S&P Affirms ING Ratings; Outlook Revised to Negative

December 11, 2008

Standard & Poor’s Ratings Services said today that it has revised its outlooks on ING Groep N.V., ING Verzekeringen N.V., ING Bank N.V., and certain related entities to negative from stable. S&P also affirmed its ‘AA-/A-1+’ counterparty credit ratings on Netherlands-based ING Groep N.V. (ING) and ING Verzekeringen N.V. , as well as the ‘AA/A-1+’ counterparty credit ratings on ING Bank N.V. and the counterparty credit ratings on related core subsidiaries of ING.

“The ratings on ING reflect its strong competitive positions, high level of diversification, proactive risk management, and strategic focus,” stated credit analyst Claire Curtin.

S&P also indicated that the ratings “incorporate the group’s significant exposure to investment risk, and a more challenging operating environment.

“The outlook revision reflects the increasing headwinds to operating performance, and our view that performance in both the banking and insurance operations may be materially affected by the tougher operating environment. A negative outlook reflects our view that there is a one-in-three chance or higher of a negative rating change in the medium term.
Curtin added that the negative outlook also “reflects our view of the increasing likelihood of challenges to operating performance in both the banking and insurance operations, which may result in a material reduction in profitability, which we consider incompatible with an ‘AA’ rating.” .

S&P also indicated that “economic and financial market weakness is likely to impact underlying performance over the next 18 months, with a heightened risk of elevated credit costs on lending, and markdowns or impairments on financial investments.

“The ratings could be lowered if earnings weakness is indicative of deterioration in ING’s underlying performance or higher-than-expected investment related losses.

“The outlook could be revised to stable if the group demonstrates a high level of resilience in underlying performance over the coming quarters, in both the banking and insurance operations, as measured by new sales, margins, client balances, and underlying profits. An outlook revision to stable would also be predicated on ING maintaining its capital strength, while managing down hybrid and debt leverage.”

Source: Standard & Poor’s – www.standardandpoors.com

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