ANNUAL REPORT ING GROUP 2001
TOWARD A GLOBAL ING BRAND
2 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
CONTENTS
TOWARD A
GLOBAL
ING BRAND
PAGE 9 -12
H I G H L I G H T S 2 0 0 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1 0 Y E A R S K E Y F I G U R E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
M E S S A G E F R O M T H E C H A I R M A N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
P R O F I L E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
T O W A R D A G L O B A L I N G B R A N D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
S T R U C T U R E A N D C O M P O S I T I O N O F T H E B O A R D S . . . . . . . . . . . . . . . . . . . 1 3
E X E C U T I V E C E N T R E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 4
P R O D U C T S & S E R V I C E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5
I N F O R M AT I O N F O R S H A R E H O L D E R S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 6
I N G I N S O C I E T Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 8
R E P O R T O F T H E S U P E R V I S O RY B O A R D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 0
R E P O R T O F T H E E X E C U T I V E B O A R D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2
F I N A N C I A L H I G H L I G H T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2
G R O U P S T R AT E G Y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 4
O U T L O O K F O R 2 0 0 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6
I N G E U R O P E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7
I N G A M E R I C A S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2
I N G A S I A / PA C I F I C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 6
I N G A S S E T M A N A G E M E N T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 9
H U M A N R E S O U R C E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3
R I S K M A N A G E M E N T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 5
F I N A N C I A L I N F O R M AT I O N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8
A U D I T O R ’ S R E P O R T . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 9
S U M M A RY A N N U A L F I G U R E S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 0
A D D I T I O N A L I N F O R M AT I O N : . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1
- R A R O C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1
- E M B E D D E D VA L U E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2
- R AT I O S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4
- C R E D I T R AT I N G S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5
C O R P O R AT E G O V E R N A N C E . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6
G O V E R N A N C E AT I N G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 6
I N F O R M AT I O N O N S U P E R V I S O RY B O A R D M E M B E R S . . . . . . . . . . . . . . . . 6 8
I N F O R M AT I O N O N E X E C U T I V E B O A R D M E M B E R S . . . . . . . . . . . . . . . . . . . . 6 9
R E M U N E R AT I O N E X E C U T I V E B O A R D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 9
R E M U N E R AT I O N S U P E R V I S O RY B O A R D . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1
S T O C K O P T I O N P L A N . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1
R E P O R T S O F T H E ‘ S T I C H T I N G E N ’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3
W O R K S C O U N C I L S A N D A D V I S O RY C O U N C I L . . . . . . . . . . . . . . . . . . . . . . . . . 7 4
0
0 .5
1 .0
1 .5
2 .0
2 .5
0100999897
OPERAT IONAL NET PROF IT
PER SHARE
in euros
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 3
R E S U LT S 2 0 0 1 . . . . . . . . . . . . . . . . . . . . . . 2 2
ING’s operational net profit
increased by 6.1% to 4,252
million and operational net profit
per share advanced by 5.3% to
2.20. Dividend rose by 3.2%
to 0.97 per share. This
means a pay-out ratio of 44.1%.
Total assets under management
rose by 2% to 513 billion.
I M PA C T O F S E P T E M B E R 1 1
E V E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2
Indirectly, ING was confronted
with (re-)insurance claims relat-
ing to the WTC disaster. After
external catastrophe cover of
100 million and internal
charges to catastrophe provi-
sions, the total loss after tax in
the 2001 annual results was
100 million.
I N T E G R AT I O N I N U N I T E D S TAT E S
S T E P P E D U P . . . . . . . . . . . . . . . . . . . . . . . . 3 2
Integration of ReliaStar and
Aetna Financial Services with
ING’s insurance activities pro-
gressed as planned. In December
2001, the next step in the ongoing
integration process was announc-
ed together with an expense
reduction programme to counter
the impact of weaker market
conditions.
ASSET MANAGEMENT UNITS IN US
MERGED INTO ING AELTUS . . . . . . . 4 0
In June 2001, ING formed ING
Aeltus Group, a new institu-
tional investment management
firm that combines two existing
ING entities in the US: Aeltus
Investment Management and
ING Furman Selz Asset Mana-
gement. ING Aeltus had 69
billion in assets under manage-
ment at year-end 2001.
I N T E G R AT I O N O F W H O L E S A L E
A C T I V I T I E S C O N T I N U I N G . . . . . . . . 2 8
In 2001, all wholesale operations,
including corporate and invest-
ment banking and group insur-
ance, were combined under the
Executive Centre ING Europe.
Further restructuring is under-
way to bring the cost base in
line with the changed market
conditions.
I N G D I R E C T: A N O T H E R Y E A R O F
R E C O R D G R O W T H . . . . . . . . . . . . . . . . . . 2 8
ING Direct delivered another
year of record growth by doub-
ling its client base and funds
entrusted. At year-end, total
clients stood at 2.6 million and
funds entrusted at 24 billion.
These figures include DiBa in
Germany in which ING expand-
ed its 49% stake to a majority
interest of 70% in February
2002.
P E N S I O N S J O I N T V E N T U R E I N
G E R M A N Y . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0
BHF-Bank (part of ING Group),
BHW and BGAG established
BHW Invest FT, a joint venture
to enter the newly defined field
of pension products based on
the new ‘Riester’ legislation.
BHW Invest FT has already
received its first mandates from
pension funds.
S T R AT E G I C A L L I A N C E W I T H
P I R A E U S B A N K . . . . . . . . . . . . . . . . . . . . . 3 0
In December 2001, ING and
Piraeus Bank agreed on a strate-
gic alliance in the Greek market.
Between them, the two partners
have local market shares of 14%
in life insurance, 10% in banking
and 8% in asset management and
will distribute their products
through 2,500 agents and 300
bank branches.
I N G AT TA I N E D 1 0 0 % O F
S E G U R O S C O M E R C I A L A M É R I C A ,
M E X I C O . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4
ING increased its stake in Se-
guros Comercial América (SCA)
from 42% to full ownership.
SCA is the largest private
insurer in Mexico.
I N G A N D A U S T R A L I A N B A N K A N Z
T O F O R M J O I N T V E N T U R E . . . . . . . 3 8
ING Australia and ANZ Bank
agreed on a joint venture in
funds management and life
insurance in Australia and New
Zealand. The proposed joint
venture, to be known as ING
Australia Limited, would be
owned 51% by ING and 49% by
ANZ.
S T R O N G P R O G R E S S I N I N G B R A N D
B U I L D I N G . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Many rebranding programmes
were successfully initiated in
ING markets, such as the
United States, Mexico, Chile,
Poland, the Czech Republic,
Taiwan and Malaysia. In the
Netherlands, ING business units
will introduce an ING
endorsement as a first step
toward the ING brand.
H I G H L I G H T S 2 0 0 1
R E S U LT S 2 0 0 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2
I M PA C T O F S E P T E M B E R 1 1 E V E N T S . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2
I N G D I R E C T: A N O T H E R Y E A R O F R E C O R D G R O W T H . . . . . . . . . . . . . . 2 8
I N T E G R AT I O N O F W H O L E S A L E A C T I V I T I E S . . . . . . . . . . . . . . . . . . . . . . . . . 2 8
P E N S I O N S J O I N T V E N T U R E I N G E R M A N Y . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 0
S T R AT E G I C A L L I A N C E W I T H P I R A E U S B A N K . . . . . . . . . . . . . . . . . . . . . . . 3 0
I N T E G R AT I O N I N U N I T E D S TAT E S S T E P P E D U P . . . . . . . . . . . . . . . . . . . . 3 2
I N G AT TA I N E D 1 0 0 % O F S E G U R O S C O M E R C I A L A M É R I C A . . . . . 3 4
I N G A N D A N Z B A N K T O F O R M J O I N T V E N T U R E . . . . . . . . . . . . . . . . . . . 3 8
A S S E T M A N A G E M E N T U N I T S I N U N I T E D S TAT E S M E R G E D . . . . . 4 0
CONTINUED PROFIT GROWTH
4 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
1 9 9 2 1 9 9 3 1 9 9 4 1 9 9 5 1 9 9 6
BALANCE SHEET (in billions of euros)
Shareholders’ equity 7 10 10 11 16
Total assets 147 154 160 180 221
ASSETS UNDER MANAGEMENT 47 53 57 95 112
(in billions of euros)
MARKET CAPITAL ISATION 6 11 10 14 22
(in billions of euros)
RESULTS (in millions of euros)
Income from insurance operations (1)13 ,027 13 ,424 12 ,757 13 ,447 15 ,226
Income from banking operations 3 ,130 3 ,529 3 ,706 4 ,428 5 ,316
Operational result before taxation
Insurance operations 641 707 832 956 1 ,134
Banking operations 477 607 685 795 968
Dividend on own shares -23 -27 -33
Operational result before taxation 1 ,118 1 ,314 1 ,494 1 ,724 2 ,069
Operational net profit 830 921 1 ,045 1 ,202 1 ,507
Net profit 830 921 1 ,045 1 ,202 1 ,507
F IGURES PER ORDINARY SHARE
(EUR 0.24 nominal value)
Operational net profit 0 .69 0 .73 0 .79 0 .87 1 .04
Net profit 0 .69 0 .73 0 .79 0 .87 1 .04
Distributable net profit 0 .69 0 .73 0 .79 0 .87 1 .04
Dividend 0 .29 0 .32 0 .34 0 .38 0 .46
Shareholders’ equity 5 .70 7 .46 7 .23 7 .56 10 .63
RATIOS (in %)
ING GROUP
Return on equity (ROE) 8 .7 8 .6 10 .6 12 .1 11 .5
Operational net profit growth 16 11 13 15 25
Pay-out ratio 41 .9 43 .4 43 .0 43 .2 43 .9
INSURANCE OPERAT IONS
Premium/expense growth gap 2 9 4 -2 3
Life premiums as a % of total premiums 64 68 69 69 70
Combined ratio non-life insurance 107 108 105 104 103
BANKING OPERAT IONS
BIS ratio ING Bank 10 .25 10 .90 11 .12 11 .07 10 .89
Tier-1 ratio ING Bank 5 .98 6 .18 6 .59 6 .79 7 .57
Efficiency ratio 71 .9 70 .2 68 .9 70 .9 72 .1
EMPLOYEES (average full-time equivalents) 50 ,650 49 ,030 46 ,980 52 ,140 55 ,990
1) Restated. 2) Excluding ING Direct.
10 YEARS KEY F IGURES
0
50
100
150
200
250
300
350
400
450
500
550
600
650
700
TOTAL ASSETS
in billions of euros
92 93 94 95 96 97 98 99 00 01
0
500
1 ,000
1 ,500
2 ,000
2 ,500
3 ,000
3 ,500
4 ,000
4 ,500
5 ,000
5 ,500
6 ,000
OPERAT IONAL RESULTS
in millions of euros
92 93 94 95 96 97 98 99 00 01
Operational net profit
Operational result
before taxation
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 5
1 0 Y E A R S K E Y F I G U R E S
1 9 9 7 1 9 9 8 1 9 9 9 2 0 0 0 2 0 0 1
22 29 35 25 22
282 395 493 650 705
174 253 345 503 513
32 50 58 83 57
19 ,535 26 ,908 29 ,720 38 ,307 63 ,077
6 ,306 8 ,415 9 ,876 11 ,302 11 ,111
1 ,688 2 ,065 2 ,400 3 ,162 3 ,571
1 ,276 804 1 ,981 2 ,605 2 ,170
-44
2 ,920 2 ,869 4 ,381 5 ,767 5 ,741
2 ,180 2 ,103 3 ,229 4 ,008 4 ,252
2 ,206 2 ,669 4 ,922 11 ,984 4 ,577
1 .40 1 .12 1 .68 2 .09 2 .20
1 .42 1 .42 2 .56 6 .27 2 .37
1 .42 1 .42 1 .84 2 .56 2 .20
0 .52 0 .63 0 .82 1 .13 0 .97
13 .30 15 .21 17 .90 13 .04 11 .03
12 .0 8 .3 10 .3 12 .2 18 .4
45 -4 53 24 6
36 .9 43 .9 44 .4 43 .9 44 .1
6 9 7 2 3
75 82 84 86 88
102 106 107 104 104
10 .77 10 .86 10 .38 10 .75 10 .57
7 .13 7 .14 7 .02 7 .22 7 .03
72 .8 79 .7 73 .6 (2) 72 .1 (2) 71 .7 (2)
64 ,160 82 ,750 86 ,040 92 ,650 112 ,000
BALANCE SHEET (in billions of euros)
Shareholders’ equity
Total assets
ASSETS UNDER MANAGEMENT
(in billions of euros)
MARKET CAPITAL ISATION
(in billions of euros)
RESULTS (in millions of euros)
Income from insurance operations (1)
Income from banking operations
Operational result before taxation
Insurance operations
Banking operations
Dividend on own shares
Operational result before taxation
Operational net profit
Net profit
F IGURES PER ORDINARY SHARE
(EUR 0.24 nominal value)
Operational net profit
Net profit
Distributable net profit
Dividend
Shareholders’ equity
RATIOS (in %)
ING GROUP
Return on equity (ROE)
Operational net profit growth
Pay-out ratio
INSURANCE OPERAT IONS
Premium/expense growth gap
Life premiums as a % of total premiums
Combined ratio non-life insurance
BANKING OPERAT IONS
BIS ratio ING Bank
Tier-1 ratio ING Bank
Efficiency ratio
EMPLOYEES (average full-time equivalents)
0
10
20
30
40
50
60
70
80
MARKET CAP ITAL ISAT ION
in billions of euros
92 93 94 95 96 97 98 99 00 01
0
10 ,000
20 ,000
30 ,000
40 ,000
50 ,000
60 ,000
100 ,000
70 ,000
80 ,000
90 ,000
110 ,000
EMPLOYEES
average full-time equivalents
92 93 94 95 96 97 98 99 00 01
International
Netherlands
6 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
2001 was a tough year in several respects. The slowdown in eco-
nomic growth in most of our key markets was aggravated by the
terrorist attacks in the US on September 11. This cast a shadow over
the entire year, not only financially, but also socially and politically.
Mainly through our new US subsidiary ReliaStar, we were con-
fronted with unexpected large reinsurance claims totalling
approximately 600 million from workers’ compensation
insurance contracts of some large companies based in the World
Trade Center. Handling such claims is part of our function as a
financial services provider and we find comfort to know that the
compensation paid will be used to support the families that were
struck by this disaster.
The world is changing and more than ever before companies are
searching for a new role in modern society. ING and its founding
companies have been very conscious of their social responsibility for
more than 150 years. In 2001, we published a new annual report,
‘ING in Society’, which documents our policies in the field of cor-
porate responsibility, sustainability and business principles. ING’s
selection as sustainability leader for the financial sector in the 2001
Dow Jones Sustainable Indices shows that our efforts are recognised.
The new edition of ‘ING in Society’ will become available this
summer.
A cornerstone of our social and economic policies is that we aim for
an optimal balance between the interests of all our stakeholders.
Our 50 million clients expect value for money and excellent service.
Our shareholders in many countries expect good financial perfor-
mance. Our more than 110,000 employees from 65 countries form a
greatly diversified and dedicated workforce, for whom we want to be
a good employer. And last but not least, we aim to be a good corpo-
rate citizen that fulfils a useful role in society.
It is my personal conviction that by balancing these interests, we will
ultimately deliver added value for the benefit of all our stakeholders.
Reliability, transparency and quality at a fair price are essential
elements to obtain a ‘licence to operate’. All of us at ING realise
that we have to earn that licence every day, in all our activities.
We have set ambitious goals. We intend to be a leader in our core
countries. We want to rank among the world’s ten largest financial
services companies and be among the top five in Europe and the US.
We already are the number one international life insurer in Latin
America and we hold the number two spot in Asia. And we aim to
be one of the world’s ten largest asset managers.
A global ING brand will help us to build a reputation that ING is
an innovator and offers different solutions to financial needs of indi-
viduals, families, corporations and institutions. From a multitude of
local labels, we are transforming to one powerful ING brand, based
on one ING culture. The progress that we have made in 2001 is sub-
stantial.
We have also made headway in strengthening our position in several
key business lines. Our life insurance operations again recorded
double-digit revenue growth with a substantial contribution from
our blossoming businesses in developing markets. The return to
savings in a weak stock market was reflected by the spectacular
development of ING Direct, which, just as in 2000, more than
doubled its number of clients to 1.75 million and its funds entrusted
to 18 billion. Our employee benefits and pensions operations in
Europe and the US also expanded their portfolios substantially in
line with the increased demand for wealth accumulation products
and services. In a difficult market, our assets under management
continued to grow, exceeding 510 billion. We advise governments
of several countries in reforming their pension systems.
In difficult economic circumstances, ING managed to uphold its 11-year track record of
uninterrupted profit growth and closed the 2001 accounts with a 6.1% increase in net
operational profit and a 5.3% rise in profit per share. We recorded this profit growth
thanks to our broad business mix, the confidence of our clients and business partners,
and the hard work of our staff.
WE WILL DEL IVER ADDED VALUE FOR ALL OUR STAKEHOLDERS
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 7
M E S S A G E F R O M T H E C H A I R M A N
Though our attention was primarily focused on integrating the
major acquisitions of recent years and restructuring our wholesale
activities, we were able to strengthen our position in a number of core
markets. In Poland, we acquired 88% of the shares in Bank Slaski.
In Germany, we agreed to increase our stake in DiBa, the number
one German direct bank, to 70% and in Mexico, we obtained full
ownership of the leading insurer Seguros Comercial América.
A joint venture with a well-established local partner can be a very
effective entry strategy. We did that to enter the life markets in India
and China. We broadened our presence in Greece through a partner-
ship with Piraeus Bank and we intend to do the same with ANZ Bank
in Australia. In Canada, we improved our position to become the larg-
est non-life insurer through co-operation with Zurich and in Germany
we entered into a partnership in the important field of pensions.
It is rewarding to team up with partners who share our vision of com-
Providing financial services is first and foremost a people business.
Our human resources policy is aimed at attracting, developing and
retaining talent throughout ING. In the same vein, we will continue
to support the intermediaries we work with. Professional advice will
continue to have a distinct added value in assisting clients to select
the products that best suit their needs. My colleagues in the Execu-
tive Board join me in thanking our clients and shareholders, our staff
and our business partners for their confidence in ING. We will do
our utmost to make 2002 a successful year!
Yours sincerely,
EWALD KIST
Chairman of the Executive Board
PERFORMANCE IMPROVEMENT, BOTH THROUGH ONGOING REVENUE GROWTH AND
STR ICT COST CONTROL , I S OUR TOP PR IOR ITY IN 2002
Chairman Ewald Kist in front of the new ING head office in Amsterdam, which
will be ready mid 2002.
bining insurance, banking and asset management.
We have now accumulated 11 years of experience
with our integrated financial services concept.
New synergies are pursued every day and co-oper-
ation has become an innate element of our corpo-
rate culture. This expertise gives us a lead on the
increasing number of competitors that have sub-
sequently chosen to walk down the same path.
Our goals for 2002 are clear. Performance improve-
ment, both through ongoing revenue growth and
strict cost control, is our top priority. Completing
the integrations of our US and wholesale business-
es is another main objective. Operational excel-
lence and synergy are also key words that feature
prominently in the strategy section of this report.
At this moment it is too early for a profit expec-
tation for 2002. The Executive Board is positive,
but cautious about the economic outlook for the
year ahead. Given the uncertainty about improve-
ment of the economies in which ING is active, we
consider it prudent not to make a profit forecast
for 2002 yet.
8 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
M I S S I O N
ING’s mission is to be a leading, global, client-focused, innovative
and low-cost provider of financial services through the distribution
channels of the client’s preference in markets where ING can create
value.
P R O F I L E
ING Group is a global financial institution of Dutch origin offering
banking, insurance and asset management to over 50 million private,
corporate and institutional clients in 65 countries. With a diverse
workforce of over 110,000 people, ING comprises a broad spectrum
of prominent companies that increasingly serve their clients under
the ING brand.
Key to ING is its distribution philosophy: ‘click–call–face’. This is a
flexible mix of internet, call centres, intermediaries and branches with
which ING can fully deliver what today’s clients expect: unlimited
access, maximum convenience, immediate and accurate execution,
personal advice, tailor-made solutions and competitive rates.
ING’s strategy is to achieve stable growth while maintaining healthy
profitability. The Group’s financial strength, its broad range of prod-
ucts and services, the wide diversity of its profit sources and the
good spread of risks form the basis for ING’s continuity and growth
potential. More than 70% of ING’s shares are held by investors
outside the Netherlands.
ING seeks a careful balance between the interests of its stake-
holders: its customers, shareholders, employees and society at large.
It expects all its employees to act in accordance with the Group’s
Business Principles. These principles are based on ING’s core values:
responsiveness to the needs of customers, entrepreneurship, profes-
sionalism, teamwork and integrity.
S T R AT E G Y
ING aims to be a top-10 global financial institution. Through a
variety of ING companies – managed by the Executive Centres ING
Europe, ING Americas, ING Asia/Pacific and ING Asset Manage-
ment – ING wants to deliver added value to clients in banking,
insurance and asset management. ING wants to ensure operational
excellence, achieve synergies and emphasise cost control within one
ING culture. The long-term financial targets are an average annual
growth of operational net profit per share of at least 12%, an aver-
age annual operational net return on shareholders’ equity (ROE) of
at least 18% and improving efficiency ratios.
PROFILE
MISS ION, PROFILE , STRATEGY
TOWARD A GLOBAL ING BRAND
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 9
ING used to be a group of companies, each
having a substantial degree of autonomy and
often working under its own name and logo.
Some of these brands were nationally known,
while others had mainly a regional reputation.
As ING expanded over the years to become a
global player and progressed toward a more
centralised management style with emphasis
on shared expertise and synergy, the need for a
strong common brand increased.
1 0 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
T O W A R D A G L O B A L I N G B R A N D
USA
ING USA consisted of a variety of companies under their own brand name.
They added ING to their name to take advantage of the strength of the global
ING brand. The campaign “It’s not an ending. it’s a beginning” was designed
to build awareness of the ING brand in the US market, thereby supporting
the sales and distribution networks. Its key message was to demonstrate
ING’s presence in the US market. The campaign was well-received by ING’s
distributors and customers. It was rated the third best advertising campaign of
2001 in the US financial services industry. In the first three months ING USA
total aided awareness rose by almost 30%.
POLAND
Bank Slaski and Nationale-Nederlanden were the main brands of ING in
Poland. An intensive PR and advertising campaign introduced the ING brand
to the Polish market. The awareness level prior to the campaign was less than
10%. The results greatly exceeded expectations: more than 50% aided name
awareness compared to a target of 30%. The campaign managed to build
strong foundations of ING brand equity and the lion icon is now widely
recognised in Poland as the ING symbol.
AUSTRALIA
Mercantile Mutual changed its name into ING to better support its position
as a provider of integrated financial services. The phased advertising
campaign utilised television, outdoor and press mediums. The well-known
Scottish comedian Billy Connolly plays the role of the critical customer. The
target was 70% aided name awareness after four weeks. Awareness levels went
up to almost 90%, which proves the big success of the campaign.
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A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 1 1
ING is active in 65 countries and ranks
among the world’s largest 15 financial services
companies in terms of market capitalisation.
However, on a worldwide scale the name
recognition of the ING brand name does not
reflect this position today. The financial
sector is characterised by consolidation and
ongoing changes in consumer requirements,
technology, distribution and legislation. In
such an environment, clients are looking for
stability, reliability and familiarity. A strong,
universal brand can help to achieve this as a
brand offers a promise to clients in terms of
quality of products and services, value for
money, corporate style and culture.
A strong brand can also help to attract the
best employees, facilitate synergies and foster
one corporate culture within the Group.
Furthermore, one brand creates considera-
ble long-term cost savings as maintaining
and promoting one brand is much cheaper
than 70 individual brands.
Among the world’s best known 100 brands,
there are only four financials. Though the
contacts are frequent – either personal, by
phone, mail or internet – financial services
companies have apparently not succeeded
in reaching the hearts and minds of their
customers. This presents a window of
opportunity for ING in building a global
brand.
Rebranding – the transfer from the local
name and logo to the ING name and the
orange lion – is one part of the mission.
The other is loading the ING brand in such
a way that it conveys the same associations
to stakeholders all over the world. This
repositioning aims to achieve that ING is
perceived as a company that offers different
solutions to financial requirements than its
competitors. As a pioneer in combining
insurance, banking and asset management
and in applying various distribution
approaches, ING built a reputation as an
innovator in the financial sector.
BUILDING A STRONG GLOBAL BRAND
T O W A R D A G L O B A L I N G B R A N D
Advertising campaigns in very
different markets, all using the
strength of the ING lion: USA,
India and Mexico.
1 2 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
T O W A R D A G L O B A L I N G B R A N D
The move toward a global brand is endorsed
by the entire top management of ING.
Executive Board chairman Ewald Kist as
ING brand manager stimulates and guides
the transfer. A Global Branding Committee
with brand specialists and senior managers
from all over ING coordinates the rebranding
and repositioning initiatives together with a
dedicated Branding Department.
ING has not chosen to pursue a ‘big-bang
scenario’, but rather a gradual approach with
pilot projects that offer valuable lessons for
the continuation of the process. The com-
panies in the Americas, South, Central and
Eastern Europe, Asia and Australia, as well
as the wholesale and asset management
operations have meanwhile adopted the
ING name and logo. The Belgian companies
have chosen a two-step route to switch to the
ING brand and the companies in the
Netherlands carry an ING endorsement as
their first stage toward rebranding.
The length and the approach of the
rebranding project vary by country, com-
pany and type of business.
Similarly, the repositioning route toward the
desired brand image is carefully determined
for each business unit. Panels with internal
and external participants from all over the
world, supported by numerous studies,
defined the required brand positioning to
distinguish ING from its competitors.
The repositioning process is inextricably
bound up with the corporate culture. It is
absolutely vital that all employees know
what the ING brand stands for.
They will have to live the brand. Communi-
cation and training programmes ensure that
the employees embrace the brand values.
Special courses at the ING Business School,
a brand and reputation intranet site, brand
books and videos will be available in the
course of 2002.
The whole rebranding and repositioning
will take years. Gradually, stakeholders will
experience that ING makes a difference in
the world of financial services.
INTRODUCING AND L IV ING THE BRAND
ING Life Taiwan launched a brand
awareness campaign, while ING Bank
in the Netherlands used the
introduction of the euro to profile
itself in a very competitive market.
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 1 3
S U P E R V I S O RY B O A R D
Cor Herkströter1 (64) Chairman
Mijndert Ververs2 (68) Vice-Chairman
Lutgart van den Berghe2 (50)
Jan Berghuis2, 3 (67)
Luella Gross Goldberg (64)
Paul van der Heijden1 (52)
Aad Jacobs2 (65)
Jan Kamminga3 (54)
Godfried van der Lugt (61)
Paul Baron de Meester4 (66)
Johan Stekelenburg (60)
Hans Tietmeyer (70)
Jan Timmer1 (68)
1) Member Remuneration and Appointments Committee.
2) Member Audit Committee.
3) Unti l 17 Apri l 2002.
4) Member Audit Committee as of 17 Apri l 2002.
E X E C U T I V E B O A R D
Ewald Kist (57) Chairman
Michel Tilmant (49) Vice-Chairman
Fred Hubbell (50)
Hessel Lindenbergh (58)
Cees Maas (54) Chief Financial Officer
Alexander Rinnooy Kan (52)
For more information on the Supervisory Board and Executive
Board members, see pages 68 and 69.
E X E C U T I V E C O M M I T T E E S
I N G E U R O P E
Michel Tilmant (49) Chairman
Hessel Lindenbergh (58) Chairman
Durk Brands (59)
Erik Dralans (53)
Ralf-Hartmut Fiedler (47)
Peter Gloystein (56)
Diederik Laman Trip (55)
Jan Nijssen (48)
Luc Vandewalle (57)
Hans Verkoren (54) ING Direct
Ted de Vries (54)
I N G A M E R I C A S
Fred Hubbell (50) Chairman
Glenn Hilliard (58)
Tom McInerney (45)
I N G A S I A / PA C I F I C
Fred Hubbell (50) Chairman
Patrick Poon (54)
Phil Shirriff (56)
I N G A S S E T M A N A G E M E N T
Alexander Rinnooy Kan (52) Chairman
Harry van Tooren (54)
E-business
Jacques Kemp (52)
STRUCTURE AND COMPOSIT ION OF THE BOARDS
C O M P O S I T I O N O F T H E B O A R D S as at 31 December 2001
S T R U C T U R E
S U P E R V I S O RY B O A R D
E X E C U T I V E B O A R D
I N G E U R O P E I N G A M E R I C A S I N G A S I A / PA C I F I C I N G A S S E T M A N A G E M E N T
1 4 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
I N G E U R O P E
ING is one of the leading
financial institutions in Europe,
delivering banking, insurance
and asset management services
to retail, corporate and insti-
tutional clients via a multi-
distribution approach.
The core countries in Western
Europe are the Netherlands, Bel-
gium, Luxembourg, Germany,
France, Switzerland and the
United Kingdom; Italy, Spain
and Greece in South Europe,
as well as Poland, the Czech
Republic and Hungary in
Central Europe.
The responsibility for the ING
Direct formula, at the moment
seven operations on various
continents, lies also with ING
Europe. The same applies to
private banking operations and
the global wholesale banking
activities, including former ING
Barings.
I N G A M E R I C A S
North America has always been
one of ING’s most important
international markets. ING is
concentrating on selling life
insurance, pension and invest-
ment products.
After the acquisition of Equita-
ble of Iowa in 1997 and ReliaStar
and Aetna Financial Services in
2000, ING became one of the
top-5 life insurers in the US. In
Canada, ING is the largest non-
life insurer. The privatisation of
the pension system in various
Latin American countries offers
new opportunities for ING.
The core countries are the
United States, Canada, Mexico,
Argentina, Brazil and Chile.
I N G A S I A / PA C I F I C
ING was the first European
company to start a life insur-
ance company in Japan, Taiwan
and South Korea. Meanwhile,
the ING companies have built
up good market positions in
these countries, further strength-
ened by the acquisition of
Aetna International in 2000.
Australia was one of the first
international markets where
ING introduced its integrated
financial services model. ING
enjoys a strong position in life
insurance, non-life insurance
and mutual funds in Australia.
Banking products for the retail
and small and medium-sized
enterprises have been added
over the years.
The core countries are Australia,
China, Japan, Korea, Malaysia
and Taiwan.
I N G A S S E T M A N A G E M E N T
Asset management is ING’s
third core activity, alongside
insurance and banking. The
activities, which are organised
on a world-wide basis, comprise
the asset management of ING’s
insurance companies, the mana-
gement of ING’s mutual funds,
asset and relationship manage-
ment for institutional investors,
real estate, private equity and
venture capital activities.
The business units of ING Asset
Management are ING Invest-
ment Management, Baring Asset
Management, ING Real Estate,
Parcom Ventures, Baring Private
Equity Partners, ING Aeltus
and ING Trust.
EXECUTIVE CENTRES
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 1 5
R E TA I L C L I E N T S
I N S U R A N C E ING’s life insurance and pension products range from
guaranteed-benefit to investment-linked products. In several core
markets, ING also provides insurance cover for risks such as fire and
property, motor, health, accident and disability.
S AV I N G S ING offers a full range of savings instruments, from basic
savings deposits to ING Direct’s high return, no fees Internet savings
accounts and sophisticated products that combine savings and
investments.
I N V E S T I N G – M U T U A L F U N D S , S E C U R I T Y B R O K E R A G E ING offers a wide
array of investment products, such as country and sector mutual
funds, either ING funds or third-party funds, and various forms of
security brokerage.
P E R S O N A L L O A N S A N D M O R T G A G E S From a credit limit on a current
account to a mortgage loan tied to a securities portfolio, ING can
provide the ideal finance form for most situations in all countries
where it offers full retail banking services.
P R I VAT E B A N K I N G Private banking products and services offered
include investment management, portfolio management, pension
planning, lending, estate planning and trust services.
W H O L E S A L E C L I E N T S
C O R P O R AT E L O A N S ING offers corporate clients all types of credit:
from a current account overdraft facility to a bridge loan for a take-
over deal. Specialisations are trade and commodity finance and
structured-finance capabilities.
PAY M E N T S – C A S H M A N A G E M E N T Optimisation of cash flows can
liberate money tied up in numerous local bank accounts for more
productive uses. ING’s know-how and experience translate into
effective solutions.
E M P L O Y E E B E N E F I T S – P E N S I O N S More and more companies offer
their employees benefits such as pensions, healthcare insurance, sick
pay and disability benefits. ING has developed a unique and flexible
approach to provide tailor-made employee benefits services. ING
combines these services with administrative support, financial-
education programmes and advisory.
I N V E S T M E N T B A N K I N G ING offers a comprehensive and integrated
range of investment-banking products, tailored to suit the needs and
balance sheets of corporate clients in Europe, Asia and the Americas.
PRODUCTS & SERVICES
ING’s range of services includes corporate finance, M&A advisory,
origination of capital-markets products and securitisation.
F I N A N C I A L M A R K E T S Corporate and institutional clients can rely on
ING for sales, trading and distribution of equity and debt-market
products, including research, treasury, foreign exchange, money
markets and derivatives. ING also offers custody and administration
of securities portfolios as well as integrated brokerage, cash and
derivatives clearing, settlement and securities lending.
I N S T I T U T I O N A L C L I E N T S
I N S T I T U T I O N A L I N V E S T M E N T M A N A G E M E N T Institutional investors can
tap into ING’s experience in asset management in the form of dis-
cretionary portfolio management or by participating in pooled
funds and mutual funds.
F U N D A D M I N I S T R AT I O N S E R V I C E S Enabling investors to outsource
non-core functions, ING provides a comprehensive range of fund
administration, custody, trust, banking and accounting services.
R E A L E S TAT E Developing, financing, managing and investing in real
estate require specialised skills. As the second largest real-estate
investor in the world, ING has demonstrated its command of these
skills. To institutional investors, ING offers a family of real-estate
funds focusing on retail property, offices and residential property.
P R I VAT E E Q U I T Y ING has several specialised units that offer opportu-
nities to make direct or indirect investments in unlisted securities.
A LT E R N AT I V E A S S E T S Hedge funds and products such as collateralised
debt obligations can produce attractive returns for our clients. While
carefully managing the risk profile, ING offers clients the oppor-
tunity to invest in these assets.
www.ing.com gives access to all ING websites.
0 .0
2 .5
5 .0
7 .5
10 .0
12 .5
15 .0
17 .5
20 .0
22 .5
25 .0
ING SHARE
PR ICE /EARNINGS RAT IO
0100999897
DEVELOPMENT ING GROUP SHARE PR ICE
Index: 1 January 2000 = 100
50
75
100
125
150
01/00 04/00 07/00 10/00 01/01 01/0204/01 07/01 10/01
ING
Amsterdam AEX index
New York Dow Jones index
1 6 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
C A S H D I V I D E N D O N LY
ING abolished the optional stock dividend as
from the final dividend 2000. The current policy
of cash dividend prevents dilution of the profit
per share. Also, as a consequence of income tax
changes in the Netherlands per 1 January 2001,
the stock dividend lost its appeal to Dutch
private shareholders.
W A R R A N T S E X P I R E D
Until 15 March 2001, fourteen ING Group warrants
and additional payment of 61.71 could be
exchanged for five (depositary receipts for) ING
Group ordinary shares of 0.48 nominal
value. These warrants have now expired, leaving
ING Group warrants B as the only currently valid
category of warrants.
I S S U A N C E O F C F C E R T I F I C AT E S T E R M I N AT E D
With effect from 2 July 2001, the bearer depositary
receipts for ordinary shares and preference shares
A are no longer available in the form of CF
certificates, but only in book-entry form. These
bearer depositary receipts are now incorporated
in two global depositary receipts which will be
held in custody by the Nederlands Centraal
Instituut voor Giraal Effectenverkeer B.V.
(‘Necigef’) in Amsterdam.
L I S T I N G S
Depositary receipts for ING Group ordinary
shares are listed on the stock exchanges of
Amsterdam, Brussels, Frankfurt, Paris, the Swiss
exchanges and the New York Stock Exchange.
Depositary receipts for preference shares are
listed on Euronext Amsterdam. Warrants B are
listed on the Amsterdam and Brussels stock
exchanges. Short-term and long-term options on
ING Group depositary receipts for ordinary
shares are traded on Euronext Amsterdam
(Derivatives Markets) and the Chicago Board
Options Exchange.
INFORMATION FOR SHAREHOLDERS
DIVIDEND HISTORY
in euros
1997 1998 1999 2000 2001
Interim dividend 0 .22 0 .30 0 .32 0 .41 0 .47
Final dividend 0 .30 0 .33 0 .50 0 .72* 0 .50
Total 0 .52 0 .63 0 .82 1 .13 0 .97
* Including an exceptional dividend of EUR 0.19.
S T O C K S P L I T O F 2 : 1
A stock split in a ratio of 2:1 was effected on
2 July 2001, approved by the Annual General
Meeting of Shareholders on 17 April 2001. The
split halved the nominal value of the (depositary
receipts for) ING Group ordinary shares from
0.48 to 0.24. The nominal value of
ING Group preference shares A ( 1.20) was
not changed.
The exchange ratio of the warrants B, issued on
5 January 1998, has been adjusted as follows:
with an additional payment of the (unaltered)
exercise price of 49.92, one warrant B
entitles the holder to two ING Group (depositary
receipts for) ordinary shares up to 5 January 2008.
GEOGRAPHICAL D ISTR IBUT ION
OF ING SHARES
in %
The Netherlands
United Kingdom
US and Canada
Switzerland
Belgium
Luxembourg
Germany
Other
25
23
20
5
8
8
4
7
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 1 7
S H A R E H O L D E R S W I T H S TA K E S O F 5 % O R M O R E
Under the Dutch Act on the Disclosure of
Significant Interests, three holders of depositary
receipts with a (potential) interest of between
5% and 10% in ING Group were known as at
31 December 2001. They were ABN AMRO,
Aegon and Fortis Utrecht.
I M P O R TA N T D AT E S I N 2 0 0 2 *
Annual General Meeting of Shareholders
(RAI Conference Centre, Amsterdam)
- Wednesday, 17 April 2002, 2.00 pm
ING share quotation ex final dividend 2001
- Friday, 19 April 2002
Payment 2001 final dividend
- Friday, 26 April 2002
Publication first-quarter results 2002
- Thursday, 23 May 2002
Publication second-quarter results 2002
- Thursday, 22 August 2002
ING share quotation ex interim dividend 2002
- Monday, 26 August 2002
Publication third-quarter results 2002
- Thursday, 21 November 2002
* All dates shown are provisional.
I N V E S T O R R E L AT I O N S
In addition to financial press releases, ING also
publishes a Shareholders’ News and Shareholders’
Bulletin. For more information, please contact:
ING Group
Investor Relations Department (AA 13.09)
P.O. Box 810
1000 AV Amsterdam
The Netherlands
telephone +31 20 541 54 62
fax + 31 20 541 54 51
www.ing.com
I N F O R M A T I O N F O R S H A R E H O L D E R S
PRICES DEPOSITARY RECEIPTS FOR ORDINARY SHARES Euronext Amsterdam, in euros
1997 1998 1999 2000 2001
Price - high 23 .92 34 .83 30 .59 42 .76 43 .97
Price - low 13 .80 15 .70 22 .18 24 .26 22 .80
Price - year-end 19 .38 25 .98 29 .97 42 .54 28 .64
Price/earnings ratio1 13 .9 23 .3 17 .9 20 .4 13 .0
1 Based on the share price at the end of December and net operational profit per ordinary share for the financial year.
AUTHORISED AND ISSUED CAPITAL
in millions of euros
YEAR-END YEAR-END
2000 2001
Ordinary shares
- authorised 720 .0 720 .0
- issued 472 .9 478 .2
Preference shares
- authorised 360 .0 360 .0
- issued 104 .5 104 .5
Cumulative preference
shares
- authorised 1 ,080 .0 1 ,080 .0
- issued – –
SHARES AND WARRANTS IN ISSUE in millions of euros
YEAR-END 2000 YEAR-END 2001
(Depositary receipts for) ordinary
shares of EUR 0.24 nominal value 1 ,970 .5 1 ,992 .7
(Depositary receipts for) preference
shares of EUR 1.20 nominal value 87 .1 87 .1
Warrants A 29 .9 –
Warrants B 17 .1 17 .2
(Depositary receipts for) own ordinary
shares held by ING Group and its subsidiaries 54 .8 69 .1
1 8 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
It is clear that these events will only strengthen our policy toward
sustainable development. As a worldwide provider of financial serv-
ices, ING has an important economic function in society. Many of
our products and services, like mortgages and pension schemes,
imply a long-term financial relationship and commitment. By pro-
viding these products and services to more than 50 million custo-
mers all over the world, it is essential that we maintain the trust of
our clients in the many different countries and cultures we operate
in. This is one of the reasons ING created sustainable ways of doing
business and developed corporate values and business principles
which apply to all its business operations.
T R A N S PA R E N C Y
With the publication of its first annual report ‘ING in Society 2000’,
ING took a further step to openness about its social and environ-
mental performance. ‘ING in Society’ aims to inform ING’s stake-
holders worldwide about non-financial aspects like social responsible
entrepreneurship and sustainability within an international frame-
work and in an integrated way. The report was well received by many
stakeholders who responded to the enclosed questionnaire or via the
Internet site of ING. The Central Works Council of ING discussed
the report and was also positive. The report also fulfilled an
important function in creating a framework for further dialogue
with our stakeholders. The ING in Society report illustrates how
ING handles the interests of each group of stakeholders. We seek to
find a careful balance between the interests of all our stakeholders.
In addition to clients, shareholders and employees, ING sees society
as its fourth major stakeholder. The Group aims to act as a respon-
sible international company that pays attention to the social and
environmental consequences of its activities. Building on good and
long-standing relationships with local communities is one of the
priorities in the coming years.
C O R P O R AT E VA L U E S A N D B U S I N E S S P R I N C I P L E S
ING’s employees are expected to act in accordance with the ING
Business Principles which were communicated throughout the Group
in 2000. In 2001, the process of embedding these principles into the
organisation was continued. In the Netherlands, the management of
the Dutch business units discussed the functioning of the Business
Principles. Throughout ING, the Business Principles introduction
and training programme was communicated to staff and mana-
gement. Many ING managers attended the ING Business Principles
programme at the ING Business school. Through this extensive
training programme the ING Business Principles have increasingly
become a regular part of the day-to-day business at ING.
B U I L D I N G O N A S T R O N G C O R P O R AT E B R A N D A N D C U LT U R E
In the next few years, the name of ING will become more visible
worldwide. In many countries the name of ING is or will be tied to
the local brands that often have a long-standing relationship in the
communities in which they operate. In this process toward one ING
ING IN SOCIETY
COMMITTED TO GOOD
CORPORATE C IT IZENSHIP
In the year 2001, sustainable development and corporate social responsibility became
a much debated issue on the corporate agenda of many internationally operating
companies. After 10 years of economic growth, the economic slowdown and the drama-
tic events of September 11 had a strong impact on the world economy and forced many
companies to review their future strategies. It also brought up the question whether this
will have an impact on the continuation of the process to more sustainable ways of
doing business.
Department is developing a risk management
system with regard to social, environmental and
reputation risks.
In co-operation with the University of Amster-
dam, a research project has been started aimed
at developing tools to value corporate responsi-
bility. In 2001, ING also supported the inaugu-
ration of a Chair of Business Ethics and Repu-
tation Management at the Vlerick Leuven Gent
Management School in Belgium.
I N T E R N AT I O N A L R E P R E S E N TAT I O N
Due to the expanding international activities, ING
wants to make a contribution to the international
debate on sustainable development. Therefore,
ING became a member of the World Business
Council for Sustainable Development in 2001.
This organisation is a growing force in develop-
ing sustainable policies for the international
business community. ING participated in many
other international organisations, such as the
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 1 9
brand it is essential to maintain the confidence and trust of our clients
by showing the added value that ING can create to the well-known
company names. The newly branded companies are committed to
act according to the high ING standards regarding sustainability,
corporate values and business principles.
M E A S U R I N G S U S TA I N A B L E P E R F O R M A N C E
ING wants to be accountable to its stakeholders for the way it
conducts business. For several years an extensive Environmental
Management System has been operational in the Netherlands. In the
coming years, ING will extend its international reporting practices
by implementing reporting standards on social, environmental and
safety performance in all its business units. Gradually, while accu-
mulating more data, ING will be able to broaden and deepen the
coverage of its reporting practices. In 2001, a new global compliance
incident registration system was developed to monitor and register
compliance risks. ING’s International Credit Risk Management
International Chambers of Commerce and the World Economic
Forum, to discuss the business case for sustainable development and
Corporate Social Responsibility.
O U T L O O K
ING’s efforts in the field of corporate social responsibility are being
acknowledged. In 2001, ING was selected as ‘the leading financial
services company’ in the Dow Jones Sustainability World Indices
and became part of the FTSE4Good index. ING has also been
included in several sustainable investment funds as an investment
option. For the coming years, ING will focus on maintaining this
position by harmonising and developing global reporting and
information systems, developing group-wide sustainable policies and
initiating dialogues with its stakeholders.
T H E N E W I N G I N S O C I E T Y R E P O R T 2 0 0 1 W I L L B E P U B L I S H E D I N
J U N E 2 0 0 2 .
I N G I N S O C I E T Y
ING WANTS TO BE ACCOUNTABLE TO I TS STAKEHOLDERS FOR THE WAY
IT CONDUCTS BUS INESS
2 0 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
S U P E R V I S O RY B O A R D M E E T I N G S
The annual retreat of the Supervisory Board and
the Executive Board in January was almost
entirely dedicated to the Medium Term Plan
2001 – 2003. During the other four meetings, the
development of the results was central to the
discussion. In the third quarter, the downturn in
the economy became increasingly visible in the
ING results, which, combined with the conse-
quences of the September 11 events, led to a
downward adjustment of the profit forecast for
the whole year. Other subjects of discussion in-
cluded management development, the share split,
the adjustment of the profile of the Supervisory
Board, the joint venture of ING Australia and
ANZ Bank and the increased interests in Bank
Slaski, Seguros Comercial América and DiBa.
The Supervisory Board further discussed subjects
such as the integration of ING Barings in ING
Europe, the integration of the American business
units within ING Americas and the development
toward a worldwide ING brand.
Several general managers gave presentations
about their business units, which also provided
the Supervisory Board an insight into the manage-
ment potential under the Executive Board. The
largest Dutch business units, the activities in
Central Europe and the developments in the field
of Operations/IT came up for discussion.
During a session in August, the Supervisory Board
met without the Executive Board to assess its own
functioning and that of the Executive Board.
During this meeting, the future profile of the
Supervisory Board was also discussed.
S U P E R V I S O RY B O A R D C O M M I T T E E S
The purpose of both Supervisory Board com-
mittees – the Audit Committee and the Remu-
neration & Appointments Committee – is to
discuss specific subjects in depth and to advise on
these to the full Supervisory Board. The Audit
Committee discussed the annual results and the
six months’ results, the reports and management
letters of the external auditors, the provision
policy and risk management. In October, an extra
meeting took place to discuss the impact of the
events of September 11 and the further deteriora-
tion of the economy, after which it was deter-
mined that a downward adjustment of the profit
forecast for 2001 was inevitable.
The Remuneration & Appointments Committee
discussed, among other things, the management
potential under the Executive Board, the em-
ployment conditions for the members of the
Executive Board including their compensation
and the disclosure of the remuneration of the
Executive Board and Supervisory Board in the
annual report.
After a number of years during which the results developed
favourably, 2001 was predominantly governed by a poor
economic climate. ING did not remain unaffected. Notwith-
standing the attention to the results, 2001 was also a building
year of integration, synergy and acquisitions to strengthen
and optimise the existing activities. All these subjects were
discussed during five meetings of the Supervisory Board and
three meetings of the Audit Committee. The Remuneration &
Appointments Committee met once.
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 2 1
C O M P O S I T I O N O F T H E E X E C U T I V E B O A R D A N D
T H E S U P E R V I S O RY B O A R D
The composition of the Executive Board did not
change in 2001. During the Annual General
Meeting of Shareholders of 17 April 2001, the
Supervisory Board bade farewell to Mr. Verhagen,
who was vice-chairman. Ms. Goldberg and
Mr. Van der Lugt were appointed as new mem-
bers. These changes were announced in the
previous annual report.
After the Shareholders’ Meeting of 17 April 2002
Messrs. Berghuis and Kamminga will retire as
members of the Supervisory Board after having
reached the maximum term. Mr. Karel Vuursteen
is proposed for appointment to the Supervisory
Board. Mr. Vuursteen (Dutch nationality, 1942) is
Chairman of the Executive Board of Heineken
until 25 April 2002. He has been proposed for
appointment because of his experience as chair-
man of a multinational, his knowledge of the
international business world and his branding
expertise. After internal deliberations Ms. Van
den Berghe and Messrs. Herkströter, De Meester,
Stekelenburg and Ververs will be proposed for
reappointment. They have each proven their
merits as members of the Supervisory Board of
R E P O R T O F T H E S U P E R V I S O R Y B O A R D
RET IREMENT OF J A N B E R G H U I S A N D
JAN KAMMINGA
We bid farewell to two Supervisory Board
members who both have a very long record of
service. Jan Berghuis was appointed Super-
visory Board member of NMB Bank in 1987
and in 1991 he was one of the newly appointed
Supervisory Board members of ING Group,
which makes him the longest serving Super-
visory Board member of ING Group.
We owe him much gratitude for his strong
and undiminished involvement during all
those years, as from 1998 also as a member of
the Audit Committee. He monitored the
Executive Board with a discerning mind, but
always in the interest of ING.
Jan Kamminga became a member of the
Supervisory Board of NMB Bank in 1988,
then in his capacity as chairman of the Dutch
employers’ organisation for SME, MKB
Nederland. His role as Supervisory Board
member was characterised by his special
connection with small and medium-sized enter-
prises and the independent-insurance broker
system, also after he became a member of the
Supervisory Board of ING Group in 1994.
His departure calls for a special word of
gratitude for his attention to the significant
importance of the Dutch business units and
the interests of their clients.
T H E S U P E R V I S O RY B O A R D A N D
T H E E X E C U T I V E B O A R D
ING and will continue to dedicate themselves
to ING on the basis of their different back-
grounds. The Central Works Council has met
with Mr. Vuursteen and with each Supervisory
Board member who is proposed for reappoint-
ment and has given its concurring advice to the
proposed appointment and reappointments.
A N N U A L A C C O U N T S A N D D I V I D E N D
In its meeting of 28 February 2002, the Super-
visory Board adopted the annual accounts and is
now submitting these for the approval of the
shareholders. The proposed dividend for 2001
has been set at 0.97 per share. After the
interim dividend of 0.47, the final dividend
will amount to 0.50 per share.
Looking back on 2001, the Supervisory Board
would like to express its gratitude to the Execu-
tive Board for its great efforts during a difficult
economic year and to all employees worldwide
who, in their daily work, give meaning to the
qualities and values ING stands for.
Amsterdam, 28 February 2002
T H E S U P E R V I S O RY B O A R D
From top to bottom, left to right:
COR HERKSTRÖTER Chairman
MIJNDERT VER VERS Vice-Chairman
LUTGART VAN DEN BERGHE
JAN BERGHUIS
LUELLA GROSS GOLDBERG
PAUL VAN DER HE I JDEN
AAD JACOBS
JAN KAMMINGA
GODFR IED VAN DER LUGT
PAUL BARON DE MEESTER
JOHAN STEKELENBURG
HANS T IETMEYER
JAN T IMMER
RESULT BEFORE TAXATION BY
EXECUTIVE CENTRE
in millions of euros
ING Europe 73%
ING Americas 16%
ING Asia/Pacific 5%
ING Asset Management 5%
Other 1%
Total
4,188
899
313
264
77
5,741
2 2 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
The weaker economy and depressed equity mar-
kets drove up risk costs and strongly reduced fee
income in investment banking, asset manage-
ment and equity-linked insurance products. ING
was confronted with claims relating to the WTC
disaster to an amount of approximately 600
million (before catastrophe cover and before tax).
After external catastrophe cover of 100 million
and internal charges to catastrophe provisions,
the total loss after tax in the 2001 annual results
is 100 million ( 150 million before tax).
P R O F I T G R O W T H
Operational net profit from insurance was 19.7%
higher at 2,810 million compared to
2,348 million a year earlier. In the first full year
since their acquisition, ReliaStar, Aetna Finan-
cial Services and Aetna International contributed
0.07 per share (after funding costs) to the net
result. The operational net profit from banking
declined by 13.1% from 1,660 million in 2000
to 1,442 million. In view of the deteriorated
economic situation the loan loss provisions were
strengthened by 750 million, equalling 32 basis
points of credit-risk-weighted assets, compared
to the very low level of 400 million (19 basis
points) in the year before.
R E V E N U E S
Total revenues, including ReliaStar, Aetna Finan-
cial Services and Aetna International, reached
74.2 billion (+49.6%). Total insurance
revenues increased by 64.7% to 63.1 billion
with life premiums up 78.1%, non-life premiums
advancing 44.2% and investment income rising by
28.6%. In the current difficult economic climate,
banking income contracted slightly by 1.7%
to 11.1 billion as the decrease in commission
of 23.8% outweighed the increases in interest
income of 4.9% and other income of 20.6%.
E F F I C I E N C Y
The organic growth of Group operating expenses
was limited to approximately 1%, reflecting tight
cost control throughout the company. Operating
expenses in insurance increased by 4.6% orga-
nically. In banking, operating expenses decreased
by 1.1% due to tight cost control, lower bonuses
and the sale of the investment banking activities
in the US. The efficiency ratio (excluding ING
Direct) improved from 72.1% in 2000 to 71.7%
in 2001. Including acquisitions, divestments and
exchange rate fluctuations, total Group operating
expenses increased by 21.4%.
F INANCIAL HIGHLIGHTS
PROFIT GROWTH, DESPITE
ECONOMIC SLOWDOWN
The world-wide economic slowdown, the decline in equity
markets and the September 11 events had a negative impact on
ING’s 2001 results. However, ING’s broad mix of businesses
proved essential to conclude this difficult year with a 6.1%
growth in operational net profit to 4,252 million.
C E E S M A A S
ING has set ambitious
financial targets, based on
medium-term objectives.
We believe that ING has the
potential to continue to meet
these targets in a challenging
economic environment.
GEOGRAPHICAL D ISTR IBUT ION
OF GROSS PREMIUM INCOME
in millions of euros
The Netherlands 14%
Belgium 4%
Rest of Europe 3%
North America 64%
South America 2%
Asia 9%
Australia 4%
Other
Total
7,164
1,878
1,657
31,896
1,111
4,782
2,029
-57
50,460
GEOGRAPHICAL D ISTR IBUT ION
OF BANK LENDING
in billions of euros
The Netherlands 49%
Belgium 22%
Rest of Europe 18%
North America 7%
South America 1%
Asia 2%
Australia 1%
Total
125.2
55.4
45.9
17.0
2.6
4.5
3.6
254.2
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 2 3
S H A R E H O L D E R S ’ E Q U I T Y
Shareholders’ equity decreased by 3.8 billion
(-14.9%) to 21.5 billion, mainly due to reva-
luation of the equity portfolio and the write-off
of goodwill regarding acquisitions.
R E T U R N O N E Q U I T Y
The operational net return on equity increased
from 12.2% for the full year 2000 to 18.4% in 2001.
The improvement reflects a higher operational
net profit and a substantially lower capital base,
mainly caused by the write-off of goodwill and
the revaluation of the equity investment port-
folio.
D I V I D E N D
For 2001, a total dividend is proposed of
0.97 per (depositary receipt for an) ordinary
share, an increase of 3.2% compared to the 2000
dividend of 0.94 (excluding the exceptional
dividend of 0.19 paid in 2000 from the profit
from the sale of CCF shares). Taking into
account the interim dividend of 0.47, made
payable in September 2001, the proposal results
in a final dividend of 0.50 per (depositary
receipt for an) ordinary share. The pay-out ratio
as a percentage of distributable net profit is
44.1% (2000: 43.9%).
I N G E U R O P E
ING Europe reported an operational pre-tax profit
of 4,188 million, a decrease of 7.8% from a
year earlier. The result from insurance went up
2.4% to 2,252 million, but the banking
operations saw their operational result before
taxation decrease to 1,936 million (-17.4%).
Lower commission income and higher loan loss
provisions – especially in corporate and invest-
ment banking – outweighed the positive effects of
a higher interest margin and tight cost control.
I N G A M E R I C A S
The 46.9% increase in the operational result
before tax of ING Americas reflected the con-
solidation of the ReliaStar and Aetna businesses
that were acquired in 2000. At 899 million
the operational result was, however, lower than
expected. The shortfall was mainly caused by
lower sales and fee income due to weak equity
markets and the claims relating to the World
Trade Center attacks. The Canadian operations
and the businesses in Latin America (except
Argentina) performed well. Seguros Comercial
América, now wholly-owned by ING, contri-
buted 35 million to the result.
I N G A S I A / PA C I F I C
The operational result before tax of ING Asia/
Pacific rose by 39.1% to 313 million.
The consolidation of the Aetna International
businesses in the region was to a large extent
responsible for the high percentage increase.
Nevertheless, good life results in Korea, Taiwan
and non-life results in Australia ensured that the
performance of ING Asia/Pacific was fully
meeting expectations.
I N G A S S E T M A N A G E M E N T
ING Asset Management saw its pre-tax opera-
tional result decrease by 18.5% to 264 million
as falling equity markets affected management
fees. However, total assets under management
increased 2.0% to 513 billion. A net inflow of
new assets under management of 41 billion,
first time inclusions of 11 billion and a
positive effect of 5 billion from exchange
rate fluctuations more than compensated for
revaluation declines.
R E P O R T O F T H E E X E C U T I V E B O A R D
2 4 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
GROUP STRATEGY
STRATEGY FOCUSES ON
SYNERGY, EFF IC IENCY AND
COST CONTROL
G R O U P O B J E C T I V E S
1 . D E L I V E R A D D E D VA L U E T O C L I E N T S T H R O U G H A M U LT I - P R O D U C T /
D I S T R I B U T I O N A P P R O A C H A N D A C U S T O M E R - C E N T R I C O R G A N I S AT I O N
This is the most important objective as ING’s existence depends
first and foremost on its ability to serve its 50 million clients around
the world to their full satisfaction. Today’s private clients are
wealthier, better educated and more critical. They want to be in
control of their own (financial) destiny. At the same time, they still
look for advice, especially as legislation and tax regulations become
more complex. They appreciate a full range of financial solutions
and they expect value for money, quality, convenience, instant
delivery and a personal approach. ING aims to offer them the
products and services they need to meet their goals for each phase of
their life. Similarly, the Group strives for total fulfilment of the
financial needs of its corporate clients. ING’s wide international
network is a competitive edge in serving corporations in all countries
where they operate.
2 . B U I L D O N I N G ’ S S P E C I A L S K I L L S : L I F E I N S U R A N C E G R E E N F I E L D S ,
E M P L O Y E E B E N E F I T S A N D I N G D I R E C T
One of ING’s special talents is to build life insurance operations
from scratch in developing countries. Including the newly started joint
venture in India, ING currently has 16 greenfields. Their continued
growth (premium growth +11.2% in 2001) is a promising sign for
ING’s long-term development.
ING has also built up special expertise in offering employers a
wide range of employee benefits in combination with sophisticated
administrative support. The combination of European and US expertise
makes ING particularly well-positioned to play a leading role in
providing solutions to the universal dilemma of offering adequate
retirement provisions for an ageing population.
The ING Direct concept, which starts with a high-interest retail
savings account and is gradually broadened with other products, has
turned out to be highly successful in six countries. Both the number
of clients and the funds entrusted more than doubled again last year.
ING intends to launch ING Direct in one or two additional coun-
tries in the next few years and extend its presence in the US.
In the past, the management and strategic development of ING Group were mainly
governed by the insurance and banking structures of the original merger partners.
As the international operations have increased in size and scope and as the integration
of insurance, banking and asset management has progressed, the managerial and
strategic focus has shifted to the four Executive Centres. ING has defined strategic
objectives for each Executive Centre (EC). These objectives, as well as the plans that
have been developed to achieve them, are discussed in the EC chapters. In addition to
the specific EC objectives, ING has a number of Group objectives that relate to all
its activities as well as financial targets for profit growth, profitability and efficiency.
The Group objectives and financial targets are discussed in this chapter.
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 2 5
R E P O R T O F T H E E X E C U T I V E B O A R D
3 . E M P H A S I S E C O S T C O N T R O L
ING’s main priority for 2002 is to adjust to the new economic reality
by adapting the cost base to subdued revenue prospects. Although
there is some optimism about the start of a gradual recovery of the
economy in the course of this year, the financial sector will have to
reckon with lower revenue and profit growth than in the second half
of the 1990s.
Financial services providers that succeed in outperforming their
peers in cost control, will be the winners in the financial sector in
the years ahead. ING will have to intensify its current cost reduction
measures without sacrificing investments in projects that will
generate future cost savings, such as the shared service centres.
4 . A C H I E V E S Y N E R G I E S B Y M A X I M I S I N G C O - O P E R AT I O N
In the early years of ING’s existence, most synergy projects were
based on largely voluntary co-operation between business units. In
2001, ING moved from voluntary to committed synergies and made
the variable component of the remuneration of senior managers
partly dependent on the synergy contribution of their business unit
to the Group.
In addition to numerous smaller commercial initiatives, five main
synergy projects have been defined: the integration of the European
wholesale banking operations, the creation of shared services centres
in Europe, the global co-ordination of corporate IT and procure-
ment, the integration of the US retail businesses and the integration
of the Aetna and ING operations in Asia and Latin America.
Currently, some of these projects still require considerable invest-
ments. Over the years, these investments will start to pay back so
that significant, structural benefits can be generated in the longer
term.
5 . E N S U R E O P E R AT I O N A L E X C E L L E N C E ( I T A N D E - B U S I N E S S )
Focusing on ‘operational excellence’ has been an ongoing part of
ING’s strategic approach to improve both efficiency and effectiveness.
In Operations/IT ING continues to rationalise its infrastructure by
consolidating data centres, outsourcing global networks and reducing
redundant IT assets.
ING’s application strategy is to seek more common solutions that
are maintained centrally but deployed locally. Leveraging internet
technology and applying a consistent e-business approach will enable
ING to deliver more web-based solutions for customers, employees,
suppliers and strategic partners.
6 . B U I L D O N E I N G C U LT U R E A N D O N E G L O B A L B R A N D
In 2001, ING made substantial progress in transforming its multi-
tude of different labels into one powerful ING brand and position
ING as a company with innovative approaches and solutions to finan-
cial services. As economic insecurity increases, people are looking
for trust. In these times it is therefore essential to invest in a strong
corporate brand and to make it trustworthy. The implementation of
the branding and repositioning plans is closely connected with ING’s
efforts to foster one ING culture. Branding is all about corporate
culture and change management. The branding/repositioning project
will prove a success if our customers throughout the world are pre-
sented with a company with a similar face, attitude and look and feel.
With its special design, the new ING headquarters – ING House –
will be an attractive carrier for the new brand.
F I N A N C I A L TA R G E T S
1 . P R O F I T G R O W T H : A N AV E R A G E A N N U A L G R O W T H O F O P E R AT I O N A L
N E T P R O F I T P E R S H A R E O F AT L E A S T 1 2 %
Due to the economic downturn and the losses from claims relating
to the attacks on the World Trade Center, ING recorded an increase
of 5.3% in operational net profit per share, which is considerably
below the target. However, on a longer-term basis, ING continues to
meet this target. Since its creation in 1991, the compound annual
growth rate in profit per share has been 13%.
2 . P R O F I TA B I L I T Y: A N AV E R A G E A N N U A L O P E R AT I O N A L N E T R E T U R N
O N S H A R E H O L D E R S ’ E Q U I T Y ( R O E ) O F AT L E A S T 1 8 %
With an ROE of 18.4% ING met this target in 2001. An important
factor was that the Group’s equity, which had already been consider-
ably reduced in recent years due to the write-offs related to acquisi-
tions, further declined in 2001 as a result of downward revaluations
in the investment portfolio due to the decline in worldwide stock
markets.
3 . E F F I C I E N C Y: A B A N K I N G E F F I C I E N C Y R AT I O L E S S T H A N 7 0 % A N D
D E C L I N I N G B Y AT L E A S T 1 % - P O I N T E A C H Y E A R , A S W E L L A S
I N S U R A N C E P R E M I U M G R O W T H E X C E E D I N G E X P E N S E G R O W T H B Y AT
L E A S T 2 %
The bank efficiency ratio improved from 72.1% in 2000 to 71.1% in
2001, almost meeting the target. Further rationalisation of the
wholesale operations, including further downscaling of the equities
activities, will have a positive impact on the cost control programmes
that are underway throughout the banking operations.
The insurance efficiency ratio was met in 2001. There was a posi-
tive difference of 2.8% between premium growth and expenditure
growth. Strict cost control will be undertaken to further improve this
measure.
To summarise economic developments in 2001, the September 11 events exacerbated the
downturn, the first signs of which were already visible in 2000. Equity markets reached their
lowest point on September 21 and have since somewhat rebounded. Recovery of the eco-
nomies of the US and Europe may be expected. Japan is still suffering from a recession.
2 6 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
A M E R I C A S
ING believes that the US economy has bottomed out and is on its
way to gradual recovery in the second half of 2002. Fiscal and mone-
tary stimuli in the US will support economic growth and consumer
spending, leading to a rise in equity markets. ING sees attractive
opportunities in savings, pensions and employee benefits in the US.
While growth in domestic product (GDP) is expected to pick up, it
will be sub-par for most of 2002. For 2003 and 2004 a recovery of the
US economy to its long-term potential growth rates seems likely. As
the recovery kicks in and short-term rates rise, long-term rates can
be expected to increase (moderately) from current levels. The crisis in
Argentina is severe, but contagion to other countries has up to now
been relatively limited. ING believes that in the long term there are
good opportunities in Argentina.
E U R O P E
The introduction of the euro has gone smoothly. Recessional tenden-
cies in Europe appear to be levelling off and economic recovery is
expected to follow the US, albeit with a certain time lag. Long-term
interest rates will gradually go up in line with the economic recovery.
The growth potential of the US economy is estimated to be higher
than that of the European Union. As a result of demographic changes
(the ageing of the population), the financial prospects of many social
security systems in Europe are not that rosy. Especially state pension
schemes are under pressure and reforms are inevitable. Governments
are diminishing their role in this area, which opens up a market that
private parties are eager to enter. Besides, fringe benefits are growing
in importance. These developments create opportunities for ING in
the field of life insurance, savings, pensions, employee benefits and
asset management.
A S I A
The US economic slowdown, the recession in Japan and the down-
turn in global demand for IT and electronics continue to exert
pressures on growth in Asia. Growth is also hampered by the fact
that the inevitable restructuring of the banking sector still has a long
way to go in many countries. An Asian recovery in 2002 is highly
uncertain. For the next few years, growth is likely to be less than in
recent years. The economy in Japan still shows no signs of improve-
ment. Decreased consumer spending, ongoing deflation, rising
unemployment and continuously low investment spending cloud the
economic outlook. In China, the economic slowdown is less severe
than in other Asian countries owing to the relatively closed nature of
its economy, accommodating policies (including large public infra-
structure outlays), large inflows of foreign investment and continued
growth in private consumption. Its membership of the World Trade
Organisation has increased the urgency of structural reform. How-
ever, widespread structural imbalances and market imperfections
mean that it will take considerable time for reforms to take hold.
Many Asian governments are planning to reform their pension
systems. With its extensive expertise, ING can contribute to these
reforms which will stimulate the local economy.
P R O F I T E X P E C TAT I O N F O R 2 0 0 2
The Executive Board is positive, but cautious about the economic
outlook for the year ahead. Given the uncertainty about improve-
ment of the economies in which ING is active, the Executive Board
considers it prudent not to make a profit forecast for 2002 yet.
OUTLOOK
OUTLOOK FOR 2002 ST ILL
UNCERTAIN
NUMBER OF STAFF
full-time equivalents, year-end
ING Europe 63%
Rest of ING 37%
71,344
41,799
RESULT BEFORE TAXAT ION
in millions of euros
ING Europe 73%
Rest of ING 27%
4,188
1,553
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 2 7
R E P O R T O F T H E E X E C U T I V E B O A R D
ING EUROPE
To be a top-5 European financial institution pursuing a financial services
strategy focusing on retail and wholesale financial services, including
employee benefits.
ING EUROPE SEEKS SCALE
AND FURTHER GROWTH
S T R AT E G Y
On the retail side, strategy focuses on retail wealth
accumulation and financial protection (i.e. retail
banking, asset management, asset gathering, life
insurance and pensions) and private banking,
supported by the click-call-face (multi-product,
multi-channel) distribution approach. In the home
markets of the Netherlands, Belgium and Poland,
the strategy is wealth accumulation supported by
an efficient mix of channels appropriate to client
segments and products, and focused on cost
reduction. In the large mature markets ING is
developing its retail position around ING Direct,
selectively and carefully adding new activities and
face channels as appropriate. In the developing
markets, particularly Central Europe, ING wants
to become a market leader in pensions, life and
wholesale banking by leveraging its market value,
including via distribution alliances.
On the wholesale side, ING’s strategy is to offer
wholesale banking products and services as well
as employee benefits to its European and inter-
national clients. ING wants to focus on offering
its products and services in those markets and to
those clients that are profitable on a sustainable
basis. The ING Europe strategy is also built
around synergy, which means working together,
In terms of profit contribution, Europe is ING’s most important
geographic region. The Benelux is a key profit generator, but it
is a small and mature market. A core objective of ING Europe
is, therefore, to expand ING’s home base, making it possible to
compete on an equal basis with other companies that already
have a ‘natural’ home base of similar size. To achieve this, ING
will increasingly seek scale and growth in Europe in the coming
years while simultaneously trying to extract high value from the
existing global franchise. ING Europe, after all, not only refers
to ING’s European activities, but also to ING Direct and
wholesale banking, which are global businesses.
2 8 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
sharing know-how to increase commercial effec-
tiveness, cutting IT, operational and development
costs and increasing cross-selling. A vast program
is underway affecting all business units, regions
and functions at all levels.
N E W S T R U C T U R E
A major accomplishment in the year 2001 was the
smooth transition toward an integrated European
organisational structure. The new ING Europe
is structured along the main functional areas
of Retail, Wholesale, Operations/IT and ING
Direct, as well as seven geographic regions. The
new integrated structure will bring more focus
into ING’s European and global business.
R E TA I L
With the new European organisation in place, the
management of Retail Europe works together
with the regions to set the priorities for future
growth. In particular, this includes developing a
common set of retail value drivers: scale, cost,
cross-sell, value of new business and customer
satisfaction. A lot of attention went to the inte-
gration of the retail activities in The Netherlands,
the implementation of our click-call-face strategy
around ING Direct in large mature markets and
country-by-country measures to improve scale,
including by way of financial advisors in Central
Europe. In January 2002, private banking was
established as a separate business line within
ING Europe, functionally combining the private
banking businesses of BBL, ING Bank Neder-
land, CenE Bankiers, BHF-Bank and ING Baring
Private Bank.
I N G D I R E C T
ING Direct is a crucial part of ING’s retail strate-
gy. The strategy of ING Direct is to be a low-cost
provider of financial services in large mature
markets by offering its clients best value for money
and excellent service via call-centers and the
Internet. ING Direct uses a high-rate, no-fees,
no-minimum savings account as an entry product,
and with this product alone ING Direct is able to
exceed the ING Group profit hurdle rate. After
reaching a minimum customer base, ING Direct
business units complement the savings account by
cross-selling a focused range of other financial
products concerned with wealth accumulation:
mortgages, mutual funds, e-brokerage, pension
and life insurance.
In 2001 ING Direct grew faster than expected.
Including the participation in DiBa in Germany,
the number of customers increased to 2.6 million
and retail funds entrusted grew to 24 billion.
Measured by retail funds entrusted, ING Direct
is now a top-10 bank in Australia, Canada,
France and Spain. Two of the six ING Direct
operations (Australia and Canada) are now
profitable.
I N G W H O L E S A L E
Within the new ING Europe organisation, ING
Wholesale was established in 2001 by integrating
the wholesale banking activities of ING Barings,
ING Bank, BBL, BHF-Bank, the wholesale
insurance activities of Nationale-Nederlanden
and the specialised subsidiaries of Charterhouse,
Ferri and Vermeulen-Raemdonck. ING Wholesale
now includes three functional areas (Corporate
Financial Services, Investment Banking and
Financial Markets), five European regions (the
Netherlands, South-West Europe, Germany,
Central Europe and the United Kingdom) as well
as the regions of Americas and Asia.
Within Corporate Financial Services, fully inte-
grated departments were formed during the year
for Global Clients, Corporate Clients, European
Business Desks, Financial Institutions, Employee
Benefits, Structured Finance and the Debt
Products Group (a joint venture with Financial
Markets). Employee Benefits in Europe comprises
a substantial part of the profits of Corporate
Financial Services and is one of the strategic
spearheads of ING Group, anticipating pension
reform trends and international mobilisation of
workforces. Seven Employee Benefits units already
Achievement of an
acceptable profit level
despite unfavourable
market circumstances.
Integration of wholesale
businesses into one
functional Wholesale
organisation.
Major Operations/IT
investment programme to
improve quality of service
and cost efficiency.
Majority stake in Polish
Bank Slaski (88%) and
subsequent integration
of all banking activities
into ING Bank Slaski.
Faster than expected
growth of ING Direct in
terms of number of clients
and funds entrusted.
R E P O R T O F T H E E X E C U T I V E B O A R D
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 2 9
R E P O R T O F T H E E X E C U T I V E B O A R D
M I C H E L T I L M A N T
Our European strategy is
built around synergy.
By working together we
increase our commercial
effectiveness, while our
upgraded Operations/IT
framework is the bedrock
for operational efficiency.
exist and at least two new units will be opened in
the forthcoming year.
Investment Banking is the Group’s provider
of high-value-added Mergers & Acquisitions,
Advisory and Equity Capital Markets services.
The market environment was generally very diffi-
cult in 2001, with significantly reduced activity
throughout the industry. Anticipating the current
modest market conditions, the business was
restructured early in 2001 resulting in significant
cost reductions.
Financial Markets falls into three major seg-
ments: Treasury, Strategic Trading, and Sales,
Trading and Research. Overall, Financial Markets
had a strong performance in most of its core
businesses and regions. The businesses of Trea-
sury, Debt Markets and Foreign Exchange posted
particularly positive increases in profit. Depressed
market circumstances resulted in an Equities
deficit overall. However, the Equities businesses
in the Netherlands, South-West Europe and
Germany delivered break-even results in 2001.
The lower results in the Equity Markets business
were compensated by the strong performance in
the rest of Financial Markets. Measures have
been taken to restructure the equities business.
O P E R AT I O N S / I T
During the year 2001, ING Europe refined its plan
to upgrade IT and Operations as the bedrock for
greater operational efficiency. That year saw the
first wave of implementations. Several shared
service centres were established in Banking
(mortgages, securities services, international
payments and financial markets) as well as in
Insurance (claims handling, life insurance).
A number of IT infrastructure projects were
launched. Furthermore, a selection of standard
applications was deployed for ING (CRM,
Financial Markets back-office and front-office
applications, HR etc.). A great number of synergy
projects were launched in the regions and business
units as well. In the Netherlands, steps were taken
to regroup support functions. In South-West
Europe, the three insurance companies were
merged and the Swiss operations were combined.
In Central Europe a retail banking shared service
centre was set up.
G E O G R A P H I C R E G I O N S
In addition to its functional lines, ING Europe
is also organised along seven geographic regions.
T H E N E T H E R L A N D S
The Netherlands as ING’s original home base is
still one of the key markets. Nationale-Neder-
landen is market leader in insurance, while ING
Bank and Postbank belong to the leading banks.
Their combined results increased by 6% in 2001,
also owing to adequate cost management. The
sale of Tiel Utrecht was successfully completed
as part of the strategic portfolio management. In
the same context it was also decided to split up
Westland/Utrecht mortgage bank into a real estate
finance unit within ING Real Estate and a retail
mortgage bank. The retail mortgage bank will be
combined with other units to create an ‘inter-
mediary bank’.
In 2001, a significant restructuring effort was
started, optimising the existing franchise by im-
proving cross-selling and transforming the existing
product- and channel-oriented business units into
dedicated retail, intermediary and wholesale func-
I N G E U R O P E
3 0 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
tions. As the independent intermediaries play an
important role in distribution in the Netherlands
we also intend to strengthen their position by
improving our support.
The functional line Intermediaries was added
alongside Retail, Wholesale, and Operations/IT,
recognising the vital importance, strong position
in the market and unique dynamics of this
distribution channel in the Netherlands.
S O U T H - W E S T E U R O P E
ING’s activities in South-West Europe comprise
business units in Belgium (all financial services),
France (corporate; retail wealth accumulation),
Luxembourg (retail market and asset manage-
ment), Portugal (corporate), Spain (corporate;
retail wealth accumulation) and Switzerland
(private banking and trade and commodity
finance). In Belgium, BBL is a core player, par-
ticularly in private banking and wealth accumu-
lation and in the mid-sized corporate market.
A key objective in South-West Europe is to move
to a single ING organisation. Several synergy
projects are of note in this regard: the integration
of the Belgian insurance companies, the merger
of Caisse Privée Banque activities with BBL and
the merger of BBL and ING Baring Private Bank
in Switzerland.
The insurance activities in Belgium succeeded
in substantially increasing market share during
the year 2001, especially for unit-linked insurance
products. Strict cost-control measures were also
taken. The integration of the three insurance com-
panies will lead to stronger organic growth and
an increase in cost efficiency.
In Spain, an ambitious growth scenario is
being developed. In Spain and France, local busi-
nesses are co-operating more closely, particularly
with ING Direct.
G E R M A N Y
For ING in Germany, the year 2001 was a year of
restructuring for BHF-Bank. The risk profile was
significantly reduced, while at the same time new
business lines were developed. The ING platforms
approach for corporate banking and financial
markets was put into place. BHF-Bank, BHW
and BGAG established a pensions joint venture.
Based on the so-called ‘Riester’ legislation, ING
has the objective of securing a market share in
pension products related to both individual and
group pension schemes. Since DiBa decided to
apply the same strategy as ING Direct, strong
growth was realised in Germany.
C E N T R A L E U R O P E
The Central Europe region covers a cluster of
ING Group activities in a wide range of countries,
including the Poland home market. Throughout
Central Europe, the ING re-branding programme
was completed. After a successful tender bid on
Bank Slaski in Poland, all banking activities were
integrated into ING Bank Slaski (no. 5 market
position), in which ING has an 88% stake at
present. All life (no. 3 market position), employee
benefits and pension activities (no. 2 market
position) were integrated in Poland. The Polish
Pension Fund showed a strong increase in profit
as well as in assets under management. Employee
Benefits were introduced in Hungary, and a
pension fund was started in Bulgaria. In the
Czech Republic the first ‘Orange House’ opened,
which is the physical location in which the retail
and small & medium-sized enterprise clients are
serviced according to the click–call–face concept.
Throughout Central Europe, initiatives were
started to share back-offices activities between
H E S S E L L I N D E N B E R G H
We will seek scale and
growth in Europe, while
simultaneously extracting
high value from wholesale
banking, a global business
with a European focus,
and ING Direct, which
has operations in Europe,
North America and
Australia.
R E P O R T O F T H E E X E C U T I V E B O A R D
Orange House in Prague is part of ING’s ‘click–call–face’ approach.
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 3 1
R E P O R T O F T H E E X E C U T I V E B O A R D
insurance and bank units, as well as between
countries in the region. In Greece a strategic
alliance between Piraeus Bank and ING was
established in the field of bancassurance,
employee benefits and asset management. ING
will continue to develop its positions in Central
Europe, predominantly through leveraging market
value, however without losing sight of the oppor-
tunities to improve our relative position.
U N I T E D K I N G D O M
In the UK, the integration of ING Barings,
Charterhouse Securities, BBL and BHF-Bank
in London and BBL in Dublin into the new
ING Wholesale organisation was completed.
A M E R I C A S (wholesale banking, l inked to EC Europe)
In the Americas region, the US domestic invest-
ment banking business of ING Barings as well as
the US domestic business of BHF-Bank were
sold successfully. Costs and headcount were re-
duced. In Latin America three branches were
transformed into representative offices. The inte-
gration of the various labels created more
commercial possibilities.
A S I A (wholesale banking, l inked to EC Europe)
In the Asia region, significant progress was realised
in treasury and fixed-income activities with the
completion of a build up of resources in these
businesses. As the market volumes softened in Asia
during the year, especially in the form of lower
equity and capital market activities, steps were
taken to reduce costs and headcount in line with
business opportunities. Also, with the integration
of BBL, BHF-Bank and ING Bank in Asia, the
number of locations was reduced from 36 to 18
as offices were consolidated and co-located.
O U T L O O K
Europe Retail’s primary goal is to continue stable
growth in the home markets (the Netherlands,
Belgium and Poland), to develop the ING Direct
strategy in the large mature markets and to
develop our field forces to build a focused
STRONG GROWTH OF ING DIRECT IN CL IENTS AND FUNDS ENTRUSTED
NUMBER OF CL IENTS (X 1 ,000) FUNDS ENTRUSTED ( IN EUR MILL ION)
YEAR-END 2000 YEAR-END 2001 YEAR-END 2000 YEAR-END 2001
Canada 342 480 2 ,152 3 ,379
Spain 186 397 1 ,934 3 ,820
Australia 123 278 1 ,262 2 ,930
France 57 181 929 3 ,211
US 60 338 699 3 ,322
Italy (since April 2001) 75 1 ,159
Sub-total 768 1 ,749 6 ,976 17 ,821
DiBa (acquired in 2002) 827 6 ,215
Total 768 2 ,576 6 ,976 24 ,036
portfolio of long-term sustainable positions in
emerging markets.
Private Banking has been established as a new
business line within EC Europe, functionally
combining the private banking businesses of
ING Bank, BBL, C&E Bankiers, BHF and ING
Baring Private Banking. This will optimise
group-wide synergies.
ING Direct will strive for further growth by
expanding its geographic coverage in the USA
and Canada and by opening new operations.
France and Spain are expected to reach
profitability in 2003, which is expected for the
USA at the end of 2003/early 2004.
ING Wholesale’s goal is to intensify cross-selling
in the Netherlands, Belgium and Poland, to strength-
en its market position in the major European
countries of the UK, Germany, France, Spain
and Italy and to enlarge European client business.
In line with the global rebranding programme,
ING Wholesale will migrate to a unified global
ING brand in 2002. Rebranding will reinforce
and reflect ING’s integrated wholesale approach.
In Operations & IT, all initiatives will be focused
on synergies to the fullest. The IT platforms will
lead to lower costs, improved quality of service
and reduced operational risk. A cost-efficient,
modern Operations and IT environment will
underpin the growth in business.
In Belgium, BBL added
ING to its own strong
brand name.
I N G E U R O P E
NUMBER OF STAFF
full-time equivalents, year-end
ING Americas 24%
Rest of ING 76%
27,656
85,487
RESULT BEFORE TAXAT ION
in millions of euros
ING Americas 16%
Rest of ING 84%
899
4,842
3 2 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
S T R AT E G Y
Rationalisation is the first of the five key strate-
gies. The company is rationalising its business
portfolio to achieve economies of scale and build
a wealth management and/or risk management
focus in its core markets. Restructuring and
integrating businesses – the second strategy – will
drive down unit expenses and eliminate redun-
dancies. In the US, ING restructured its core
businesses into US Financial Services to better
focus on product manufacturing and distribution
channels. In doing so, ING is on its way to realis-
ing its third strategy, which is creating a winning
customer value proposition, while at the same
time reflecting its customer-centric focus in its
brand values. Aligning ING’s culture with the
customer proposition and business strategy – the
fourth strategy – enables the company to attract,
retain and motivate a highly professional and
diverse workforce which reflects the customer
base. As well, initiatives have been launched to
leverage ING’s global capabilities and extend
expertise in branding, direct marketing, asset
management, risk management, IT and procure-
ment across country platforms, which is the fifth
of ING Americas’ key strategies.
M A R K E T P O S I T I O N
ING Americas’ goal is to be a market leader in
each of the core countries. In the US ING has a
top-5 position in life insurance, variable annui-
ties, fixed annuities and retirement plans, and has
ING AMERICAS’ BUSINESSES ARE
POISED TO DELIVER REVENUES
AND EARNINGS GROWTH
ING AMERICAS
The mission of ING Americas is to continue to build strong
integrated financial services (IFS) platforms in its core markets
to satisfy the needs of ING’s customers by offering multiple
products through a variety of channels. The five key strategies
that were pursued in 2001 will continue to be the key strategies.
These strategies will drive ING Americas in building strong
business platforms and a true IFS organisation.
Build leading market positions through integrated financial services platforms
in the core countries.
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 3 3
R E P O R T O F T H E E X E C U T I V E B O A R D
the largest independent broker-dealer network.
In Canada, ING is the number-1 non-life insurer.
In Mexico, ING is the largest health and
property & casualty insurer and is number 2 in
life insurance. In Argentina, Brazil, Chile and
Mexico, ING is the top international insurer.
F I N A N C I A L P L A N 2 0 0 1 N O T M E T
During 2001 ING Americas focused on integra-
tion and branding after the acquisitions of Relia-
Star, Aetna Financial Services and Aetna Inter-
national. Amidst a global economic slump, which
was magnified by the tragic events of September
11, it was impossible for ING Americas and most
other companies focused on the wealth manage-
ment market to meet the financial plan for 2001.
I N T E G R AT I O N
The integration efforts of ReliaStar and Aetna
Financial Services with ING’s US organisation,
and Aetna International with ING Latin America,
started in 2001 with significant progress. In the
US alone, almost 200 projects were identified
throughout the integration process. By the end of
2001, 94 projects – which included a common
finance system and shared service organisation –
had already been completed. The rest of the
projects are scheduled to be completed during
2002. All these integration efforts have achieved
revenue and expense synergies planned for 2001
and are on track with business plans for 2002
expense savings. The next integration step in the
US was taken by combining retail and wholesale
businesses into ING US Financial Services,
focusing on separating product manufacturing and
distribution to get closer to the customer. The
acquisitions also have re-characterised the US
business from a traditional life and annuity
insurance company to a multi-product wealth-
management company. In December 2001, ING
Americas further streamlined operations by
moving its mutual funds business to US Finan-
cial Services to enhance cross-selling opportuni-
ties. In Latin America, the integration of Aetna
International with ING Latin America has almost
been completed and all businesses are now well-
positioned to build strong financial platforms.
B R I N G I N G I T A L L T O G E T H E R – T H E I N G B R A N D
Following the strategy of the global brand posi-
tioning, ING Americas promoted its brand
throughout the region to raise awareness of the
ING name and services, not only externally to
F R E D H U B B E L L
Our mission is to continue
to build strong integrated
financial services platforms
in each of our core markets
and satisfy the needs of
our clients by offering
multi-products through
multi-channels.
ING Direct Café in New York: the success of attracting clients via the Internet and call centers combined with personal contact.
3 4 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
customers but also internally to employees. A
common Human Resources platform has been
launched by which all employees can get the same
‘ING’ branded paycheque and benefits. Brand
campaigns, including the successful ‘It’s not an
ending, it’s a beginning’ US programme, are steps
toward an evolutionary brand strategy to position
ING as an innovative and refreshingly different
financial services provider. A successful advertising
campaign was launched in Canada around the
ING brand. ING also rebranded its Mexican retail
businesses – Seguros Comercial América and
Afore Bital – under the ING Comercial América
label. It also moved its acquired Aetna Inter-
national insurance business in Chile under the
ING Chile label.
S A L E S M O M E N T U M M A I N TA I N E D
Among the key positives in 2001 were the partner-
ship and teamwork fostered through integration.
There was a solid union of people and cultures
across a multitude of businesses and sites. This
was so successful that it allowed the region to step
up the ‘One ING’ goal and accelerate the next
phase of US integration. The businesses main-
tained their market shares during this complex
integration process, amongst others because of
the strength of the ING Advisors Network, the
largest network in the US market place with over
10,000 representatives.
W O R L D T R A D E C E N T E R C L A I M S L O S S
The September 11 attacks resulted in approxi-
mately USD 535 million claims loss, primarily
through ING Re, the reinsurance operation, which
had an unusual concentration of reinsurance risk
in the upper floors of the World Trade Center
towers. ING Re had USD 100 million catastrophe
reinsurance cover and had never previously been
confronted with catastrophe claims over USD 7
million for one single event. Subsequently, it was
decided to exit the personal accident and workers’
compensation catastrophe lines that caused these
excessive claims.
C A N A D A R E A L I G N M E N T
The alliance with Zurich Canada and acquisition
of some of its activities was a major strategic
realignment, which moves ING Canada to the
number one position in non-life lines. ING
acquired Zurich’s personal and car and home
insurance operations in Canada as well as its
portfolio of small and mid-market commercial
risks. In turn, Zurich acquired ING Canada’s large
commercial and corporate lines. Both companies
will offer their complete product lines to each
other’s distributors and customers in Canada.
S T R O N G P R E S E N C E I N L AT I N A M E R I C A
During 2001, ING continued to build a strong
presence in Latin America with the integration of
Aetna International, acquired in late 2000.
In Mexico, through the mid-year completion of
the Seguros Comercial América acquisition, ING
became the country’s leading private insurance
company. ING’s combined retail operations in
Mexico serve almost 10 million clients and were
rebranded to ING Comercial América.
ING Chile, the country’s number one insurer,
was named ‘Best Foreign Company’. ING Argen-
tina was given the prestigious Mercury ‘Excel-
lence in Marketing’ award and became the first
life insurance company to win the award since its
inception in 1982.
In Buenos Aires, ING began construction of a
new corporate office building in the city’s Puerto
Madero district that should be completed in the
second quarter of 2002. It will house the head
offices of all of ING’s operations in Argentina.
As part of its rationalisation strategy, ING sold
its Argentine subsidiary Aetna Vida SA as well as
Asistencia Médica Social Argentina SA (AMSA).
ING exited Colombia with the sale of Cruz
Blanca, a health insurance company.
E - B U S I N E S S
The ING US web site was re-launched last year
to give a sharper customer focus. The site will
Revenues and earnings
were lower than expected
due to weak economies
and the World Trade Center
attacks.
ReliaStar and Aetna
Financial Services are being
integrated into ING US
Financial Services, one
of the top-5 US life
insurance companies.
A successful brand
advertising campaign
was launched bringing
the new US companies
under the ING name.
The Aetna International
businesses were combined
with those of ING in
South America to form
the leading international
insurance company on
that continent.
ING acquired the remaining
55% of Seguros Comercial
América, Mexico’s largest
private insurance company.
ING Canada and Zurich
Canada formed a strategic
alliance that makes ING
the leading non-life
insurer in the country.
R E P O R T O F T H E E X E C U T I V E B O A R D
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 3 5
R E P O R T O F T H E E X E C U T I V E B O A R D
easily migrate to the new www.ing-usa.com, which
will add more interactive functionality for cus-
tomers in 2002. ING has seen an increasing need
to create technologies with which ING businesses
can organise and access customer information.
These technologies enable customers and distribu-
tors to access their personal account information
and perform functions. A web strategy providing
customer-distributor links lies at the heart of
becoming a customer-focused organisation. As
ING web sites evolve throughout this year and
beyond, they will begin to direct users to contact
ING-associated financial advisors. The web page,
then, becomes a workhorse for customers who
want more personalisation – as well as for ING
advisors – by immediately engaging users on a
variety of levels.
O U T L O O K
Due to generally poor equity markets in the US
in 2001, ING began the year 2002 with assets
under management considerably below expecta-
tion. The announced reduction of annual oper-
ating expenses by over USD 250 million will help
reduce expenses in line with lower revenue
expectations. In addition, as significant progress
in integration has been made in 2001 and the
remaining integration projects will be completed
by the end of 2002, ING US Financial Services
will achieve its IFS platform operationally and
managerially by the close of the year. Assuming a
modest recovery in the region’s economic growth
and stock markets, ING businesses are well-
positioned to contribute their fair share to the
Group’s profit.
The company’s overall goal for the coming year is
to strengthen its business platforms in key coun-
tries that deliver revenue and earnings growth
across a wide range of market conditions – and
that ultimately lead to the region’s intent to be the
consummate integrated financial provider. Fun-
damentally, the plan calls for continuing aggres-
sive portfolio management, continued business
restructuring, enhancing performance, lowering
expenses, customer-focused product development
as well as building the ING brand and culture.
I N G A M E R I C A S
ING Comercial América offers its insurance clients mobile assistance in Mexico City.
3 6 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
ING ASIA/PACIF IC
S T R AT E G Y
With already a leading life insurance position in
Asia/Pacific after the integration with the Aetna
International businesses, the strategy will be to
focus on key strategic markets where scale,
distribution, management and technology are the
drivers of sustainable profit growth. Building the
brand awareness and positioning the ING brand
in the region help establish the Integrated Finan-
cial Services business platform. Rounding out
ING’s product range with innovative products
such as mutual funds, defined contribution plans,
variable life and unit-linked products in selected
markets, positions ING closer to its customers with
more product choices. Distribution ability needs
to be enhanced by diversifying distribution and
implementing a CRM business model. In other
words, ING Asia/Pacific is aiming to build on its
strength as a traditional life insurer distributing
through agents sales forces to gradually become a
multi-channel financial services provider focused
on delivering superior products and services to
customers in the middle and upper retail market.
STRONG MARKET
POSIT IONS IN AS IA/PACIF IC
The year 2001 has been a year of integration for ING Asia/
Pacific. Following the Aetna International acquisition in
December 2000, all the Aetna businesses were fully integrated
with ING’s businesses in the region in 2001. In spite of the
significant integration efforts which distracted management
focus throughout the year, the region delivered its profit target
according to plan. Shifting toward one strong ING global
brand is also part of the integration efforts. 2001 was marked by
major rebranding and brand awareness campaigns throughout
the region. Country platforms have been set up to build brand
using combined scale to leverage cost structures and enhance
revenue synergies.
Be a leading player in the core markets Australia, Japan, Korea, Taiwan, China
(including Hong Kong) and Malaysia, while further developing the (major)
greenfields in China and India.
NUMBER OF STAFF
full-time equivalents, year-end
ING Asia/Pacific 7%
Rest of ING 93%
7,976
105,167
RESULT BEFORE TAXAT ION
in millions of euros
ING Asia/Pacific 5%
Rest of ING 95%
313
5,428
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 3 7
R E P O R T O F T H E E X E C U T I V E B O A R D
form. An award-winning advertising campaign,
centering on the “good man” image of ING
insurance agents in Hong Kong, was highly
successful in reinforcing ING’s brand.
N E W O P P O R T U N I T I E S I N J A PA N
With the divestment of Aetna Heiwa Life Japan
in the latter half of 2001, ING has taken a step
further in streamlining its operations to focus on
product manufacturing and independent distri-
bution channels in Japan. ING Principal Pen-
sions, ING’s joint venture established with the
Principal Financial Group, was among the first
to become operational and enter the promising
defined contributions market in November follow-
ing the long awaited new legislation on Japanese
pensions.
R E G R O U P I N G O F O P E R AT I O N S I N A U S T R A L I A
To consolidate its strong position in key markets
and to ensure it continues to prosper in an increas-
ingly competitive environment, ING in Australia
started the process of regrouping its operations
into customer and adviser segments, where his-
torically its focus has been on product or distri-
bution. With a new function-based organisation,
Results of ING Asia/Pacific
fully met expectations,
with good results in Korea,
Taiwan and Australia.
Successful integration of
Aetna International with
ING companies.
ING Life Korea has become
the fastest growing foreign
life insurer in the country
with 7% market share in
new premiums.
Revenues in life insurance
joint venture in Shanghai
more than doubled.
New promising joint
ventures in India and
Japan.
ING is one of the largest life insurers in Taiwan.
S T R O N G M A R K E T P O S I T I O N S
As the second largest international life insurer in
the Asia/Pacific region, ING has now become a
dominant player. In Australia, ING ranks among
the top five insurance and asset management
institutions with a market share of 6% for retail
funds under management. Measured by new
premium income, ING is now the fourth largest
life insurer in Taiwan, having strengthened its
position from the previous year, and is easily the
largest foreign life insurer there. In Hong Kong,
ING ranks sixth with a 5% market share. In Korea,
ING is the fastest growing foreign life insurer
with a 7% market share in new life premiums.
ING ranks 19th in Japan up from 24th last year,
and is among the top three for corporate-owned
life insurance (COLI) new business with a market
share of 3%. In China, ING’s joint venture PALIC
in Shanghai now ranks as the second largest
foreign joint venture and fifth overall with a 4%
market share in new life premium. ING’s and
Aetna’s experience in establishing new emerging
market operations is benefiting this company – it
already has 100,000 customers and revenue growth
over 100% on a pro-forma basis. As the third
largest insurance company in terms of premium
income and with 10% market share in terms of
new business, ING strengthened its position in
Malaysia in individual life insurance and main-
tained its leadership in employee benefits.
R E B R A N D I N G T O I N G
In Australia, the ING brand was smoothly adopt-
ed using a transition logo to explain the name
change from Mercantile Mutual to ING. The
nine-months transition campaign indicated strong
consumer awareness and ensures success when
removing the Mercantile Mutual link in January
2002. In Taiwan, Life of Georgia and Aetna were
smoothly integrated under the new brand name
ING Antai. In Hong Kong and Macau, the
change from Aetna to ING Life coincided with
the integration and realignment of its operations
to establish a single strong financial services plat-
3 8 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
the restructuring includes all ING Australia’s life
insurance, funds management and adviser opera-
tions. In terms of shared synergies, expertise and
knowledge, Australia continues to serve as a
regional hub, transferring its mature market skills
to other ING businesses in developing markets of
the Asia/Pacific region.
J O I N T V E N T U R E W I T H A N Z B A N K
A preliminary agreement was reached with ANZ
Bank, one of the leading banks in Australia, to
form a joint venture in funds management and
life insurance in Australia and New Zealand with
a view to strengthen the competitive position of
ING Australia in the top of the financial services
market. If completed as planned, the joint
venture will rank fourth in terms of retail funds
under management and will be the exclusive
supplier of life insurance and funds management
products to the ANZ Bank branch network and
to ING Australia’s many distribution channels.
I N D I A A S A G R O W T H M A R K E T
ING Vysya Life insurance, a joint venture between
ING and Vysya Bank in India, established opera-
tions in Bangalore, Delhi and Mumbai after it
was granted an operational licence by the Indian
Insurance Regulation and Development Authority.
India is one of the key long-term growth markets
in Asia. ING Vysya Life Insurance started selling
policies in September through its highly profes-
sional sales force of over 300 tied agents as well as
through the 480 outlets of Vysya Bank which are
concentrated in the southern part of the Indian
subcontinent.
B E C O M I N G A R E C O G N I S E D E - L E A D E R
A key priority is becoming a recognised e-leader
in key markets. Through the use of the Internet
and other digital technology, ING works to
foster new and powerful relationships with its
customers, agents, employees and partners by
lowering costs per transaction and increasing
revenue per customer, while at the same time
increasing satisfaction and customer retention.
Altogether there are 24 on-going e-business
projects across the region with many in the form
of self-service platforms.
O U T L O O K
The year 2001 was a successful year for ING
Asia/Pacific, which achieved its sales and earnings
targets despite the deteriorating economic climate.
ING Asia/Pacific views itself as a financial
product manufacturer and distributor, organising
around operational excellence to build a customer-
focused organisation throughout the Asia/Pacific
region. Key will be staying ahead of competition
and demonstrating expertise in addressing the
negative elements, such as low equity markets
and current low interest rates, that impact the
business environment. The diversification of ING’s
business portfolio across the region together with
a close eye on expense levels will help to alleviate
these economic adversities. All in all, ING Asia/
Pacific expects substantial growth in revenues and
earnings in 2002 through further integrating the
business activities, optimising synergy, expanding
distribution opportunities, building one powerful
brand and focusing on meeting customer needs.
F R E D H U B B E L L
We aim to build on our
strength as a traditional life
insurer to gradually become
a multi-channel provider
of superior financial
services for the middle and
upper retail market.
R E P O R T O F T H E E X E C U T I V E B O A R D
NUMBER OF STAFF
full-time equivalents, year-end
ING Asset Management 5%
Rest of ING 95%
5,275
107,868
RESULT BEFORE TAXAT ION
in millions of euros
ING Asset Management 5%
Rest of ING 95%
264
5,477
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 3 9
R E P O R T O F T H E E X E C U T I V E B O A R D
ING ASSET MANAGEMENT
I N V E S T M E N T P E R F O R M A N C E U N D E R P R E S S U R E
As is normal in a highly volatile market, ING’s
investment performance came under pressure.
For ING’s key funds, 53% performed better than
their relative benchmark on a 1-year basis and
60% on a 3-year basis per 31 December 2001.
Although these investment performance statistics
slipped slightly, ING’s performance against peers
improved with 75% of the funds showing above-
median (first or second quartile) performance on
a 1-year basis versus 72% on a 3-year basis.
S T R AT E G Y
ING Asset Management is committed to delivering
excellence in investment performance and client
service quality through its ‘global investment
ASSETS UNDER MANAGEMENT
INCREASED IN DIFF ICULT
MARKET C IRCUMSTANCES
The year 2001 was very difficult for the asset management
industry. The business is sensitive to the level of market prices as
revenues are linked to funds under management. In addition, a
drop in asset prices often coincides with net outflows. Under these
difficult circumstances, ING Asset Management generated a
pre-tax profit of 264 million – 18.5% below last year’s
324 million. A significant part of the decline was caused
by lower results on seed capital invested to sponsor third-party
private equity funds. ING’s assets under management still
increased 2% from 503 billion to 513 billion thanks to a
strong inflow of new funds ( 41 billion). The share of third-
party assets declined slightly from 71% to 68%.
Become a global top-10 (currently no.12 in assets under management) and
remain a European top-5 (currently no. 4) asset manager with an
above-average investment performance.
4 0 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
expertise, local client focus’ business model. By
consistently meeting these commitments, ING
Asset Management intends to reach its objective
to be a top-five asset manager in Europe as well
as a top-ten asset manager globally.
O R G A N I S AT I O N
As of 2002, ING Asset Management’s private
banking activities will be transferred to ING
Europe. Aeltus, the asset-management unit of
Aetna, has been merged with ING Furman Selz
Asset Management to form ING Aeltus. The
wholesale real estate business of Westland/Utrecht
Hypotheekbank and ING Bank Nederland will
be transferred to ING Real Estate.
After these transfers, ING Asset Management
comprises a group of attractively homogeneous
business units. Each activity is of a truly global
character, combining global product sourcing
with a global customer base. Throughout ING
Asset Management, there is a strong emphasis on
product design and manufacturing. Distribution
and marketing efforts focus on institutional and
wholesale clients, either representing institutional
investors or retail distribution channels.
ING Asset Management is pursuing cost reduc-
tions on all levels, among others by integrating
or outsourcing back-office processes and by
reducing overlaps in product offerings that do
not add value. Furthermore, ING Asset
Management is consistently strengthening its risk
management infrastructure across its business
units. This effort has, for example, resulted in an
AA+ rating from Fitch-AMR for Baring Asset
Management’s London investment operations.
A C T I V E M O N E Y M A N A G E M E N T F O R
I N S T I T U T I O N A L I N V E S T O R S
Baring Asset Management, ING Investment
Management and ING Aeltus offer active money
management services to institutional investors.
Institutional client assets under management
amounted to 166 billion, which makes ING
one of the larger third-party money managers in
the world with strong market positions in Europe,
the US and Asia/Pacific. At Baring Asset Mana-
gement a deterioration of investment performance
in some products led to a higher than expected loss
of mandates. The investment process has been
reviewed and improved. It is expected that a
further loss of mandates is stemmed now that the
performance is improving.
ING Aeltus strengthened its managed-account
business, resulting in substantial inflows of funds.
ING Investment Management performed very
satisfactorily and won a number of prestigious new
mandates. ING Investment Management manages
133 billion of assets on behalf of ING
Insurance.
In the US, the integration of the general-account
investment platforms of Aetna, Reliastar and ING
has been completed, resulting in an expansion of
investment capabilities and cost savings.
M O R E C O M P E T I T I O N I N M U T U A L F U N D S
In 2001, retail investors reduced their investments
in equity funds in reaction to negative returns. In
the mutual fund business, average holding periods
are falling due to the emergence of theme funds,
but also because investors are becoming more
sensitive to performance. Furthermore, the emer-
gence of open architecture, whereby distribution
channels are selling products from various pro-
viders, has led to a more competitive en-
vironment. Alternative investments (funds of
hedge funds, private equity) as well as principal
protected products are gaining ground.
The different business units of ING Asset Mana-
gement managed 181 billion in mutual funds.
Net inflow was mainly due to inflow in the US
and in Asia. ING Pilgrim successfully launched
principal protected products in the US, which are
managed by ING Aeltus.
In very difficult market
circumstances, assets under
management still increased
by 2% from EUR 503 billion
to EUR 513 billion.
ING’s key funds performed
well against their peers
with 75% of the funds
showing above median
performance on a 1-year
basis per 31 December 2001.
Profit decline due to lower
returns on seed capital and
lower management fees.
In the US, Aeltus, the former
asset management unit of
Aetna, has been merged
with ING Furman Selz Asset
Management to form ING
Aeltus.
The wholesale real estate
business of Westland/
Utrecht Hypotheekbank
and ING Bank Nederland
is being integrated within
ING Real Estate.
R E P O R T O F T H E E X E C U T I V E B O A R D
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 4 1
R E P O R T O F T H E E X E C U T I V E B O A R D
0
50
100
150
200
250
300
350
400
450
500
0100999897
ASSETS UNDER MANAGEMENT
BY CL IENT CATEGORY
in billions of euros
External clients
Internal clients
L E A D I N G P O S I T I O N I N R E A L E S TAT E
ING Real Estate operates as asset manager, devel-
oper and financier. With 31 billion of assets
under management, ING Real Estate ranks in the
top three of global real estate asset managers.
The development and financing activities are in
themselves highly profitable businesses, but they
also support ING’s real estate asset management
business. For example, the launch of the Ibérica
Retail Fund was jump-started thanks to the wealth
of in-house expertise in the development of
shopping centres.
After making a public bid in November 2001 for
the shares of Filo, a Spanish real estate and
shopping centre developer and management com-
pany, ING Real Estate reached agreement with
the four main Filo shareholders to acquire their
stakes totalling 81.5% in December 2001.
The average profit growth of the development acti-
vities has been 2% annually over the last four years
and further growth is expected. Currently, the port-
folio of development projects under construction
amounts to 1.3 billion. Several prestigious
projects have been added this year, such as the Zlota
project in Warsaw, the New York Times Tower
project and the Gershwin project in Amsterdam.
In 2002, the wholesale real estate financing busi-
nesses of ING business unit Westland/Utrecht
Hypotheekbank and ING Bank will be transferred
to ING Real Estate. With a loan portfolio of ap-
proximately 15 billion, the new combination
will be leading in the Dutch real estate financing
market. ING Real Estate expanded its inter-
national financing business, especially in Europe
and the US. A notable area of growth is the design
of innovative (off-balance sheet) financing struc-
tures for ING’s international client base.
N E W I N I T I AT I V E S I N A LT E R N AT I V E A S S E T S
‘Alternative’ investments – notably hedge funds
and private equity – offer attractive performance
characteristics and diversification benefits.
ING Aeltus expanded its hedge fund product
range with a diversified fund of hedge funds. With
7.4 billion of assets under management, ING
Aeltus is a leading investment manager in the area
of high-yield bonds and leveraged loans. A new
European CDO (collateralised debt obligations)
product was launched, which marked the first step
of this product line outside the US market.
Private equity was affected by the deteriorating
markets and the aftermath of the Internet bubble.
In spite of these difficulties, Baring Private Equity
Partners was able to launch new private equity
funds for Russia, Eastern Europe and Asia,
raising its total assets under management to
2.3 billion.
ING Aeltus launched two new private equity
funds. Especially the ‘secondaries’ fund, which
buys private equity partnership interests from
investors who wish to reduce their exposure to
this asset class, met good demand from institu-
tional investors in the US and Europe.
I N G A S S E T M A N A G E M E N T
ING’s call centres offer clients the opportunity to manage their investment port-
folio very efficiently.
4 2 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
R E P O R T O F T H E E X E C U T I V E B O A R D
At Parcom, the captive private equity company
of ING Asset Management, substantial profits
from its (middle market) buy-out business more
than outweighed the losses from write-downs on
some investments in young ICT companies.
F U N D A D M I N I S T R AT I O N A N D T R U S T S E R V I C E S
S T I L L G R O W I N G
The continuing trend to outsource non-core
functions by asset managers is a stimulus to the
fund administration business of the Financial
Services Group of Baring Asset Management.
Assets under administration, in custody and held
in trust, were 65.4 billion at year-end. The
Financial Services Group has built an excellent
reputation as an offshore administrator of private
equity funds and hedge funds, which business
has been growing rapidly in the last two years.
ING Trust specialises in trustee services and the
formation and management of offshore compa-
nies used for, amongst other things, tax planning,
estate planning and asset protection. By acquiring
Intra Beheer in April 2001, ING Trust has become
a leading player in the Dutch market for offshore
trust services.
O U T L O O K
Asset management continues to be a highly attrac-
tive business for ING because growth prospects
remain excellent and capital utilisation is low. In
Europe and Asia, demographic trends continue
to offer significant growth potential. In the US,
the emergence of the open architecture model
allows ING to further bolster the distribution of
its top-performing funds. While in the short term
the business remains vulnerable to adverse market
developments, the asset management industry will
continue to expand rapidly at profitable margins
in the longer term.
A L E X A N D E R R I N N O O Y K A N
We are committed to delive-
ring excellence in global
investment performance and
local client delivery service.
ING Real Estate is market leader in the Netherlands in the development of shopping centres.
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 4 3
ING is an attractive employer, also because of its
long-term commitment to training and develop-
ment, its diversity of experience and background
and its commitment to its people. ING has a
culture made up of all the businesses the Group
comprises. The company is proud of its Dutch
heritage and embraces its international diversity.
L E A D E R S H I P A N D TA L E N T M A N A G E M E N T
In terms of leadership, ING has made great
progress in forming its Management Council
targeted at a size of 200 senior leaders. Over the
past year these managers have been further linked
through a common performance management
process which recognises and rewards them on
measurable results and their commitment to
ING shared synergies.
The first International Conference outside of
Europe was held in June 2001 in Atlanta, recog-
nising ING’s expansion in the Americas and
further emphasising its cultural diversity. ING
takes effective talent management seriously and
consistently evaluates the longer-term career plans
of young people rated as top talent throughout
the organisation. Simultaneously, each business
unit tracks and plans talent management within
its own organisation.
I N G B U S I N E S S S C H O O L
In terms of management development, the ING
Business School in the Netherlands continues to
flourish as a dedicated learning centre for ING
leadership. During 2001 ING Business School
surpassed previous enrolments with over 1,100
participants. The courses continue to focus on
the various technical aspects of our core busi-
nesses as well as leadership development. Key
additions included “ING Mindset”, which was
conducted in various satellite locations with the
intention of bringing home the values, culture
and reach of the ING enterprise. The ING
Business School will continue to develop courses,
which are ‘time sensitive’ to our current and
near-term business priorities such as branding,
leveraging synergies, leading effectively through
change etc.
The ING Business School also provides the
opportunity to network and share best practices
HUMAN RESOURCESR E P O R T O F T H E E X E C U T I V E B O A R D
ING’s success is determined by the quality of its people. Active
in 65 countries, ING remains in the enviable position of being
an attractive employer. In March 2002, Fortune selected ING
as one of Europe’s “10 great companies to work for”. We plan
to further develop our employer brand. Each separate business
of ING has a distinguished reputation as an employer. Our goal
is to maintain that reputation locally, and strenghten it by refer-
ring to ING’s global employment opportunities.
TAKING ADVANTAGE OF THE
DIVERSITY OF OUR PEOPLE
Development of talent,
performance management
and stimulating diversity
defined as key issues in
human resources.
ING Business School proves
to be a successful learning
centre as part of
management development.
Management Council of 200
top managers developed as
backbone of ING leadership.
One ING collective
labour agreement for
34,500 employees in
the Netherlands.
4 4 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
with ING colleagues from around the world.
These acquaintances are valuable as they are fre-
quently relied upon to solve business challenges
long after the courses have been concluded.
D I V E R S I T Y I N B R O A D S E N S E
ING is characterised by a high degree of diver-
sity. The challenge is to utilise this resource as
much as possible. During 2001 the Diversity
Council, which advises the Executive Board on
these matters, was broadened beyond women.
Clearly the advancement of women in leadership
remains a top priority, yet we also realise that one
size does not fit all. Our goal is to ensure that
ING’s workforce at all levels reflects the customer
base and geographic mix of the locations where
we do business. The Diversity Council has a
detailed action plan, which covers three primary
categories of focus: demonstrating commitment,
changing behaviour and assigning ownership.
During 2001 ING announced that diversity would
be a component of the medium-term plans of its
business units. It is considered a business issue
as well as a social issue. Businesses were asked to
set measurable objectives as is being done for all
other key initiatives. We will discuss progress
toward these objectives regularly and ensure
our leaders see this topic as part of their overall
leadership objectives. Diversity is part of ING’s
strength.
C O L L E C T I V E L A B O U R A G R E E M E N T I N T H E
N E T H E R L A N D S
The differences in the employment conditions of
the various business units of ING in the Nether-
lands were removed in 2001. Before that time,
there were separate conditions for employees of
ING Insurance and ING Bank. This situation
was corrected when ING introduced its own
Collective Labour Agreement for all its employ-
ees in the Netherlands in 2000. This makes it
easier for employees to transfer to another
business unit to further develop their career.
In addition, the employment conditions have
been modernised to suit the needs of ING’s
current workforce in the Netherlands. Within
certain boundaries, employees can distinguish
between several options regarding working hours,
pension provisions and number of holidays.
Another important theme in the Collective
Labour Agreement is the introduction of variable
compensation based on performance manage-
ment. In this way, ING has increased its appeal as
an employer.
R E P O R T O F T H E E X E C U T I V E B O A R D
EMPLOYEES
full-time equivalents,
year-end 2001
The Netherlands 31%
Belgium 12%
Rest of Europe 21%
North America 21%
South America 6%
Asia 7%
Australia 2%
Other
Total
34,463
13,685
23,402
23,886
6,892
8,141
2,600
74
113,143
A L E X A N D E R R I N N O O Y K A N
Thanks to the drive,
commitment and expertise
of our people, ING is well-
positioned to compete in
the global market place.
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 4 5
R I S K P O L I C Y
On Executive Board level, the Risk Policy Committee evaluates and
manages ING Group’s overall risk profile, aiming for a good balance
between risk, return and capital. The principal risks that are monitored
are credit risk, market risk, liquidity risk, actuarial and underwriting
risks, operational risk and solvency risk.
B A S E L I I
The Basel Committee is planning to introduce a new capital adequacy
framework called Basel II, which is to replace the original Basel Agree-
ment from 1988. In January 2001, the second consultative paper
from the Basel Committee was published, which incorporated the
comments banks made in response to the proposals. During 2002, a
further consultative paper is expected. Basel II is expected to be intro-
duced in 2005. Within ING, various risk management units are
preparing for the introduction of Basel II to make sure ING is com-
pletely compliant by 2005. The focus of ING’s preparations are in
the areas of credit risk, market risk and operational risk manage-
ment.
I M PA C T S E P T E M B E R 1 1 O N R I S K M A N A G E M E N T
September 11 altered the very concept of what constitutes a catas-
trophe, and this has potential implications for the risk profile of all
the life, annuity, health and non-life portfolios. ING initiated a study
of the Group’s concentration risk exposure in those portfolios
and its reinsurance policy, particularly with respect to catastrophe
reinsurance.
C R E D I T R I S K
B A N K I N G C R E D I T R I S K
ING’s general credit risk policy is to maintain an internationally
diversified loan portfolio, avoiding large concentrations. The emphasis
is on expanding business within the European region by means of top-
down concentration limits in the areas of country, individual bor-
rower and industries. The focus is also on more relationship banking
activities, while maintaining stringent internal risk/return guidelines.
Additions to provisions in 2001 showed a significant increase after a
period of annual declines since 1998. The deterioration of economic
conditions necessitated a strong increase in the addition to the
provision for loan losses of the banking operations.
I N S U R A N C E C R E D I T R I S K
ING’s Insurance’s policy is to maintain a fixed-income investment
portfolio with an average credit quality comparable to a Standard &
Poor’s rating of AA-/A+ (A3/A1 of Moody’s). The provision for
loan losses amounted to 165 million at year-end 2001 (2000:
248 million).
RISK MANAGEMENTR E P O R T O F T H E E X E C U T I V E B O A R D
ADDIT IONS TO THE PROVISION FOR LOAN LOSSES ING BANK
amounts in millions of euros
2000 2001
Netherlands 75 113
International 325 637
Total 400 750
HIGH PRIORITY FOR
R ISK MANAGEMENT
The Executive Board places a high priority on risk management. By nature of the Group’s
size and its wide diversity of activities, types of clients and geographic regions, ING
recognises that it has a special responsibility in maintaining the highest quality
of risk management and applying the most up-to-date and reliable methods available.
ING has comprehensive risk management procedures on all levels within the Group.
4 6 • A N N U A L R E P O R T I N G G R O U P 2 0 0 1
C O U N T RY R I S K
The country provision methodology is more closely linked to the risk
definitions with respect to determining where the country risk occurs.
Some countries with perceptually high risk, but which have not yet de-
faulted, require no mandatory provisions. Instead of provisions, addi-
tional capital has to be allocated to transactions that incur country risk,
the amount of which is a function of the risk of the country as well as
the risk of the transaction itself. For countries that are near default or
have recently defaulted, adequate provisioning remains a requirement.
The Dutch Central Bank continually monitors our policies with respect
to capital allocation and provisioning for country risk. The table below
shows the largest cross-border lending exposures in emerging markets.
M A R K E T R I S K
B A N K M A R K E T R I S K
ING’s policy is to maintain an internationally diversified and mainly
client-related trading portfolio, while avoiding large risk concentra-
tions. The emphasis is on expanding business in liquid markets. ING
applies value-at-risk and stress-testing scenarios for market risk mana-
gement. Value-at-Risk measures the maximum overnight loss that
could occur under normal market circumstances if the trading posi-
tions remain unchanged for a time interval of one day. Apart from
market risks in its trading portfolios, ING Bank has a structural
interest rate risk on its balance sheet. As at 31 December 2001,
an increase in interest rates of 1% gradually during the year
could potentially have an adverse effect on interest income of
79.2 million (year-end 2000: 4 million).
I N S U R A N C E M A R K E T R I S K
The insurance market risks are monitored through asset and liability
management policies and procedures. To this end, a structure is
established on business unit, regional and corporate level. The risk of
loss occurring through adverse changes of prices in the financial mar-
kets is monitored through a set of preferred risk measures. Earnings-
at-Risk positions measure short-term volatility, whereas Embedded-
Value-at-Risk measures longer-term volatility. As a number of busi-
ness units is in the process of upgrading systems to report on the
at-risk market risk measures, the total market risk exposure for the
insurance operations of ING is measured using scenario analyses.
The insurance operations are exposed to interest rate movements
with respect to guaranteed interest rates and policyholders reason-
R E P O R T O F T H E E X E C U T I V E B O A R D
VALUE-AT-RISK BY CATEGORY
in millions of euros
YEAR-END 2000 YEAR-END 2001
Foreign exchange 2 .3 3 .1
Equities 6 .6 7 .7
Emerging markets 7 .9 9 .2
Interests 4 .8 24 .9
Sub-total 21 .6 44 .9
Diversification effect -5 .4 -12 .1
Total 16 .2 32 .8
LARGEST (>EUR 750 MILL ION) CROSS-BORDER LENDING EXPOSURES IN EMERGING MARKETS
in millions of euros, figures exclude local currency-denominated loans
GROSS EXPOSURE RISK REDUCING FACTORS PROVIS IONS ON FOREIGN
CURRENCY LOANS
PRIMARY TRADE
COLLATERAL F INANCE
2000 2001 2001 2001 2000 2001
Poland 1 ,640 2 ,227 189 8 41 46
Indonesia 1 ,551 1 ,586 1 ,099 38 447 304
Hong Kong 2 ,048 1 ,566 216 124 27 37
Russia 884 1 ,468 1 ,013 370 34 8
South Korea 1 ,557 1 ,440 20 716 35 14
Brazil 979 1 ,214 286 705 - -
Mexico 1 ,628 1 ,095 334 89 5 5
Argentina 901 846 302 230 8 98
Turkey 824 830 468 277 - -
A N N U A L R E P O R T I N G G R O U P 2 0 0 1 • 4 7
able expectations with respect to crediting rates. Asset portfolios
backing these liabilities are managed accordingly. The current product
portfolio also comprises products where interest-rate risks are entirely
passed on to the policyholder, thereby reducing ING’s exposure to
interest movements.
The insurance operations are exposed to movements in equity
markets since they have an impact on the level of charges deducted
for unit-linked and variable business. A 10% decrease in stock mar-
ket prices would lower the pre-tax budgeted result for the insurance
operations in 2002 by 2.7%.
L I Q U I D I T Y R I S K
ING closely monitors its liquidity risk to maintain an adequate
cushion to meet its financial liabilities when due. Liquidity risk is
managed at Group and local level by a combination of existing
investment mandates, guidelines for asset & liability management,
specific limits for certain business units and Treasury policies and
procedures.
A C T U A R I A L A N D U N D E R W R I T I N G R I S K S
Actuarial risks arise with respect to the adequacy of insurance pre-
mium rate levels, provisions with respect to insurance liabilities and
solvency capital, taking into consideration the supporting assets (fair
and book value, currency and interest sensitivity), changes in interest
rates and exchange rates and developments in mortality, morbidity,
lapses and expenses as well as general market conditions. Specific
attention is given to the adequacy of provisioning, considering the low
interest rates in a number of countries in which ING operates. ING
is of the opinion that its provisions are adequate.
ING Insurance’s actuarial and underwriting risks are controlled at
ING Group level. Insurance Risk Management provides guidelines
for product design, reserving, underwriting, pricing criteria and
reinsurance strategy. Consistent with other business in ING Group,
the current embedded-value methodology is extended to a risk-
adjusted capital allocation and performance measurement tool.
O P E R AT I O N A L R I S K
ING’s policy is to minimise operational risks by raising the opera-
tional risk awareness among its management and staff, setting clear
governance and implementing a periodic operational risk iden-
tification, assessment and mitigation process. During 2001, an
operational risk management (ORM) governance framework was set
up. ORM departments were established in the business units.
Furthermore, operational risk committees have been installed in EC
Europe.
S O LV E N C Y R AT I O S
The following table shows the solvency ratios for the banking opera-
tions and ING’s targets:
For the insurance activities, the required solvency margin is based on
European Union directives. At the end of 2001, ING’s solvency margin
exceeded the required solvency margin, as shown by the following table:
M O R E I N F O R M AT I O N
Detailed figures on regulatory requirements and ratios of the banking
and insurance operations are given on page 64. A comprehensive
chapter on risk management has been added to the separately issued
Annual Accounts. This information is also available on the Internet
site of ING Group (www.ing.com).
Amsterdam, 28 February 2002
T H E E X E C U T I V E B O A R D ,
EWALD K IST, Chairman
MICHEL T I LMANT, Vice-Chairman
FRED HUBBELL
HESSEL L INDENBERGH
CEES MAAS , Chief Financial Officer
ALEXANDER R INNOOY KAN
R E P O R T O F T H E E X E C U T I V E B O A R D
BANK
2000 2001 ING target
Tier-1 ratio 7 .22% 7.03% approx . 7%
BIS ratio 10 .75% 10.57% at least 10%
INSURANCE
in millions of euros
2000 2001
Available solvency margin 19 ,897 20 ,650
Required solvency margin 7 ,989 9 ,845
Surplus funds 11 ,908 10 ,805
R I S K M A N A G E M E N T
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