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December 12, 2009

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ING repays half of bailout loan

ING Groep NV, the Dutch bank and insurer, said yesterday it will repay 5.56 billion euros (US$7.4 billion) in government bailout money on December 21 with cash raised from investors.

That's half of the 10 billion euros, plus interest, that ING received from the Netherlands in one bailout package last year.

The company is paying the state back with proceeds from a 7.5-billion-euro share issue.

"After repaying half of the funds we received last year from the Dutch state, we will work now toward repaying the second half," said CEO Jan Hommen.

He said the company would use regular earnings and money raised from divestments for that.

Until it repays the aid in full, ING is barred from buying other firms and from undercutting rivals with lower prices or more favorable interest rates, and it must get European Union approval to repay hybrid and subordinated debt capital.

ING is using another 1.3 billion euros of the money raised in the share issue to pay for its other bailout package, a complicated deal by which the Dutch assumed most of the risks and benefits of ING's portfolio of mortgage-backed securities.


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