A+ Certificate Of Deposit A-1 Commercial Paper A-1 Aetna Services Inc. Senior Unsecured A ING (US) Funding LLC Commercial Paper A-1 ING (US) Issuance LLC Senior Unsecured A+ ING Groep N.V. Senior Unsecured A Short-Term Debt A-1 Lion Connecticut Holdings Inc. Senior Unsecured A Ratings Affirmed; CreditWatch/Outlook Action To From ING Bank N.V. ING Financial Markets, LLC ING Belgium S.A./N.V. Counterparty Credit Rating A+/Negative/A-1 A+/Stable/A-1 ING Bank (Australia) Ltd. ING Groep N.V. Counterparty Credit Rating A/Negative/A-1 A/Stable/A-1 Complete ratings information is available to subscribers of RatingsDirect on the Global Credit Portal at www.globalcreditportal.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com. Use the Ratings search box located in the left column.