November 1, 2013 1:01 pm

Dutch government profits from ING bailout

The Netherlands’ government will turn a €400m profit on the sale of US subprime mortgage-backed securities that it took over as part of its 2009 bailout of Dutch bank ING during the financial crisis.

Jeroen Dijsselbloem, the Netherlands’ finance minister, announced today he had reached agreement to sell the so-called “Block Alt-A” securities for their current market worth of €6.4bn.

Under the complex terms of its bailout arrangement with ING, the state owes the bank €6bn for the securities, leaving it with a €400m profit.

The government struck the agreement to take over the risky ING securities after their value plunged from a nominal €24bn due to missed mortgage payments and falling US house prices. The falling value of the securities threatened to force ING to take a large writedown at a time when it was already struggling under the impact of the financial crisis.

“With this sale, the end of state support to ING is in sight,” Mr Dijsselbloem wrote in a letter to parliament.

In addition to assuming the Alt-A portfolio, the Dutch state provided ING with more than €10bn in capital injections. ING is scheduled to make its next repayment of €1.125bn of that aid on November 6, leaving it with a further €2.5bn in principal and interest to repay by 2015.

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