Ladies and gentlemen and photographers, welcome to this meeting. As Chairman of the ING Supervisory Board, I am pleased to welcome you at this general ING meeting. Welcome, shareholders. Welcome, representatives of the Central Works Council and press representatives. In front of you and in the room are a few people I will be introducing to you. On the front row from your left to right is Mr. Ralph Hamers, Steven van Rijswijk, members of the executive board, and at this end is Vroukje van Oosten Slingeland, the acting general counsel to the firm. On the stage behind me from your left to right, Jan Peter Balkenende, Mariana Gheorghe, Hermann-Josef Lamberti, Henk Breukink, Robert Reibestein, Eric Boyer de la Giroday, and Margarete Haase. At the side is the company secretary, Cindy van Eldert-Kleppe.
On the front row at your right in the front are the members of the ING Bank Board, Tanate Phutrakul, Isabel Fernandez, Roland Boekhout, and Roel Louwhoff. The nominated new supervisory board members, you'll have an opportunity to see them clearly later on, Herna Verhagen and Mike Rees. On behalf of our external auditor for the 2018 financial year, Marc Hogeboom of KPMG and Johannes Pastoor as the KPMG representative. On the second row to your right is our independent notary public, Joyce Leemrijse, who works at Allen & Overy. As you've heard, this meeting will be in Dutch, as will be the presentation of the Executive Board Chairman. Some supervisory board members will be addressing this meeting in English. We have interpretation headsets available for everybody so that you can listen to the meeting entirely in Dutch or entirely in English. Channel three is Dutch.
Channel 4 is English. As approved at the general meeting on 25th April 2006, this meeting is broadcast directly on the ING website. Welcome to the viewers who are watching us live. Remarks. First, shareholders have been convened pursuant to law and articles of association. Therefore, the meeting can take legally valid decisions. Shareholders have not submitted any proposals to be addressed at this meeting. Formal announcements. Hopefully on the screen you will see the issued capital on the record date 26th March 2019. As you will see, the issued capital consisted of 3,892,532,880 shares. The ING Group and subsidiaries jointly held 929,821 shares on that date. The number of voting shares is therefore 3,891,603,059. One ordinary share is eligible for one vote to be cast.
As for the capital present and represented and proxy votes cast will be projected on the screen prior to the first vote. The minutes from the meeting held on 23rd April 2018 have been adopted and signed by the chair, the secretary, and the designated shareholder, Mr. H.A.J.C.M. van Oenen from Almere. They have been available on the ING website since 23rd October 2018. The drafts have been available for examination since 23rd July 2018. The meeting report shall be drafted by the secretary. For the minutes, an audio recording will be made of the entire meeting. At this meeting, of course, we will take proper minutes. We propose that Mrs. M.N. Grootfaam from Amsterdam be appointed as the shareholder who will co-sign the minutes. Can you agree to this by acclamation?
Mr. Chairman, you have made a serious error. Please tell me.
First, I'll tell you who I am. I'm Mr. Sluys in Amsterdam. I'm a private investor with a broad base in corporate finance and business economics as part of my special major administrative law at the University of Amsterdam. I'm here to submit complaints and claims, and I have to do that because you have to present them to the necessary bodies before I have the VEB, of which I'm a member, assist me in this. That's not on the agenda right now. You are saying that no items to be addressed were received. They were received, and what's even more serious is that you did not send me confirmation of receipt from your office at the Amsterdam support. All I heard was from the Institute of Investor Relations that I'm welcome here. Well, I'm welcome here based on my share capital.
In any case, what I would like to ask the notary with your approval is that on 5th April was sent, and on 6th April you received the items to be addressed at the annual meeting of shareholders. I want you to confirm that so that I can be certain that my complaints can be legally addressed and that you cannot hide by saying that you didn't receive my letter, because you did receive it, and the notary has confirmed that. Okay. When we discuss the financial statements, I'd like you to address my points. You'll get the floor at the relevant agenda items. Thank you.
Ladies and gentlemen, that takes us to we've already adopted the proposal of Mrs. Grootfaam. We have a lengthy agenda and a rigid schedule, so please formulate your questions and comments concisely and briefly so that everybody can get a turn.
Questions explicitly need to relate to that agenda item. If it's not the case, I reserve the right to interrupt you and to correct you about that. We don't have any other business items, so please ask your questions at the relevant agenda items. If you have a question or a comment about your client relation with ING or ING products or services, then at the information desk in the main lobby, they'll be happy to take your questions, including about services. You can also ask them to send you the adopted minutes or the presentation that will be delivered by the executive board chairman in a moment. Please switch off the sound of your cell phones or other devices that make noise. You might even switch them off entirely, at least put them in silent mode.
During this meeting, no photo or video recordings are allowed to ensure the privacy of your fellow shareholders. As I mentioned, this meeting will be broadcast on the ING website. We also have a remark about the voting procedure to ensure that it will go smoothly. I'll hand you over to Froukje for that.
Thank you very much. To check the voting system, I would like to ask you the following. You have received a voting card and a voting handset. Please insert the card in your handset with a gold chip facing you and see whether you see a welcome message and your name. If you do not see your name on the display, please raise your hand. We have hostesses available here to help you. I'll give you a moment for that. Okay, looking good.
If you discover you're having problems with your handset after all, please ask one of the hostesses to help you cast your vote. Thank you.
Ladies and gentlemen. Agenda items two through two. We will be explaining them individually first, and after the explanatory statements, you'll have 75 minutes to ask your questions about items two through two. The themes are strategy, financial presentations, and sustainability in the first block. The second block serves to answer questions about the settlement. I'm sure people will have questions about the settlement. The third round will accommodate all topics that were not yet covered at two through two. The idea is to streamline our exchange of ideas coherently. We'll have to stick to this breakdown of the debate.
two and the duties performed by KPMG in 2018 will then be explained by Mr. Hoogeboom from KPMG, and then you'll have 15 minutes to ask questions about that. Any questions about KPMG's explanatory statement can be put to me, and I'll decide who answers them. After that, we'll be voting on item two. I will hand you back to Froukje to explain the voting procedure. Thank you, Mr. Chairman. Most of you are familiar with the voting procedure, but I'll repeat it briefly for you. You just had a trial vote, and you have your voting card and the voting handset. Insert the voting card with the gold-colored chip facing you as said earlier, and then you should see a welcome message and your name. When the vote opens, you have three options. If you want to vote in favor, please press one.
If you want to vote against, please press two. If you wish to abstain, please press three. After that, on the screen, you'll see your choice confirmed. As long as the vote remains open, you're free to change your vote by pressing again either one, two, or three, and your final choice will be the valid vote you cast. If the voting system isn't working satisfactorily, please raise your hand and we'll get somebody to help you. That's the procedure.
Thank you. Ladies and gentlemen, prior to the general meeting, ING used the electronic voting platform again, and that supports the desire of ING to involve shareholders in the decision-making as much as possible, and it facilitates shareholders in voting and registering before the meeting.
Of the issued capital, nearly all the votes and voting instructions had been received on the platform, and we will be voting electronically. I've just explained how all this works. At the end of the meeting, please return the handsets and the chip cards. If you have to leave while the meeting is still in progress, you can hold on to them. That takes us to items 2A and B on the agenda. First, I'd like to provide a brief explanation on behalf of the Supervisory and Executive Boards. As you know, last year, ING made headlines because of the proposed increase in the remuneration of the CEO and because of a settlement we reached with the Dutch Public Prosecution Service. Henk Breukink, chairs the Remuneration Committee, will explain at item 2D what steps were taken after the remuneration proposal was withdrawn.
Anticipating questions that will certainly be asked about the settlement agreement, I would like to tell you on behalf of my Supervisory Board and Executive Board colleagues what is about to follow. As for the settlement by the Dutch Public Prosecution Service, ING reached a settlement last year with the Dutch Public Prosecution Service concerning serious shortcomings in the execution of policy to prevent financial economic crime at ING Netherlands in the period 2010 through 2016, which was the period examined. As a consequence of stated shortcomings, ING did not do enough as gatekeeper of the financial system to help prevent financial crimes. Steven van Rijswijk, our Chief Risk Officer at a round table meeting in the House of Representatives, elaborated on the settlement, and he explained the steps that ING took to meet regulations for compliance and risk management.
Various initiatives have been launched to strengthen compliance and risk management, such as a detailed improvement program for managing customer information so that we know our customers better and to monitor customer activities. We also gave extensive consideration to enhancing internal compliance culture and awareness. Improving non-financial risk management is a top priority, and all staff need to be keenly aware of this, both domestically and internationally. Clearly, the number of staff working with, as we call it, KYC, know your customer, needed to increase, and this includes everything related to customer examination, such as acceptance, verification, and continuous monitoring. That has been covered by now. We have 2,500 full-time staff working at KYC, know your customer. ING also uses new technology such as artificial intelligence tools that enables staff to distinguish fake signals more easily from genuine signals. This is important because the transaction volume can be immense.
It's about 20 million transactions a day or more at ING by now. I'd also like to address the settlement agreement, how a settlement amount of this magnitude can come as a surprise, and why it wasn't mentioned earlier in communication. This is one of the questions we were asked repeatedly. The answer, ladies and gentlemen, is that IFRS accounting regulations do not allow an entity to take a provision until a reliable estimate can be made of the amount required to cover that obligation. That was a problem. There were too many uncertainties, too many uncertain factors for ING to estimate how the criminal investigation would culminate in a settlement, and that uncertainty was alleviated only when the Public Prosecution Service was allowed by the Minister for Legal Protection on 3rd September 2018 to enter the settlement. Without the Minister's approval, this settlement would not have come about.
One of the greatest uncertainties was that until that date, the Minister's approval was not certain concerning extrajudicial settlement of the case, nor were the conditions known. Only once the Minister had granted his approval to the Public Prosecution Service was the settlement agreement signed between the Public Prosecution Service and the Dutch state and ING Bank. Since 2016, in the annual reports and documents presented, ING has mentioned that it was subject to an investigation and was fully transparent about the possibility that any financial impact could be considerable. In addition, talks were taking place simultaneously with the SEC, the U.S. Securities and Exchange regulator, until it was announced on 4th September 2018 to ING that the SEC had completed its investigation and did not intend to impose any sanctions. The reason no provision was taken has just been explained.
We also received several questions about publishing share price-sensitive information. ING is required to publish such information immediately if it has it, and if so, it needs to see whether such publication is allowed. We continuously see whether we have share price-sensitive information and whether it needs to be made public. We have a special procedure for that, and the ING Disclosure Committee is responsible for advising the board about these cases. As for the role of the external auditor in the above, KPMG has been serving in this capacity since 2016. Prior to that, Ernst & Young, as they used to be called, now they're EY, did so. Therefore, KPMG was not involved in the period of the investigation from 2010- 2015. Ladies and gentlemen, ING took measures against a few, mainly former senior staff at ING here in the Netherlands.
These are measures against senior staff members who to avert financial violations, had a broader responsibility for policy and procedures concerning careful management of customer information. One of the measures was to forego payment of part of the variable payment they were still due from previous years, and some staff members were removed from their position considering revised job profiles concerning the skills required. The shortcomings observed that took place in the period examined from 2010- 2016 are not attributable to specific individuals. That's very important. They relate to collective shortcomings at all responsible management levels, such as the line organization, compliance, and management positions. Given the severity of the matter and the many responses of the stakeholders, the Supervisory Board believed that measures had to be taken at board level, which is why CFO Koos Timmermans has resigned in consultation with the Supervisory Board.
He was a member of the MBB and was for several years the person in charge of ING Netherlands during part of the period that the Dutch authorities conducted this investigation. The Supervisory Board and I personally will closely monitor the organization to ensure that ING once again serves in its capacity as a gatekeeper according to legislation regulations. In addition, on the ING corporate website, a special page is dedicated to the settlement, the Know Your Customer program, and follow-up steps. Ladies and gentlemen, we understand that 2018 has been a disappointing year for our shareholders in several respects, despite the commercial successes. Although many things went well, 2018 was also a disappointing year for the Supervisory and Executive Boards, especially because of the settlements we reached.
During the previous period, we were in close contact with a great many institutional shareholders, some including at our Investor Day on 25 March and in countless direct conversations, which also revealed disappointment concerning the course of events in 2018. We see this as strong encouragement to focus fully on carrying through the Know Your Customer improvement program that we launched in 2017 to achieve ongoing improvement. Our contacts with shareholders confirmed this insight. I am fully confident that ING experts in managing financial risks will also become expert in managing non-financial risks. The fact that nearly 40% of the net inflow of customer assets took place in the fourth quarter proves that people trust ING despite the impact on ING's reputation when the settlement was disclosed in September. Thank you for listening. That was my explanation to date.
You are free to ask questions later on after we've covered the other points. Now on to 2A on the agenda, the executive board report on 2018 and sustainability. I'm going to refer to the executive board report as included in the annual report, pages three through 87, and the explanatory notes to the agenda at item 2B. I'm going to hand you over to Ralph Hamers now.
Thank you, Mr. Chairman. Welcome. Ladies and gentlemen, shareholders, loyal shareholders, critical, discerning shareholders. I'm delighted to see all of you here once again this year, and I'm pleased to be able to deliver this presentation and to discuss your questions and provide answers. The chairman provided the introduction. 2018, this year focused on our settlement with the Dutch Public Prosecution Service in connection with the shortcomings in applying our policy to avert financial economic crimes.
You have every right to expect us to keep the bank safe and to comply with all legislations and regulations. Our top priority as has been the case for several years will remain so in the years ahead. When in 2016, the Public Prosecution Service approached us and asked questions and requested information, we did not delay. We started our own investigation and shared a large portion of this investigation with the Public Prosecution Service to make sure that they noticed that we were taking this as seriously as they took it, but also to learn as quickly as possible what was wrong. Our own investigation revealed exactly the same shortcomings, and we didn't wait for any additional developments in how the Prosecution Service would handle this.
Based on the information we already had, we drafted a program for improvement. This program for improvement was launched in 2017 and not only covers the Netherlands, although lessons were learned from any shortcomings in the Netherlands. We are presently applying this worldwide for all customers in all countries where we operate. The improvement program will continue through the end of 2020. The improvement program comprises two sections. The first, as the chairman just said, is about know your customer. How do we ensure that we have as much information as possible about our customers, not only to reach the right decisions about business we want to do with them, but to reach principled decisions as to whether we want to do business with that customer. That requires an entirely different method of gathering information. That's the KYC information gathering system, and that's very complex.
It requires a lot of specific information. I'll explain that this is not a one-size-fits-all reply. As for wholesale banking, that's our bank for large businesses. On average, we are dealing with customers that operate in 15 or so countries with about 100 different legal entities and a great many products. First, we need to gather information about all those legal entities in all those different countries. We need it to be accurate and complete. We need to assess that information, not only based on the standards of Dutch laws and regulations, but also based on applicable local laws and regulations. That's the work we're doing now. That's the work that so many of our people have been assigned to ensure that that information is fully available. This means that customers need to provide a lot of information.
Some of them have centralized this, others have decentralized it, and customers aren't always happy about that, because at the same time, we're trying to improve how we can gather that information from customers and keep it up to date. We're devising a portal for those customers to offer their information so that we can consider that in our assessment. That's what I wanted to tell you about know your client. In addition to know your client, we're working on improving the structural working environment. We're also examining how we have to modify our policy. For example, the fourth guideline anti-money laundering by the EU translated into local legislations and regulation, and we're going to have to amend it based on the fifth guideline approved by Brussels as well, so that we can keep advancing our procedures and processes to account for our role as a financial gatekeeper.
In addition, in governance and structuring our organization, we have centralized our KYC organization. We provide a large group of people with guidelines, and they help people, and we're also exploring structural solutions for keeping this activity up to date. We have a KYC committee for each country, chaired either by the country manager or the person in charge of operations, to make sure that all internal policy requirements are met to deal effectively with this anti-money laundering regulation. In addition, we have customer integrity committees. These committees use the available information and have to determine constantly in what measure we do or do not want to continue doing business with that customer. To give you an impression, in the past year in the Netherlands alone, we parted ways with 2,700 customers for these reasons. That was up from 1,700 in 2017.
That's just to put things in perspective for you. We're doing more. We're examining IT advances to ensure that our staff who work on this the whole day can store this information centrally so that we can assess it centrally, and that the regulator can also determine centrally whether we've got all the records we need. That's what we're working on now. It's a huge expense, as the chairman mentioned. We now have 2,500 staff members at work on this project, and we're investing hundreds of millions EUR to ensure that our systems are streamlined and that we're using the right algorithms, and that our knowledge and skill in this area keeps progressing. Last and certainly not least, the mindset. The mindset needs to be adapted both in terms of skill about the topic, just as financial and non-financial risk management need to be embedded in our DNA.
In these cases, teamwork is more important than ever. We need to make sure that what just happened to us in the Netherlands does not recur, and where we think that one person is taking care of it, and the other person simply bases himself or herself on that. We need to keep improving. I'd also like to illustrate my points with this slide, which shows how we're onboarding customers. We check whether when somebody who applies as a customer, what information we request. If it's a private customer, they need to present identification, and if it's a corporate customer, we need to see the articles of association and who the authorized signatories are. We need to know who the shareholders are of such a corporate customer. Based on that, we determine whether we would like to do business with that customer.
Once we have onboarded that customer, we'll need to examine continuously in what measure that customer acts with integrity. If we notice negative media reports about this customer, we'll need to act on that and see how to interpret it, how to deal with it. If we notice certain combinations of payments by the customer, we need to see how to approach that and interpret it. Based on that, we'll decide whether we want to continue doing business with that customer. In addition to becoming a customer, there's a continuous cycle of ensuring that a customer can remain a customer. At some points, we do conclude we don't want to continue doing business with that customer, and then we will part ways with them, and that's what you see on this sheet.
Because this is such a hugely important topic for us, we wanted to cover this first in our report on 2018. Now I'm going to continue telling you about the other things that we did in 2018. In 2018, we continued implementing the strategy that we launched in 2014.
May that have...
I'll take you through what we discussed at the meeting at the time, what kind of trends we saw. We saw a trend of low interest rates at the time, regulatory requirements that were quite stiff at the time, and the future of technology playing a more important part. A future in which our customers expect more and more from us, that we be able to interact with them digitally. Therefore, we developed this strategy. We also determined our purpose on that basis. In other words, people work at ING because they want to enable people to be front runners in their personal lives, but also in their business lives. That is our purpose, and that is what attracts people to ING every day in, day out, new talent. We continue to succeed in that.
We also said that in a world that is becoming more and more digital, you want to attract customers, but you have to focus on how you deal with services, how you provide distinguishing services, and how you deal with the big techs, the fintechs that perform in the field of service providing. To give you an idea, we have about 3 billion interactions a year with our customers. 3 billion. More than 99% of those interactions are digital interactions. We have 38.5 million customers, 26% of those customers only deal with us on their mobile. That's how they do business with us, no other way. Just to give you an idea how this is growing, in 2016, it was 12% of our customers. In two years' time, this number more than doubled.
The trend of digitization, this trend of dealing with your customers in a different way, a different interaction with your customers, this is something that we saw. We saw that well, we're going to continue to build on that, and that's going to lead to the right performance. In order to be able to do this and to time and time again, make sure that you can improve your relationship with the customer.
To do that, you will have to improve. You have to innovate. We have our own innovations, but we also work with third parties. Cobase, for instance. Cobase is a company that focuses on pooling banking information for several banks, we believe in that.
We believe in a world in which there are intermediaries that make sure that the business customers have an overview of all the businesses that they do with all the banks. That's Cobase. That's what they do. Action. Action is a company that engages in machine learning, develops algorithms in order to make sure that we match supply and demand much better. The syndicated loans, how we organize them for customers and with which investors we're going to place those syndicated loans. We also have our own innovations. We have our innovation called Twyp, we have that in Spain. This is a peer-to-peer payment environment
What we also did with Twyp is that not only in 8,000 locations in Spain you can pay with Twyp, including at El Corte Inglés, on these 8,000 locations, you can also withdraw cash. In the future, we will become less dependent on the ATM, the cash machines, we can withdraw cash in other stores and other businesses in Spain at this point. Also in Australia, where we advertise a product called Everyday Round Up. What do we mean by that? Well, this is in Australia. What we say is that if you pay with us, we can make sure that the payments that you do are rounded up and that this additional amount is passed on automatically to your savings account.
You can also say, "I want that additional amount to be used to amortize my mortgage," that you can amortize your mortgage without really noticing it. It's pain-free for those people who would like to have that. It's just an idea, an example of how we try to do what the customer really needs from us. We've done the same thing with Yolt. We've talked about Yolt here before. It's our own aggregate. It's the consumer side. What does Yolt do? Yolt pulls all the banking information for you as a consumer. We introduced this in the U.K. We have 800,000 customers there now, and we also introduced it in Italy and in France.
All these innovations and this focus of our services leads to the fact that in seven out of 13 countries, we are number one in the net promoter score, NPS, and we measure our customer satisfaction. Our customers that think that we do so well that they also recommend us to their friends in order to make sure that those friends also become customers of ours. Of course, this increases the number of customers, more primary customers, and also it leads to more business. EUR 36 billion in new credits were issued last year. This past year, EUR 19 billion in additional savings was received by ING. As the chairman just pointed out, 40% of these savings were received in the last quarter of last year even. Commercially speaking, we are doing well.
The purpose that I referred to earlier on, allowing people to be front runners in their personal lives, in their business lives. You see that this purpose doesn't have the word bank, it doesn't have the word financial. What we focus on is the person, their personal lives, their business lives, and that this human being, the person, the way in which they deal with us, in which we interact with them, with the environment in which they live, that this person, this human being, feels supported. Our sustainability policy is directly related to our purpose. Our sustainability policy, apart from what we do in-house with respect to purchasing renewable energy in 2020, is also focused on what we can do externally. What we can do for the environment, for the planet. Actually, we have two pillars. One is about how creating a self-reliant society.
What we see in this digital world is that people don't really have a feeling for the value of money, less and less so. Perhaps at some point in time, people really lose the feeling of how to manage their own budget. They may end up having debts, and we want to avoid that. We want to make sure that EUR 30 million of our customers feel self-reliant, that they feel they understand what they're doing, and that they have a grip on their finances, and they know what they're doing. Now it's EUR 25 million, we've got another 5 million to go. With our sustainability policy, we also aim for a low-carbon society.
We're doing a lot in this respect, quite apart from the fact that we have active funding in the field of climate funding, climate change funding, and obviously we hope that that will help to counter climate change. We have EUR 16.5 billion in portfolio, and we want it to increase by 2020. We're also looking at what we can do in the field of indirect impact. The EUR 600 billion loans that we already have on our balance sheet. How can we, through indirect interaction, how can we reduce our indirect emissions? We developed an approach for that along with 2° Investing Initiative, and we call it the Terra approach. The Terra approach is something that we introduced this past year, and it works as follows.
In our asset base, we distinguish between our residential mortgages that we're all familiar with, and then we follow a certain method that we agreed on with the Dutch banks as to how to turn our mortgage portfolio into energy positive. There are certain methods to do that, measurements to do that. The business side, that's a bit more difficult because there we're dealing with several sectors. For them, it's easier to reduce their CO2 emissions than others. We're trying to find out which technology there are for those industries to become, or to reduce their CO2 emissions. Based on this approach, it is already being embraced by all sorts of institutes, and that is being followed by BNP, Société Générale, BBVA, et cetera. They immediately committed to this approach. We also committed to the ambitions of the Paris Agreement.
In other words, what we're saying is that our EUR 600 billion in loans that we have at this point in time, we're going to manage those loans in such a way that the loans and the companies behind these loans develop in line with or better than the ambitions in the Paris Agreement. 2%. Obviously, we try to do as well as possible, and to end up below the 2% increase. That's more or less what we do. Two years ago, or one year ago when we met, we talked about a strategy where we were in terms of our strategy and where we were with respect to the changes that we see happening around us. Our conclusion was that the large technology companies were developing so quickly that we simply cannot lag behind. We simply had to accelerate and transform.
To give you an idea, Apple Pay gets 1 million new customers a week. Alibaba, which is an enormous platform in China, generates EUR 9 billion in SME credits a year. WeChat, also from China, has more than 1 billion daily users. The fact that we are living in a more digitized world and that we have to structure ourselves and prepare for interaction with our customers on Facebook, or whatever, made that two years ago we said our customer service has to be aligned, but also internally, we have to become uniform because the upside of the platform companies is that from one single system, they can operate globally. For us on the consumer side, we still have 13 different systems in all sorts of different countries. We have to move to one single system.
We want to integrate the Netherlands, Belgium, Spain, France, Italy, and Czech Republic. We want to integrate them. Slowly but surely, we want to move to one set of systems, one set of procedures, one way of working to make sure that we keep up as much as possible with these new competitors. Also making sure that we can determine our layout as a digital bank, as a digital platform. We are more or less halfway now. On the Investor Day, we provided a lot of information on that, and we can talk about it in greater detail in a couple of moments as well. This is the reason why we are doing all of this.
At the end of the day, all of this, the transformation, the focus on the NPS has led this past year to an improvement of our net underlying result of almost EUR 5.4 billion, and return on equity has increased from 10.2%- 11.2%. This past year, we have improved our core capital ratio to 14.5%, whereas our ambition was somewhere around 13.5%. The results of this past year also allow us to pay out a total year dividend of EUR 0.68 per share. Now that we are talking about the share, here we see the development of the share price, the ING share price. Quite a bit was written about that. You see a comparison here of the ING share price with what we call our peers. Those are the other banks in Europe.
You see that the largest impact on the share price of bank shares is economic development and the expectations also forecast with respect to economic development. The situation that we are in now, the transformation that we are engaging in now, and the strength of our capital, the capital that we have now, gives us a wonderful starting position to proceed to the next step in becoming a digital bank, the next step in becoming a platform. This gives us some idea of what it is that we mean with this platform. Interaction with customers that goes beyond just being a financial service provider. Our app in the Netherlands can be used on a daily basis, and it is the number 10 app that people have downloaded on their mobile phone. Numbers one through nine are Facebook or Google. This is WhatsApp, Facebook, Google Maps, Google Search.
We are the ING's executive board, and also the implementation of the Think Forward strategy for those activities that go beyond bank services and developing a platform approach that we just discussed. Other important focal points were remuneration policy, the investigation of the Dutch authorities, the EBA guidance concerning internal governance, the appointment of a new CFO, transformation initiatives and cooperation with fintechs, the expected impact of Basel IV, Brexit updates concerning IFRS 9, funding of the company, dividend capacity, and all sorts of thematic reviews in connection with different requests of the regulator, also updates concerning developments in the field of supervision. In the committees, we discussed all sorts of things, including the Know Your Customer program, the new candidates for the supervisory board, quarterly results, corporate governance, risk management, and human resource issues and culture within ING.
Okay, so you can find all those details in the report. I am not going to say all too much about it. You can ask questions about it later on. First, I shall give the floor because when we refer to the remuneration report 2018, which has been included in the annual report, pages 124- 139, I would like to give the floor to the Chairman of the Remuneration Committee, Mr. Henk Breukink. Henk.
Thank you, Chairman. Ladies and gentlemen. Mr. Wijers, in his introduction, already pointed out that I would give a further presentation explanation on the steps that we took with respect to withdrawing the agenda item concerning the remuneration policy for the Executive Board, which was on the agenda for the AGM last year.
The Supervisory Board withdrew the proposal based on the many reactions of many of our stakeholders. It was discussed in great detail at the AGM. One of the points of criticisms that emerged since that time is connected with the settlement that we entered into with the Public Prosecution in the Netherlands. How could you have made such a proposal for remuneration, whereas you knew that there was this settlement with very high fine that was hanging over your heads at the time? This is a question that we obviously understand that you should ask. At the point of the proposal remunerations, the full implications of the settlement were simply unknown, not yet known.
It was only later that year that it became clear. As we said earlier on at the AGM last year and at the public hearing in Parliament, ING pointed out that the Supervisory Board underestimated the sentiments with respect to this matter. It was also said that Supervisory Board was going to start an extensive consultation process internally and externally in order to assess the decision-making process. One of the outcomes of this evaluation is that in future amendments to the remuneration policy, we shall follow an approach in which we shall consider the positions of a broad group of stakeholders, taking into account the legal requirements. Now what? Supervisory Board is carrying out an extensive analysis of the remuneration policy, consulting with its advisory committees.
In this process, as I pointed out, we shall consider the interests and positions of a group of stakeholders that is as broad as possible. With respect to the remuneration for the financial year 2018. In the light of the settlement with the Dutch Public Prosecution Service, the members of the Executive Board under the Management Board Banking of ING decided to waive their variable remuneration for the performance year 2018. The remuneration paid out in 2018 to the Executive Board and other items are included in the remuneration report 2018. The second time we have reported on the pay ratio as included in the Netherlands Corporate Governance Code. In 2018, this pay ratio is one to 29, whereas in 2017 the ratio was one to 33.
The difference is caused by several factors, including the limited salary increase, waiving the variable remuneration that I just commented on, also the lower bonus pool for other staff members of ING, therefore it's very difficult to compare. To express the collective responsibility with respect to the settlement, it was decided to make sure that the overall amount available for variable remuneration for 2018 vis-à-vis 2017 be decreased substantially from approximately EUR 403 million to EUR 303 million. The implications thereof were the greatest for employees at senior management level. For this group, variable remuneration on average decreased by 60% with respect to 2017. For people who are lower down in the organization, the impact was more limited. At an individual level, Mr. Wijers talked about that.
The settlement led to the fact that ING took measures with respect to a number of senior employees, in part former senior staff members at ING in the Netherlands. These are senior staff members who, in order to avert financial economic violations, they had a broader responsibility with respect to policy and procedures. One of the measures that we took was not to pay out the outstanding variable remuneration for the performance year. We call this a holdback. Certain employees were removed from their position. We took into account the recalibration of job profiles in this respect. The Supervisory Board felt that at a senior management level, responsibility had to be taken. Mr. Wijers talked about that. In consultation with Mr. Timmermans, Mr. Timmermans stepped down from the Executive Board.
Within the applicable rules and regulations and taking into account his employment contract, the Supervisory Board granted Timmermans a severance pay of 50% of his fixed annual salary. This shall be paid to him at the end of his period of notice, which was agreed on contractually, which will end on the 31st of August 2019. Timmermans dedicated his working life to ING for many, many years. In 1996, he started working for ING, and in 2006, he joined the Executive Board. Until the 31st of August 2019, he shall provide advice in the handover of his work. Ladies and gentlemen, before we start with questions, I still owe Mr. Sluys an answer. Mr. Sluys, in order to be able to place a point, an item on the agenda, you have to comply with a number of requirements.
You have to represent 1% or more of outstanding shares, and more than 60 days before the AGM, you have to submit your request. You do not comply with either one of these conditions, so we cannot place your request on the agenda, and I would advise you to contact the customer service at ING. I'm not going to talk to you about it. No, Mr. Sluys. No, I'm not going to talk to you about it. You gave me the floor. I'm answering you. Mr. Sluys, please, a point of order. Mr. Sluys, you said you were going to give me the floor, and you didn't do that. That's why I request the Civil law notary to make sure that the note I sent in, which also discusses the share price of ING, Mr. Hamers, Civil law notary, this is a serious request.
My letter of the 6th of April, which was sent on the 5th of April with the agenda items, even though Mr. Wijers does not want to deal with them, on the basis of this note, I'd like you to give me the opportunity to address that later on in the meeting. I have much more to say. Well, I'm the one who decides about points of order, not the civil law notary. We've dealt with this, and now we're going to proceed to questions on strategy, finance, and sustainability. After that, we shall talk about the settlement, and after that, we shall talk about the other items. Before you ask your question, I kindly request you to state your name.
Which shareholder you would represent. Now I'd like to give the floor, and I will bundle two, three questions so that we can have a meaningful debate. To be quite honest, I must say, because you're fighting over there to be the first to ask a question, microphone two, to be quite honest, the gentleman over there, I know him, officially, I don't know his name, but he was the first one there, he was so fast, I'm going to give him the floor first, and you must say who you are and who you're representing.
Mr. Wijers, I think it's important for our CEO and for ING to have a Chief Communication Officer to avert undesirable damage for the ING and Mr. Hamers. You know very well that I'm Mr. Froukje and represent WeConnectYou in public relations.
This type of idea belongs with the Supervisory Board. Mr. Hamers deserves a CCO to ensure a proactive communication and press policy. To start where this meeting could have started, Ralph Hamers and ING, according to Citigroup, are the best prepared for the future. That merits a wonderful round of applause. The top U.S. bank says that ING has charted a digital course in the past year so that after years of investing, they set themselves apart of other digital banks in Europe. That's a magnificent achievement. What's also very special is that Ralph Hamers is dealing with all the complaints about money laundering. That's not acceptable because Pieter van Vollenhoven has said that from 2010-2013, the ING was contacted 49x by the Nederlandsche Bank about money laundering. 49x . Who was the CEO then? That was Jan Hommen.
It's unacceptable that Ralph Hamers is held to answer for this.
Well, let's keep to the order of the meeting because we were going to talk about the settlement later on. You're supposed to ask questions, not reflect. How is this possible? In that period, the ING had nearly 50 warnings. Why wasn't immediate proper action taken at the time? In addition, I advise that the Supervisory Board never say anything else again about the bonus and salary of Mr. Hamers because that is merely destructive. In addition, I advised Mr. Hamers last year, we were talking about maintaining an excellent communication policy because last year the ING was the most sustainable bank in the world, but the money laundering affair swept that under the carpet. What also strikes me, that's relevant in the international context, in 2006, in China, there were 10 billionaires.
13 years later, there are 400 billionaires. That gives pause about Mr. Hamers' remuneration. Next question. Last question. That should not be a remark. What other skeletons do you have in the closet? Thank you. Microphone one, Mr. Wijers. Would you like to get different eyeglasses? Because that gentleman was not first. I was first. Would you please stick to the order? You'll get your turn afterwards. Settle down. Be quiet.
I am quiet. I'm very quiet. I'm Mr. Spanjer. I'm from Amsterdam. Good afternoon. Of course, I read the annual report as well, Mr. Chairman. Let me be perfectly clear, as you say on page eight, paragraph four, first sentence. Mr. Chairman, you're part of the Supervisory Board, and you allow Mr. Hamers to set up the Commerzbank route. Why?
Did you forget that the state of the Netherlands rescued your bank with a EUR 10 billion bailout and that we shareholders did not receive a dividend for years? You must have amnesia if you're having Mr. Hamers set up the Commerzbank route. Am I to understand that Mr. Hamers deliberately approached a financially weaker party to talk with the German government in Berlin and in Hessen to be able to get a bonus in excess of 20%? What he's arguing is that he thinks it's such a shame about the 20% bonus. It didn't get him anywhere. That's nonsense. He makes enough to buy a cheese sandwich at the Lidl supermarket.
Let me continue. It also says that there seem to be money laundering devices in Italy, in Ukraine. It sounds like we're at a laundromat for laundering. Come here, laundering. I've still got space in my laundromat in Italy. I've got plenty of space, and in Ukraine.
Mr. Spanjer, I'd like to hear your questions. You have to start asking your questions now. I'll get there. Onto paragraph two, second line. You mentioned innovative solutions, and then we've got that laundering. That's a question about Ukraine and Italy. Why did you allow that? After the settlement with the Dutch state, you personally stated on television that you would be taking care to ensure that things were on the up and up. We agreed that the settlement would be addressed afterwards. You can now ask your last question. Last question.
In the report for 2017, you say that there was $1 billion for Mr. Hamers' hobby. You've already spent $775 million, so the $225 million still remains, apparently. You do not mention anything in the annual report about Italy or Ukraine. Have you taken a provision for that or not, and how much is that provision? We'll be answering this question when we move on to the second topic that we'll be discussing. Microphone four.
Hello, I'm Mr. Van den Bos. I'm a private investor. I could talk about my family vehicle, but I'm here as an individual. Mr. Hamers, let me speak about your introduction. You communicated the number of shares incorrectly because a different number was projected on the screen. You said 888, and I saw 880 there.
You may be wearing the wrong glasses, the same thing that led you to say that the first person was at microphone 2 when there was already somebody standing at microphone four. Check with Mrs. Van Oosten about that.
Let's see. Where was I? What did I want to say?
I've actually already finished.
Well, it slipped my mind. Wait a minute. Okay, take your time. We'll give somebody else the floor. No, I've got it again. I emailed you explicitly, requesting that you divide this meeting into one part before lunch about the money laundering and all the problems, the second part after lunch would be the regular AGM. In your introduction, each shareholder is allowed to make only a few comments. You're basically putting a muzzle on the shareholders. Do you hold any shares in ING? That's my direct question because I think it's unacceptable to muzzle the shareholders that want to say something about this. What I also think is unacceptable, that the gentleman who was just at microphone two, who's a shareholder and a customer, to just send him off on a wild goose chase.
It would behoove you to ask Mrs. Van Oosten to have a chat with that gentleman because I assumed the man says he sent a letter, and I hope he sent it by registered mail with confirmation of receipt requested, then the letter reached you. Once again, I think that this was below the belt. When I get to the money laundering, I'll be much harder on you. Well, I'm looking forward to it. I explicitly offered for the gentleman to have a direct conversation with people from the ING. Onto microphone five. Mr. Wijers, that won't work. That man is a shareholder. Have Mrs. Van Oosten get in touch with him, and he'll be treated properly.
The gentleman knows for certain that you are taking him into consideration, because if he shows up at the bank, he will be sent off on another wild goose chase, Mr. Wijers. That is how it happens. Onto microphone five.
I am present here today not only as a small shareholder of ING Bank, but also as a resident of the Salento region of Italy, where the Trans Adriatic Pipeline is being constructed. ING is among the banks supporting this anachronistic gas project, whose destructive impacts are both global and local. The Trans Adriatic Pipeline greatly exacerbates our already rapidly warming climate. Politicians and fossil fuel lobbyists like to claim that fossil gas is a clean energy alternative because when burned, it produces fewer CO2 emissions than coal or oil. While true, this argument conveniently ignores other significant life cycle emissions further up the supply chain, specifically leakage and venting of methane, an extremely potent greenhouse gas at the point of extraction, distribution, and storage. I know firsthand the physical and psychological destruction this pipeline is inflicting on the communities in this path.
When I decided to start a family, I imagined that my children would inherit the beauty of the same place where I grew up, a healthy environment whose strength has always been the care and love the local population has given it. Instead, they are inheriting a legacy of reinforced concrete, barbed wire, expropriated land, denied rights, destroyed local economies, and southern Italy once again exploited and succumbed to the interests of the strongest and the most powerful.
Could you please come to your question? This is not the time for decoration, but for questions.
My question to the board is this, given the increasing price parity of renewable energies technologies and the climate and the local impact from projects such as TAP, what consideration are being given to the likely direct reputational and financial risks of being involved in a new fossil fuel project that goes directly against the bank's purported values? Also, given the serious impacts of TAP, can the bank commit to review the policy that allowed its involvement in the project in the first place, and explain how it will avoid supporting such destructive projects against in the future?
Thank you. That's a very clear question.
Ladies and gentlemen, we will now consecutively answer the questions asked. I'll give the floor to Mr. Hamers first.
Thank you. Regarding Mr. Freke, I think you've given some examples that we can certainly work with, and our communications department always welcomes advice. Thank you for those ideas. I do have a question about KYC. Otherwise, I don't have that many questions listed. Most were remarks.
Around the Trans Adriatic Pipeline. It is clear that we're in a period of massive energy transition, and it's our policy to further reduce at least the impact of our portfolio in line with the Paris Accord, as we have indicated. Within that transition, we know that the power and the speed at which renewables are being developed, and also the predictability of true renewables, always needs to be backed up by other energy resources, and gas is one of those. From the fossil fuel perspective, we have a policy around coal, where we basically want to phase out all of our exposure to coal power generation by 2025. We also see that a large part of the economy is still supported by power generated on the back of fossil fuels other than coal, in which case it is actually gas. That's one.
On the other side, clearly, we don't just do these financings. We are not just involved in these. We do take care. We have a lot of requirements to follow, and specifically this one, as you know, is supported and also arranged and guided by the E.U, and seen as a strategic pipeline in order to have access to gas as a fossil fuel going forward and being less dependent on other gas suppliers around us. That's where we feel we can support this. The gas pipeline itself will not stimulate the demand for gas, so it doesn't make things worse from that perspective. In the end, if it does phase out coal and it will be a backup to renewables, in the end, we all still gain, and that is how we see this. Thank you very much.
Ladies and gentlemen, some of the questions asked concern the settlement, and we'll answer those when we get to that item. As for being a shareholder at ING, you probably know that in the Dutch corporate governance code, supervisory board members are not advised to hold shares in the organization that they serve on the supervisory board of, so I don't have shares. We've structured the debate to have ample debate about the settlement. We're not muzzling anybody. We discussed this at length with our shareholders in the past year. Once again, Mr. Sluys has the opportunity individually, because this is an individual matter, so he can contact the ING individually, and we'll make sure that your questions will be answered, but not at a shareholders' meeting, because this is not one of the items on the agenda. You had a remark.
To Mr. Freke, yes, there are other examples of where the bank or CEO is depicted in a positive light internationally, and modesty behooves us, and we have to solve the issues that have been discussed at length. If this keeps happening, we will put this in the spotlight, but not to reopen debate about the subject. Of course, I will now take microphone two. Thank you, Mr. Chair. Stevens. Legal protection for insurers. Yes, it was addressed for a moment, a possible merger with a Commerzbank. That was in the German media. We'd certainly like to hear more about that. We're certainly interested in that B Segment, and we'd like to hear your response about that. You're working on the digital model, and you're ahead of the other European banks.
During the previous Investor Day, nothing was said about it, and that is at odds with what you just said. To the other point. You had to hire an additional 2,500 people. Isn't that at odds with your cost income targets of 50% and 52% in the 2020s, preferably 2021? Are those temporary jobs? Are they going to be automated? We would also like to say more about that, because these are additional costs, but your capital position is just barely sufficient. Could you please tell me more about that? Next, I had a question to the supervisory board concerning methods. In recent years, quite a bit of water has run under the bridge, and we wonder how the supervisory board functions. Do you take a look on site?
Do they have unexpected office visits, or do they show up unexpectedly or with appointments at subsidiaries to take a look? We'd like to hear more about how the Supervisory Board operates. We have a question about the volatility of commission fees. What is your policy to reduce those? There's a long throughput time between reaching agreements with the third parties, Scalable Capital, and with insurers and receiving the corresponding commission fees. A question about the envisaged increase in spending. We just spoke about cost-cutting. Am I going to get another turn? I have several additional questions. Well, we'll see how we're doing for time. Those were some good, clear questions.
Thank you very much. Microphone one. Good afternoon. I'm Jacqueline Duiker. I'm here on behalf of the VBDO, the Association of Investors for Sustainable Development.
I've been banking at the ING for over 50 years. I worked at the ING for over 10 years and greatly enjoyed it. On my own, I would call myself a multi-stakeholder. My questions at present are about sustainability. I have three questions on sustainability. One concerns the Sustainable Development Goals, another concerns climate change, finally, one about human rights. Let's start with the Sustainable Development Goals. The VBDO would like to compliment the ING on being one of the founders of the Principles of Responsible Banking. This international initiative elaborates six different principles, one being aligned with the Sustainable Development Goals, also known as SDGs. This considers both the positive impact of the ING financing and investment as the negative investment. Excuse me, the negative impact of that financing and investment.
My question is how the ING will be implementing this in practice to further all 17 SDGs. Does the ING have targets to achieve this by 2030? My second question relates to climate change. Not so much about curtailing CO2, which is often the focus, dealing with the physical consequences of climate change. You might consider extreme drought, floods, rising sea levels, all kinds of physical consequences that are physical risks to projects and customers that ING funds and where ING invests as well. To withstand those physical consequences of climate change, the financial institutions have to do their best to pay more and more attention to these physical risks. Regulators are demanding this as well. As for the physical impact, the other end also matters. It's not only about what's the risk to ING.
On the other hand, the companies or projects financed by ING have an impact on the climate. My question is: to what extent does ING consider that? In what measure does ING consider whether customers contribute to being climate-proof? You spoke about self-sufficiency in your introduction, also making your customers climate-proof. What does ING do for customers exposed to physical risks resulting from climate change and with a longer-term vision. Does ING have an impression of to what extent the activities of customers contribute to becoming climate-proof in a certain area? They aren't necessarily exactly the same. That was my question about climate. Finally, a question about human rights. In that sense, we read that ING pays a lot of attention to human rights in terms of its sustainability policy.
In 2018, a human rights report was drafted, the ING mentions the environmental and social risk framework that a living wage is part of human rights. The ING considers different sectors, specifically to forestry and agro commodities, also the manufacturing sector. In those sectors, the ING identifies the risks of not paying a living wage by those customers or by the suppliers of those customers. A living wage is a risk in many other sectors, such as garments, mining, IT, and failing to pay a living wage there presents a serious risk as well. The question is whether the ING is willing to consider living wages in those sectors in each of the countries, for example, in Asia and Africa, where such violations are taking place.
Thank you. We're going to hear from four, then we'll start answering the questions.
Good afternoon.
I'm Jan Bengels. I'm a private investor. I wanted to start here because I wanted to speak the Limburgs dialect here, I won't. I have a few remarks. First, there's a lot of talk about settlements, customers, digitization, sustainability, I'm delighted that the ING is going to be more socially responsible. What I think that the ING is excluding an apology. It's all very well and good that the ING reached a settlement with the Public Prosecution Service, show a conciliatory token to the customers. Customers are entitled to service. You can talk to your staff about that. I do have a few remarks that also relate to customers' opinion about your services, such as hanging up on a customer when a customer is unhappy is extremely rude.
I also think you should take your customers more seriously because customers could easily say, "Okay, we're going to play boogeyman." That's not me. I've been an ING customer for a long time. I'm not going to walk away. It's important to identify changes within the ING, that means that the ING should also see whether the customer wants to continue doing business, because you want a group of 25 or 30 customers that shows the issues they encounter. That's entirely different from people who work for the ING and are talking about the company. Whereas the customer will talk about the service level. It can concern digitization, it can involve other matters as well.
Finally, I'd like to make another remark that a bank is bad, money laundering is bad, a bad bank launders money, on a different note, the ING did a bad job laundering money. Thank you.
I suggest we proceed to answer this series of questions. I shall start with this last question or last word of advice. Any form of complaint is an opportunity for us to improve our customer service. Thank you for highlighting that here again. I think you've highlighted a number of ways in which we can improve our customer service and how we can learn. We are already working at this with the NPS, the Net Promoter Score. We're asking our customers to give us feedback on our service. This is not only giving us a score, but very often customers give us feedback that we take on board in our improvement processes. The customer services is not deteriorating, is not improving. The thing is that the requirements of our customers are changing, and we have to continue to meet the needs of the customers.
That's why this story will never end, and it shouldn't end, because customers will always expect more from us and better service, and you can expect me to fully commit to that. Now, questions from Mr. Stevens. Mr. Stevens, our core strategy is crystal clear. It's organic by nature. For years, we've been giving guidance in terms of how we want to develop, how we see the increase of a customer base, how we can make sure that we can improve our customer service in order to land more customers. That's the gist of our strategy, which has proven to be reasonably successful so far. We are going for that full force. In the past, I shall point out again that we should also look at an organic growth, not only organic growth. That would be in three areas.
First of all, wherever we think that we can buy know-how, can acquire companies that have know-how that we don't possess in terms of improving our processes or improving our services. If we can do that, we may do that, and we often do acquire companies, as you will know. Certainly, there is an M&A part of our strategy. The second area has to do with the development of portfolios and credit portfolios and knowledge with respect to portfolios. If there are portfolios on sale that involve know-how, with which we can improve our expertise in, for instance, SME credits in those countries where we don't have that, then we will consider it, and we won't shy away from that. Third area.
With respect to looking at mergers and acquisitions, we've always said this, if we operate in a country in which there is certain degree of consolidation at some point, obviously we'll have to look at it, and we'll have to determine what our position is, which is precisely what we did in India. At some point, the regulator more or less imposed consolidation there. We went along with that, and we entered into a merger with the Kotak Mahindra Bank, and we sold our share in that. Now we're looking at the possibilities in Thailand, and we're engaging in talks with another party to see whether we can start a partnership there. That is all I can say with respect to that question. Other question concerned the number of FTEs that we dedicate to KYC and our improvement processes.
Part of that, yes, will be temporary. Of course, we are sorting out our customer files, and these people who are involved, these FTEs, will be temporary. Once we have sorted that out, and we can maintain and keep things up, we will decrease the number of FTEs. To be quite sincere with you, I am not looking at cost income. This is simply such an important matter that I may have to disappoint you. These costs are so good for us to incur these costs to make sure that we sort this out, that I have given full freedom to all business leaders to do whatever they think is necessary to make sure that we sort this out and that it remains sorted.
By the way, we also pointed out that we are moving away from only looking at cost income ratio, because that really does not seem to be a good efficiency measure. We prefer to look at operating leverage as a metric for efficiency. Of course, cost income will be reported. You can continue to look at that. What we feel is very important is our return on equity. That is what you look at, and cost income is an ingredient of that, but no more than that. It is not an objective unto itself. In this phase, we have to invest extra in order to sort things out. That is what we want to do. About the volatility of our commission income. That volatile No, not really, because there are two environments in which it may be somewhat more volatile.
This is commission income in terms of invested equity. Of course, the stock exchange goes up and down, and therefore, our income on the invested capital will go up or down accordingly. The second has more to do with the environment of the commercial banks. Our commission income for bond issues or share issues or in ranging large credits. Within a quarter, there could be some ups and downs. It could be somewhat volatile between the quarters. Ultimately, it will have to grow. We do believe that these commission incomes will continue to increase. In Offenbach, we indicated that this income will increase by 5% or 10%, and that has got to do with the fact that in the future, we are going to increasingly become the intermediary between the customer and a product that meets the needs of the customer.
We are not convinced that our products are always the best product for the customer. We sometimes will say that products of third parties, non-banking products, but also bank products of competitors should also be offered. We do so in several respects as well. Our agreement with AXA will also contribute to that. Then we have Miss Duiker, if I am not mistaken. We are going to answer this question together. About living wage. I am going to start with the last question, and then the first question, Mr. van Rijswijk will then cover risk management. Living wage. A very interesting matter, a very relevant matter. It should also always be considered within the context in which the company operates, the environment in which it operates. What is a living wage, and how does it relate to the local environment?
We consider it to be a very important matter, also because we feel that self-reliance is so important. We increasingly address the matter in our discussions with customers and the responsibility that they have within their supply chain, their value chain, rather. We echo the importance of living wage. The thing is, it is not always easy to detect. It is not something you can find. It is not black and white. You will have to form a judgment on it. We are taking note of that. We are working on it already, and our investment office is also working on the matter. They are looking very much at what kind of investments we are doing, what kind of companies, and how they deal with these matters. We may even exclude them if we feel that they do not deal with these issues properly.
With respect to the Sustainable Development Goals, well, there are 17 of them. You see, we can look at all 17 of them, and we could say, "Okay, we are going to set up our strategy in such a way that we support all 17 of them." I would love to do that, but I really do not know whether that would be the best way to work on these Sustainable Development Goals. What we did in our strategy is look at Sustainable Development Goals 12 and 8, because they are really part and parcel of what we are doing.
They are rooted in our work, so we have arrangements for that. We also have targets that we want to achieve in due course. That does not mean to say that we are ignoring or neglecting the others, but it is very difficult to have targets for all 17 of them.
The closer we get and the more we understand the matter, the more we can onboard them as targets. Thank you. Concerning the physical risks, we have a committee. We have a risk committee that looks at transition risks for energy, the Paris Agreement. Let me refer to that. We look at how we need to set up our portfolio, make it ready for Paris, and whether we see risks in our credit portfolio in the meantime, in terms of energy transition. Carbon, for instance, also has a risk element, and how do we deal with oil and with oil rigs, if we fund it now, and what happens in the future? There is a sustainability element here. Something else that we are dealing with is looking at our physical risks, taking stock of them. Where are we funding real estate, houses, mortgages, or agriculture?
That is what we are working on right now. Your follow-up question is, well, if that is what you are doing, will you then hold customers accountable and talk to them about their conduct in terms of climate issues? We are not there yet, but that could be something we could do. Also in view of the targets that we have for climate funding, we could add that to the targets that we have, goals that we have. I still owe Mr. Stevens an answer as to how the Supervisory Board operates. Years ago, the Supervisory Board came to the meeting at the very last minute, and then were at the meeting, and then left. But those times are long gone.
We dedicate much more time to talking to people at ING, in-depth relationships. When we have Supervisory Board meetings, we spend a lot of time keeping in touch with young people in the organization. Also, the Selection Appointment Committee talks a lot to people who are really deep in the pipeline. We talk to them about their ambitions and how the bank is doing. If there are issues, such as now with the KYC program, we genuinely sit down with the people working in the field, talk to them about the dilemmas that they see, talking to them, engaging in the debate with them. That way you can encourage them as well. This year we're going to separate the Supervisory Board in three different groups. We're going to visit three different countries in order to specifically look at these things.
Quite apart from the fact that we have the ordinary meetings and the ordinary talks, we have many more talks with other people in the organization to get a feel for the culture, et cetera. I can tell you much more about it, but this, in brief, is more or less what I wanted to tell you. Ladies and gentlemen, I just need to check. Who of you has an urgent question on strategy funding and sustainability? I see, Honda, you've already had your turn, so you will be the last, even though your comments are always very interesting. Please don't take it personally. Number 5. Let's start with number 5, then I'll go around that way. 4 as well. Then we're going to talk about the settlement. Otherwise, I'll have unhappy people about that. Microphone 5.
My name is Claire Hamlet. I'm a representative of BankTrack, which is a small shareholder. As we heard from Mr. Hamers in his speech and his answer to my colleague, ING prides itself on being a climate leader and claims that its new PACTA for lending methodology, which is part of its Terra approach which is focused on financing technology shifts for key sectors, will fully align its business activities with the Paris goals. PACTA will cover ING's activity in the oil and gas sector. From BankTrack's perspective, we do not see how the PACTA approach, aimed at financing technology shifts within a certain sector, can effectively rein in the oil and gas industry, focused as it is on exploiting the fuels that cause climate change. What is urgently needed is not a technology shift, but a rapid termination of activities of the oil and gas sector.
I ask the board, can you publicly state what specific long-term and intermediate goals ING seeks to achieve with applying PACTA to the oil and gas sector? Commits to publicly report on progress towards these goals. Secondly, given that the climate emergency has reached such a height and that incremental policy changes will not really cut it anymore, by when can shareholders expect ING to end its financing for all new oil and gas projects and to release a plan to phasing out its finance of oil and gas altogether within a clear time frame compatible with limiting warming to 1.5 degrees?
Thank you. Clear question.
Thank you. Jose van Haastrecht is my name. I'm a private shareholder. Chairman, it's great to hear your voice. It's a very clear voice. Far, we only saw people with a sanitary at the table. It's a pleasure to listen to you. You're keeping order. Excellent job, better than your predecessor. Perhaps you can put any other business at the end of the program because you're doing very well at keeping order. First of all, strategy encompasses several years. I would also like to look back. 100 years ago, 1990, the Postcheque- en Girodienst was one of the predecessors that was set up. And one of the things that we saw on the façade of the building in The Hague is that people who went there as a customer, the Giro service, could make money.
I'm wondering why people would bring their savings to the bank. Perhaps you can explain that and explain why, in the short time, why people here or elsewhere should bring their money to the bank, because interest rates are almost negative. If you look at the costs as well, it's useless to bring your money to the bank. If you mention numbers and percentages, could you perhaps also mention it in absolute terms, because percentages change because of mortality rates. Looking forward, you said nothing about the use of TAN codes in the Netherlands. It seems to me quite essential for the strategy of the bank moving forward, because that will also be a determining factor in the way you deal with your customers, a decreasing group of people here in the Netherlands. Now, strategy.
First of all, I'd like to thank Mr. Breukink for the way he referred to Mr. Timmermans, because if I look back from the times I attended the meetings, I see a number of things. I see the fact, and I'd like to refer to the word syndicate that was used in my impression in the settlement. This matter may have been set aside. Syndicates could be skeletons in the closet, and should they exist, they should be mentioned. Mr. Timmermans, since 2006, was a member of the Executive Board. I can remember after we took leave of Mr. Hamers, things were not really good and there was some concern here in the room, and Mr. Hamers and Mr. Timmermans had a bit of a disagreement on the forecast.
I'm quite surprised that in 2015, that was the appointment, 2016, there was this issue, some issues coming up, then 2017, Mr. Timmermans was appointed. In what measure was this a strategy to appoint someone in the Executive Board who would then become a victim? I'd like to know about the strategy.
Thank you. Microphone one. My name is Paul Koster, VEB, the Association of Stockholders. Thank you, Mr. Chairman. First of all, I'd like to come back to the question that was asked about the Commerzbank. This is a rumor, and this is something we can address when we talk about strategy. I'd like to refer to words of Mr. Hamers in the press. As long as nothing is done against the banks, nothing will change. There are no cross-border acquisitions. ING doesn't need acquisitions to grow.
I can imagine that given the changing world around us, that small acquisitions may be self-evident, but I was rather shocked when I heard about these rumors, and particularly in the light of the situation that we're facing with what happened last year. Many incidents, and you yourself, Chairman, in the annual report referred to that as negative sentiment. You want to avert that. If I were you, I would create clarity, and I would explain what it is that this means. You yourself, Mr. Chairman, in the annual report, you say, "Trust is ING's most important asset." Mr. Hamers says, "Trust is our license to operate." What I'm getting at is not the settlement, but what transpired after it.
Mr. van Rijswijk recently in an interview said, and he said this, "It's clear that there is more control on the part of regulators after the settlement." A number of investigations started and a number of investigations have been finalized. Only in Italy have the findings been disclosed. The atmosphere with the settlement, the annual report, nothing about it in the annual report, just three sentences, 2016, six sentences in 2017. Up to August 2018, there was no mention of it other than that it seemed that it was going to be finalized. After a week, all of a sudden we get this announcement about the settlement. This is disappointing. Actually, the exact same thing happens with the annual report. We were attending a meeting at ING.
After a week, we heard that in Italy, the central bank, no less than the central bank, decided to impose a restriction in accepting new clients. My question specifically is this one: Are there any pending investigations without you knowing the outcome in other countries that we would need to know about? Did you talk to the regulators? Because I simply don't understand, as a former staff member of a regulator, how it is possible that in Italy they conduct an investigation for four months without the ING senior management, either in Italy or especially, I would say, in the Netherlands, knowing about those events. All in all, I find it increasingly difficult, and I would also prefer to talk about the growth strategy and all these opportunities that were highlighted wonderfully well in Mr. Hamers' presentation concerning the digital future.
Unfortunately, we're dealing with this oil spill that is increasing slowly but surely. Thank you. Yes. Okay. We'll answer this question first or these questions first. Last question is part of the second round. We'll set those questions aside. They'll be answered later on. Please don't be concerned about that.
We all have to acknowledge that this world is in need of an energy transition. I think world leaders have all submitted to the Paris Accord and all but maybe one or two have engaged into that accord and are working on that. As part of that climate accord, there is a couple things we can do. One is how do we take our sectors and our exposure to sectors into the future so that basically we can actually pledge our commitment again through our indirect exposure with an indirect footprint to ensure that we stay within the Paris Accord, well within the Paris Accord. We do that with all sectors. Your question was specifically on oil and gas, and from that perspective, clearly, I wish the whole world could run on renewables. Regretfully, it's not the case yet.
A large part of the power generation in the world is still very much dependent on other resources than renewables, including oil and gas. From that perspective, there is also a reality check here. The reality check is how quickly can you phase out the development of power generation on the back of fossil fuels? At this moment, we can't do that very quickly. That doesn't mean that we're not supporting that. Therefore, for those areas that we feel in fossil fuels are the most pollutive in terms of carbon dioxide, like coal, like tar sands exploitation we actually stop those financings. If it comes to general oil and gas, we are not stopping that, which doesn't mean that we're not looking at a way to see how we can influence that and how we can agree on specific targets around that to decrease it.
First, we want to know the implications of it. On strategy,
Those were the questions raised at microphone four, Mrs. Haastert. Is that correct? Great. Okay. Why are people bringing money to the bank? We still pay out some sort of interest, but you must realize that we are losing money on the interest. The money that we get, the largest part of surplus liquidities, we have to pay 40 basis point. That's an ECB requirement. I think that the ECB policy is still focused on fostering economic growth, consumption in Europe, and also doing something about inflation in Europe. We don't think that all of a sudden increase. For a long, long period of time, the interest rates will be low, if not negative. That also implies that the interest that we can pay on savings deposits We don't expect that that will be increasing very quickly, per sale.
Of course, I cannot and will not make specific statements on that. This has got to do with the economic climate and the accommodating policy pursued by the European Central Bank. In order to make sure that the economy continues to grow, that consumers continue to spend, hopefully that because of this growth, there'll be inflation, that the interest rates can increase. Your question about the TAN codes. For now, we have informed all our customers that the TAN code, as a way of confirming transactions, we're phasing that out. There's an alternative to that. The alternative is using the app on the mobile phones. We are drawing our customers' attention to the fact that we're phasing TAN codes out. Your approach on appointments in the executive board, I'm very sorry, but I cannot comment on this.
I really have a different perspective than you have, I think, I really don't know how to answer that question.
Mr. Wiers, I'll answer that question. There's only one reason why Mr. Timmermans stepped down, that is that he retired because he took his ministerial responsibility as being the person most involved in this situation as filed. No other reason. Mr. Koster had a question about how I see the consolidation in Europe, the European bank consolidation. I think you need to separate two things. What I say about it, about the European bank consolidation. We all hope that we have a bank union, a full-fledged bank union. That requires a number of steps. Once we have that, I see more advantages of European bank consolidation, cross-border bank consolidation than I would have now. That doesn't mean to say that there are no advantages now.
There are, in principle, three kinds of examples. First of all, capital optimization, the other one is liquidity optimization, the third one is cost optimization. These are the three factors that I believe will be a determining factor in whether or not there will be bank consolidation, cross-border or locally. I made no statement as to our position. This has got everything to do with our strategy, I've already given that answer to Mr. Stevens. Can't you be just a bit clearer, because it's sort of hovering over us. It seems as if you're intending to engage in enormous acquisition, whereas, in 8A on the agenda, this issue may be addressed, you want to extend your capital with this issue. I do think that this question is quite relevant in my view.
How would you see an acquisition in a time in which you still have a lot to sort out internally? Both of you pointed that out in your presentations in the introduction of the meeting. As I mentioned, our strategy is a strategy of organic growth. We're doing really well. There are three aspects in our strategy that may not be organic, that may have to do with buying certain skills, know-how or technology, or consolidation that should take place in those markets in which we operate. We'll have to wait and see what happens. Really, that's what I can tell you about that. You are already so successful in Germany with your digital strategy. Mr. Koster. This is an extremely interesting debate, and you understand that, and you are very experienced. We're not going to speculate, and we simply can't do that.
Chairman, that's what I wanted to avoid. That's why we standard say, we are not going to comment on rumors in the market. We have to leave it at that, however interesting this debate may be. I apologize. Before we proceed to the settlement proper, we'll come back to the other point that you I think that this person who has been waiting at microphone five has waited for such a long time, so patiently. We'll give that person the possibility to close this debate.
My name is Suzy Snyder. I'm representing a small shareholder. I'm here as part of the international campaign to abolish nuclear weapons. You may recall our campaign, we won the Nobel Peace Prize in 2017 for our efforts to bring about the Treaty on the Prohibition of Nuclear Weapons. That treaty is rapidly moving towards entry into force. Given the expectation that the treaty will enter into force within the coming year or so, it will make all activities associated with the development, production, stockpiling, and maintenance of nuclear weapons illegal, I'd like to know, specifically in ING's sustainability strategy, what steps are you taking now to ensure that there is no exposure to companies like Fluor, Huntington Ingalls, Northrop Grumman, or Lockheed Martin, all of which are producing key components for nuclear weapons?
What are you doing to minimize the reputational and regulatory risk of continuing exposure to these companies? Thank you very much.
Thank you very much, Steef.
Thank you very much. I believe that the Treaty on the Prohibition of Nuclear Weapons shall enter into force in 90 days' time approximately. In that, when in force, these conditions may translate it into non-assistance of production of nuclear weapons. We are looking into that as well. We expect it to happen on nuclear weapons as well. In our current defense policy, we take a restrictive stance on nuclear weapons, that will largely cover any future prohibition on the financing of nuclear weapons in and of itself. In addition, but that's already what we currently do, we do not finance the development, the production, maintenance, or trade of nuclear weapons. That's where we currently are.
Sorry, the companies that I mentioned, you are currently financing, and they are involved in these activities right now.
Yes. If there are companies, so we do not specifically finance projects in that regard. If there are companies who do have elements of nuclear weaponry in that regard, we are looking at percentages of takeover and other restrictions that we are engaging with these companies for them to diminish those activities. In that dialogue, we then take a decision whether we finance these companies as a whole, but we do not finance specific projects.
Okay. Thank you. [Foreign language] Thank you. Now on to the topic of the settlement. Mr. Wijers, there's somebody here who is a bit younger than me who was standing at the microphone, but because he's so young, you didn't notice him, and he wants to ask a question. I personally have one comment. I asked you two direct questions. I did not receive a reply.
You did receive a reply. You asked me whether I was a shareholder, and I answered that question.
I think that you stepped out for a moment.
Yes, I needed to use the restroom.
I apologize. I'm going to keep order as we agreed in advance. At a certain point, we will transition from the discussion about strategy, finance, and sustainability to the settlement. Many people want to conduct that debate, I would like to accommodate that. I apologize if not all points were covered. We'll be happy to continue any of these discussions after the meeting. I deeply apologize, we cannot answer all questions in that timeframe, we need to make headway. Otherwise, we will not finish at 6:00 P.M. tonight, ladies and gentlemen. We're going to discuss the settlement. Who has questions? First, I'll give the floor to Mr. van Rijswijk, who still has to answer the question in this context about the question from Mr. Koster.
There was also a question from Mr. Spanjer about Ukraine and about provisions for Italy and Ukraine. There were a few comments about that. As for Italy, I think that answers part of the question from Mr. Koster, I'll deal with it more specifically later on. We do regularly inspect banks. That's part of our regular operations, that they're on site or deep dives reviews at banks. These address financial and non-financial risks and also know your client. I don't remember the interview, they must have quoted me in some presentation that after the settlement took place in the Netherlands and in some areas, there were deep dives or investigations or inspections into KYC. In Italy, we did have an outcome, I'll answer your question about timing and the like more specifically later on.
In the meantime, I'd like to project a slide concerning the timing of publication about this topic. That's the slide. I'll talk about that in a moment. We're working on that, we said at the Investor Day a few weeks ago, after we publicized an improvement program following settlement, Mr. Hamers just mentioned that in his presentation. On the one hand, this targets adding to and improvements in our records. The static due diligence to be complemented by media signals and names those we don't want to do business with. That's a bit to the left of the slide Mr. Hamers showed of the flat eight, as I'd call it.
At the right-hand of the slide were elements relating to the structural solutions to ensure that we have better systems for storing our records and also ways of reviewing transactions better and faster through certain algorithms or rules to say, well, we need to explore this conduct in more detail. We're working on those ideas. When they've checked what the status is of KYC, know your customer. Until recently, it was insufficient, at a certain point, we said, "Okay, we think that ING needs to get its affairs in order first." That's part of a broader program that will, in any case, take until 2020. First, we're supposed to get our affairs in order before we're allowed to accept new customers in Italy. I have one more comment to add.
If you look at the program, people are fixated on that program will run until 2020, then it should be all done. Well, just as with financial risks, they need to be managed continuously. Non-financial, operational, and IT, and compliance risks such as KYC need to be monitored continuously. This program is a forum to ensure additional attention in the organization to roll out new ideas with some structure. Even after 2020, we'll continuously be introducing improvements because this has our ongoing attention.
That takes us to the second question, which related to Ukraine. I'm not sure what that means, but if you're referring to rumors in the press, as Mr. Wijers just said, we don't react to rumors in the press. What we will do, especially on this topic, if we see press releases about laundromats or Troikas or other negative banking signals alleging that banks were abused through syndicates trying to launder money or evade taxes through all kinds of schemes, then we immediately check whether these include any customers that bank at ING, whether ING has any role there. If that's the case, then we report that to the hotlines at external agencies about an unusual transaction, and we abandon that customer. We always look at it if such things come to light or there are newspaper reports or reports in other media.
We always check whether ING has any involvement, and we do that continuously in response to more significant reports. Now, about provisions, we're talking about the financial statements for 2018. We announced a settlement with the Public Prosecution Service to the tune of EUR 775 million, including a penalty of EUR 675 million and expropriation of EUR 100 million. We don't ordinarily make any statements about provisions. We're not going to do that in this case either. This relates to asset recovery, and that takes me back to Mr. Koster's question. That relates to disclosure. The question is whether we disclose on time. How are we going to deal with this in compliance with IFRS? Let me finish my answer before I'm interrupted. Three elements are important to take a provision.
Having an obligation. That's rule one.
We have to be certain that this is an obligation. I talk about that in the slide. Second, it needs to lead to an outflow of benefits. In this case, from ING to another party. In a third case, you need to have a reliable estimate. You need to generate a reliable estimate. Looking back to 2016, at the left of the screen, to those of you sitting in the audience, at that point, an investigation started in early 2016. In the financial statements, we said that we were the subject of an investigation into criminal activities that were the subject at the time. Supposedly, we had facilitated money laundering. We said that we're the subject of an investigation, but we don't know what the outcome will be. That was in 2016.
In the middle of 2016, in our half-year figures, we referred once again to memo 45. There are all kinds of notes in the financial statement. Paragraph 45 in the 2016 financial statements mentioning that we're the subject of an investigation. As we advance in the investigation and we're at the 2017 financial statements, that takes me to the two points of the three elements I just mentioned. More likely than not, there's a certain obligation that will arise and will lead to an outflow of resources or rather a payment. In that financial statement, we said that we've met two of the conditions stated in IFRS. We thought you should know this. Two of those conditions have been met, but we still expect more information.
We say Dutch authorities or in this case, the prosecutor, about the consequences for the first half year, and we weren't at the first half year yet. We were discussing this with the regulators, but the talks were ongoing, and we were unaware of the outcome. The reason we didn't know the outcome, as Mr. Wijers just explained, is that only at the very last minute did we hear from the minister once we had already discussed a settlement. Only then did we know whether the settlement would be approved and whether those conditions were part of the settlement that was approved as well. That's why we didn't figure that out until 2018. I need to correct what I just said. In March 2017, we reported on the 2016 financial statements, in March 2018, we made that report on the 2017 financial statements.
That's your question as to why couldn't you have reported this earlier, and why did you provide such a brief report? We reported to the public exactly where we stood in that investigation, and that's what we did at that point. May I respond, Mr. Chairman?
Go ahead.
The point is that I cared about August following up on what happened in the previous year. Was there a situation in August where the second quarter figures were disclosed without anything reflecting the extent, and there's a lot of contradiction in the press about what was known internally about the extent or what was not known. My question, which if I was listening properly, has not been answered yet. Are other investigations currently pending that you can tell us about so that we have an idea of how many investigations are taking place? That raises the question where SBM was recently told by AFM, situations you can inform the public. I thought that I had hit a critical note. As long as not all facts are known, can you be forced into disclosure as a firm?
If I look at your firm, I mean that in the best possible way toward ING, in your situation, you would benefit more from just a bit more disclosure than you have done thus far. These types of statements, by the Chief Risk Officer, some investigations are pending. That makes people uneasy. I'll give you an example that I'm very curious about, I'm breaking your rule, but it concerns the legal proceedings. In this case, I'm talking about note 47. There's one case where I wonder what it means, and that relates to tax cases. In the second half of that short paragraph, I read that an investigation is pending because internally ING noticed shortcomings in financial reporting about taxes. Allegedly, there were withholding problems as well. That's with the IRS.
If there's one thing I know is that one organization you don't want to have a falling out with is the IRS. That's another example. Those four lines have a significant impact on the firm. That's why I keep getting back to that question. Is it wise to consider huge acquisitions right now if you're thinking about the internal control systems at the ING? I have seen firsthand how incredibly difficult it is when you're acting as a gatekeeper. I'm certainly not saying that this is easy. I understand that. It's very important for us as shareholders to get more timely information that can put our minds at ease and convince us that it's being addressed properly.
Thank you, Mr. Koster. I certainly understand your question. What I can tell you is the following.
As the bank, we're continuously subject to investigations, deep dives, thematic reviews, et cetera, and have been for the past 10 or 20 years. That was so, remains so, and will always be so. If anything needs to be reported in relation to obligations we need to impose on external stakeholders, we will do that as we did in relation to the settlement from the past. If there's something to mention for the future, we'll certainly do that as well. We have nothing else to say about that at this point, except that I said something that should be already known, that regulators, whether we're talking about the DNB, the ECB or any other regulators, they continuously conduct specialized investigations into elements of your operation. That holds true for KYC, IT, cybersecurity, SOX provisions, and many other matters.
No. Now it's my turn.
The second element you said is about last August with respect to the half-year figures. All I can keep saying is you keep being fixated on the EUR 775 million figure and asking whether it was known or not. The question is whether you can generate a reliable estimate at that moment of the cash flow, and that reliable estimate could not be made at that point because back then we did not know whether or not we would reach a settlement. I wasn't at the discussions. I didn't see the notes, so I cannot tell. If the next week you hear that announcement, then there must have been conversations, including those with the accountant. Isn't it in time to indicate more specifically that this is not a case involving EUR 100,000 or EUR 10 million, but hundreds of millions.
I'll tell you one more thing. We have a rigid chairman. That's the way things are. We said from the outset that it could lead to a significant impact on the organization. Once again, we indicated that it was significant and we didn't have to say that. We did say that there's a chance it will be significant and that reliable estimate relates to what I argued about point three. I was asking about other investigations that you related directly to that settlement that aroused the inference of other regulators. I've been there and done that too. My question is whether there are any countries where we could expect that conceivably, but then we hope for a positive outcome, other countries where disclosures might be made that suggest to shareholders that you have identified the risks. I hope I made my point.
Thank you, Mr. Koster.
I think you provided your answer. Now some very patient shareholders deserve the floor. I think the lady at microphone three has been standing very quietly for a long time, so she'll have the floor. Then you at microphone two, then you at microphone four. You'll all get the floor. Not to worry.
I'm Margriet Stavast. I work for PGGM. I speak and vote on behalf of our customers, including the Care and Wellbeing Pension Fund. I'm also speaking on behalf of APG Asset Management, MN, PME, Burmese Investment Management, Goudse, and Menzis. I have four questions for you. You announced that you would be taking measures to strengthen compliance and risk management. You just mentioned the five pillars of the improvement program. We welcome these measures. Here's my question. You know this question. How do you intend to keep shareholders informed of the progress on these measures?
My second question is about the internal audit service. The operations of the cash flow has been enhanced by internal audits. Although cash flow is an internal matter, we would like this process to be validated externally. My question is, how do you define the role of the external auditor? Are you considering changing it? For example, you could broaden the scope of the internal auditor's audit. As for non-financial risks, we advise that you include the internal risk behavioral team in that assessment. In your annual report and your presentation, you indicate that non-financial risk management and compliance should be embedded within ING's DNA. The tone at the top is important for the behavior and culture of the rest of the bank. There is a new head of non-financial risk who reports to CRO.
The present chief compliance officer also reports to the CRO and permanently participates in the supervisory board risk committee. Here's my question. Why doesn't the supervisory board opt for a chief compliance legal ethics officer in the statutory board? By embedding this at the highest level, shareholders and other stakeholders will feel comfortable about ING being aware of non-financial risks. My final question concerns the remuneration of the board members. Mr. Timmermans is compensated in two respects. His redundancy pay was reduced at the discretion of the supervisory board to half of his base salary, there's a holdback concerning the non-vested shares, that amount will be disclosed later this year. This is in addition to the previous agreement not to pay any bonus to board members throughout 2018.
ING has also taken measures against some staff members and former staff members who were responsible for execution of policy and procedures in relation to compliance. This issue concerns 2010 to 2016, in which the wrongdoings became known at ING in 2016. At all companies where we invest, we think it's important for board members to be accountable for the policy pursued. You opted for a partial holdback of the variable remuneration of Mr. Timmermans. Can you explain why you are not applying the holdback to all board members who served on the executive board in 2016 and 2017? Thank you.
Okay. Yes, you were ahead of that other gentleman. About the settlement, you have some questions about that, right? Yes. You didn't answer my question yet. Between 2010 and 2013, ING received 50 warnings by the DNB about money laundering. How could that have been ignored 50 times?
How could DNB and the House of Representatives not provide proper supervision? If you had received a penalty in 2010, it could have been EUR 100 million rather than EUR 800 million. The supervision by the House of Representatives and the DNB is sorely inadequate, shareholders such as the VEB and pension funds need the supervision by all these bodies to be conducted professionally. I assume that Mr. Balkenende agrees with this entirely because in 2019, he saw the meltdown in the Netherlands. In addition, the ING has paid EUR 10 billion EUR 15 billion as a penalty reduction. ABN AMRO, which was also run in serious trouble, has not been privatized yet. The ING did beautifully, EUR 6 billion in profits about EUR 1 billion in penalties. It seems like the ING is doing everything wrong that we can here.
The supervisory board, could you please tell me, to what extent did you know in 2010 or 2013 when Jan Hommen was here, to what extent did you know about these 50 warnings from De Nederlandsche Bank? I simply can't understand it, and the other shareholders are also at a loss to understand this. Thank you for your clear question. On to microphone four. Yes, I'm holding it. Are you okay if I remain seated? I can't stand anymore.
I'm Mr. Van Kessel. Mr. Van Kessel, you have the floor.
ING has had a difficult year filled with concerns. Several times, the media depicted the goings-on in the organization. This is unfortunate, but the publicity was largely negative. Unfortunately, in addition to the commotion caused by the level of the salaries, the inappropriate actions within the organization had nefarious consequences. For quite a while, the ING share price has been declining, but around the year-end, it reached a nadir, and related financial prospects, such as call and put options, lost their value, declined on their expiration date in December 2018, as well as for those expiring on April 2019. Closing positions caused major losses because of the decline in the share price. This is obvious. The Public Prosecution Service delivered evidence of mismanagement and accordingly imposed a heavy penalty on ING, exceeding EUR 700 million. If you as the executive board.
One of those actively involved has already left, but this remains your responsibility, and you're accountable for that. I'm one of those who suffered losses and would like to have you cover my damages. There you go,
Thank you. I suggest we answer this round of questions, and then you will be given the floor, absolutely. Yes, I shall answer the question of Ms. Stavast of PGGM and the whole series of pension funds and investment managers. The improvement program. The improvement program is a program that we developed and that we actually implement in close cooperation with De Nederlandsche Bank. We constantly inform De Nederlandsche Bank of our progress, and that, in fact, is the way we want to move forward with this. We made arrangements with them.
They know what this entails, and we report to them on our progress, and together we reach conclusions in terms of where we need to accelerate things and where not to. The second point is the role of our audit service, which is indeed focusing on internal control and financial risk management and gets its assignments, is instructed directly by the audit committee. That goes outside my line. On a daily basis, the head of the audit service obviously does report to me, but the instructions and the program that the organization carries out is run outside me, and he gets the approval of the audit committee and obviously has to report to the audit committee and does so every quarter when we have an audit committee meeting and when the audit report is discussed on a quarterly basis.
Obviously, we also do so in the Executive Board, but the finding of the audit service here is very important, and we consider that to be very, very important. It's a very professional and objective organization. As such, we see that the external auditor can specifically focus on financial reporting and not so much on non-financial reporting. Yes, a compliance officer. Obviously, there are several ways to deal with this, we have a Chief Risk Officer. As such, the Chief Risk Officer has a very specific responsibility at an Executive Board level, and within the responsibilities of the Chief Risk Officer, compliance is a separate responsibility, separate reporting line besides non-financial risk management. We have someone who's responsible for non-financial risk management. These are very separate lines in the Executive Board with Mr. van Rijswijk. That's that.
Then the last question is about Yes, for that, I'd like to give the floor to Mr. Breukink, the chairman of the Remuneration Committee.
Thank you. The question, the way I understood it, has to do with the question why the holdback has not been applied to several directors. It may be important to once again repeat what I said in my introductory speech. It's important that in part this concerns a collective responsibility, and this is also the reason why the variable remuneration has been reduced in the pool, and members of the Management Board Banking, amongst others, have not received compensation. Specific. That's one thing. Now specifically, why only Mr. Timmermans? The fact is that this-
The investigation concerned 2010, 2016. He was not only a member of the Management Board Banking, but for several years he had the ultimate responsibility for ING the Netherlands, and that is the reason why we decided to take this decision as such. Now I'd like to give the floor to, yes, Steven.
There was a comment, I think it was Mr. Flege, about 49 words of warning from De Nederlandsche Bank. Well, I must say, I don't really recognize this number. I only know what was said about Project Houston and the facts. Perhaps that is what Mr. Van Vollenhoven referred to, but I don't know, 2010 to 2013 internally within ING, there were 49 alerts that were created.
That means is when there are transactions that seem unusual, the system generates an alert, and there needs to be a response to that. Then there needs to be an investigation, increased due diligence to find out whether something's going on with this customer. In that period of time, insufficient action was taken on these internal alerts. That was the 49. The 49 refers to internal alerts that were not followed up on. I just wanted to highlight that. I also asked about the fact that supervision in the Netherlands is absolutely insufficient. 2009, we faced a complete meltdown of systemic banks, and now it's insufficient again because all of a sudden ING has to cough up EUR 800 million. It is absolutely insufficient and members of parliament have insufficient understanding of the matter in order to be able to supervise that.
I think we need a structural improvement in the Netherlands. Otherwise, in a couple of years' time, all of a sudden we will be facing a similar situation. It does not only concern ING, it is also ABN AMRO and Rabobank. There is absolutely insufficient regulatory authority in the Netherlands. I can say this. I read a bit about this in the press. I would like to hear this confirmed by the VEB. There has to be a better supervision so that you can get a fine in a timely fashion and not all of a sudden be faced with a fine of EUR 800 million. This is the AGM of ING. I think the last entity to be critical about this would be ourselves. We take note of your comments and we are going to roll up our sleeves and work very hard to solve problems.
It is not up to us to criticize anybody. We are not going to criticize MPs nor regulators. "No, you cannot do that. I can do that," says Mr. Flege. We have a question from Mr. Van Kessel. Yes. Mr. Van Kessel, you are asking for compensation. As Mr. van Rijswijk explained, we feel that as from the moment when we were faced with the investigation of the Public Prosecution Service and all the subsequent developments, we really feel that we informed the market and shareholders adequately. We see no reason to do that. Thank you. I shall now turn to microphone two, microphone one, and four.
Pepping is my name. I am a private shareholder. Until 2008, I was a minor risk manager. I do know something about this. I do remember that we were very accurate.
The bank that I worked for, we looked at all the regulations, the suspicious transactions. We can learn from history. I would like to go back in time. How can it have happened that orders were given top-down, I think probably to cut costs, that only three alerts a day from the system were allowed to be considered at ING? This is an example. Particularly, how come we have this culture? Actually, I feel cheated. I am angry and perhaps retroactively angry at Mr. Hamers. I never talked about this. Everybody has already talked about that issue. I am really angry why we were never informed about these things. It was known within ING. How are you going to learn from history? Thank you. Microphone number one.
Yes, Mr. Chairman. My name is Spagna for the minutes. I have a couple of questions.
Question one, the annual report 2017, Mr. Joorna referred to that there was an amount of EUR 1 billion for a potential claim. Why for Italy and Ukraine do you not include anything in the annual report? Why is it that you are so sure that nothing will come of this? We see Ukraine come up in the press. Investor relations is not contradicting this and is not denying this. Where there is smoke, there is fire with Ukraine. Mr. Koster, the VEB has just asked, are there any investigations that concern us? That is Ukraine. Why are you not talking about Ukraine? Second, this year you have EUR 303 million in bonuses that have been paid out. How many bonuses went straight to the laundromats in Italy and Ukraine?
I want to know this exactly, because I can hardly imagine that the EUR 300 million only went to employees outside Mr. Hamers here in the Netherlands. I want to know the exact amount. Third, I also have a comment about your department investment relations, because when I request an annual report from Angelique Schilder or your director, she is extremely difficult. She says, "Go to the website." I say, "I always get a printed version." She says, "Go to the branch office." I go to the branch office and then people are, again, very difficult. They are making my life difficult. At the end of the day, I just took it with me. You just said in your introduction, we are going to listen to the customers. I believe these are hollow words, but in practice, you are not doing anything at all.
You do have it now, don't you?
Yes, good.
Okay. Thank you, Mr. Spanjer.
You are welcome.
Microphone four, please.
Hello, my name is Wim Visser. I have a proxy of my brother, Jeroen Visser. He is a shareholder, and I wanted to say that there is a pending investigation. I asked for this information at the College of Advocates General, an investigation into public prosecutor Ploos and Frohberg, because the way we see it, things are going terribly wrong with reports on money laundering in the flower bulb sector with all the bankruptcies. In our bankruptcy of our company, €280,000 in tulips disappeared and €200,000 we had ordered fertilizer, but it turns out that nothing was supplied. That went missing, and at some point, I had warned that was dangerous, this fertilizer for car bombs. You can make car bombs from it, can't you? Central Station.
I warned the railway organization. They thanked me for that, Ms. Ploos says that I am a suspect. I am a suspect that I had hidden the fertilizer. I would like this police report, I want them to act on this police report. Something else that really annoys us is that we really looked at the files, the fraud files, and we offered to explain things to the ING, and I also sent it to Mr. Hamers, and all we get is references to a lawyer. That is it. Which I think is very disappointing. We have major issues with the Public Prosecution Service. They are saying that we are taking up too much capacity, too much money. I would suggest that ING reflect on an independent committee that would deal with these smaller fraud cases so that the Public Prosecution Service have less of a workload.
I have another question. These €120,000, what happened? Where did that end up in the accounting system? The auditor must know. Mr. Visser, I am getting the impression that we are not talking about the policy of ING vis-à-vis the settlement, that you have an individual problem with the Public Prosecution Service and perhaps even with ING. I think that that is less relevant for the shareholders who are present here today and less relevant to the agenda. I suggest, as we agreed, for individual cases, that we discuss this outside this meeting, at the desks outside, so that we can take a look at your situation. That is not for this meeting.
I just want to highlight that nonetheless, I do feel that at some point the DOJ asked, "Are there any skeletons in the closet?" Ms. Frohberg knew about our police reports, knew about our situation, she covered it up. We'll take a very close look at this. Thank you. Microphone number two.
Thank you, Mr. Chairman. You're familiar with my name, Slaughters. I have a legal and economic background. Mr. Hamers just showed the development of the share price. I found that very difficult to believe. Prior to the 1st of July, 2016, the ING Group painted a much too rosy picture of their policy. June 2016, we had the Brexit. If we read the AEX monitor, we have to keep in mind that there's going to be a lot of pressure from Brexit that is hovering above the market.
I don't see that reflected in the graph that Mr. Hamers just showed us. The share price was 916. 12th January 2018, it reached all-time high, 961. Mr. Hamers, ladies and gentlemen, the economic value of the ING Group as a whole and in its part has misled shareholders. I just heard a comment about compensation for damages. I agree with that completely, and I would like to explain my rationale for asking this question. You can respond to that because this is my freedom of expression and my question. Before the money laundering situation came out, I had shares ING, these shares would've been worth much more money without the fine and the settlement. Now in 2019, we have the irregularities of previous years. These irregularities, in my view are not attributable to the shareholders, but are attributable to the executive board, supervisory board, ING Groep N.V.
Therefore, I hold these bodies liable for the decrease in value of shares ING as a consequence of the enormous settlement and the fine of Public Prosecution Service. When the money laundering was disclosed, I read that analysts of Morgan Stanley had reduced the value of shares of ING because of what happened and the high cost. Mr. Chairman, with Italy and all the money laundering issues in Russia, this is going to become worse. ING just showed a very small profit. ING was so pleased to have all these new customers. What kind of customers were they? They were money laundering customers, this led to this mega settlement, therefore we are feeling the damages in the share price, et cetera. Mega settlement in money laundering valuation of ING. Because of all that, I decided to sell my shares ING.
I knew I was going to incur a loss that was not attributable to myself, but attributable to the bodies in front of me of ING. I hold them liable. All the shares were sold for just more than EUR 13. I incurred damages. If the share price is no higher than EUR 11.79, we have incurred damages. The value has declined, the sums are easy to make. My question is, I have clearly explained my question. Is management, executive board, supervisory board, are you prepared to compensate not only myself, but all shareholders? Will you compensate the damages that we have suffered as a consequence of the fine and the settlement and the decline of value of the ING share? The request for compensation is a request that I would submit to you. Thank you.
Thank you for that question.
Don't worry, we'll comment on your questions. We'll answer all the questions first, and then you will have an opportunity to raise further questions. Mr. Pepping. Yes. I think that we fully agree. For us, it was indeed a shock as well, and we really have to improve our performance in this respect. We analyzed the causes, the reasons why this all happened. We also have the facts of the Houston investigation. We, as ING, did an investigation into the causes of these shortcomings that came up over this period of time. There were five causes. One, there was insufficient attention and priority of that, and ING staff was very customer-oriented, but it's what we call business over compliance. In some cases, we didn't finalize our investigation, our research, before we contacted the customer.
With all the best of intentions, but you shouldn't do that. First, you've got to do due diligence. You've got to conclude your due diligence first and then do business with your customer. Three, looking back, we have simply not invested enough in IT data analysis and also for a couple of years. We could have done that much better, and should we have done that, we would've been able to see which customers were engaging in these unusual transactions. The workflow systems that we talked about, the transaction monitoring, data analysis, we should have invested in that much earlier, and we did so insufficiently. There was also fragmentation and the cooperation between people on the business side, risk management, and the internal audit service. People were sort of prepared to do their job properly, but only in their own area.
They didn't communicate sufficiently, and so there was no overview of the entire perspective, and that's what we need to improve. Also the escalation culture. Of course, we said things needed to be improved, but to really carry out this improvement, you have to professionally be able to say, "Okay, we disagree in terms of how to do this, so now we've got to escalate the matter." There was insufficient escalation and communication. This is what I want to say with respect to what Mr. Pepping said, and I think it was also highlighted that there were three alerts a day, and I see this appear in a number of media, but there are several risk indicators. There are dozens of scenarios of risk indicators, and for each and every risk indicator, there can be an alert.
For a number of risk indicators there had been restriction. Yes, sometimes it was three, somewhere else it was five, and somewhere else it was 10. It's still not good. That capping is saying, "Okay, we don't see enough going on, so let's not look into all these alerts because it doesn't really lead to anything." You shouldn't do that, and you shouldn't want to do that. What we really need to do is that when we see these alerts, we should immediately investigate them. Should there be better scenarios or better predicting tools, well, we will have to use them in order to make sure that risk management becomes more effective and not only more efficient. Mr. Spanjer. I don't know. You're talking about a claim or receivable. I don't really know what it is that you're referring to.
Once again, you're asking about provisions, we don't disclose provisions unless they exceed a certain amount. We're not going to do that here either. I think that the question really concerned variable remuneration. Well, yes, we decreased it, that was due to the fact that we feel that this whole thing of knowing your customer and everything we need to do in the context of our gatekeeping role globally, that we want to improve that. Hence, we felt that we had to give this signal, also internally, that this is important, and as a team, you win and you lose as well. Therefore, we reduced our variable remuneration. This was done worldwide. Also the countries that you referred to, variable remuneration was reduced there as well. In answer to the question asked by Mr. Visser.
No, not Mr. Visser. No. Well, we're going to solve that in a different way. Independent committee. Well, we discussed this on several occasions with you. There are sufficient bodies that deal with this matter that you can engage with. We don't really believe there should be an independent committee here. Now, the share price development. I can imagine that perhaps this is disappointing, but as you have seen in the graph, it is quite similar to what happened to many peers. This has got to do with economic forecasts. If you think that it has to do with the settlement, that may be the case, I don't know. The question is whether we have informed you sufficiently and at the right point in time. As Mr. van Rijswijk explained today, that is what we believe we have done.
Why didn't you issue a profit warning when this mega settlement was disclosed? You knew that the cost would only increase, not only then, but also with Russia and ING Italy. The costs are out of control, and this is to the detriment of the shareholders. Thank you. You made your point. The last two. I shall give the floor to Mr. Van den Bos and microphone two for Mr. Van den Bos.
Thank you. Agenda item 2D is still on the screen. I think that we are discussing agenda item three. Am I mistaken? No, you're correct. Oh, great. No, it's two, that's why I'm really going to shorten things. Well, the upside is that if we end this meeting really late, there won't be any traffic. Well, I called the Chinese restaurant that I was going to arrive home later. Anyway, I have a comment.
A comment for an indirect shareholder, the VEB. They sound like a trade union. The VEB said to Postano last week, "Let's split the company," now we're dealing with fines from 2017. Mr. Koster, as far as I know, he's a chartered accountant. Perhaps not. He doesn't work for a company anymore. You know with IFRS 9 that they're not allowed to do that. Now with the new rules and regulations, well, you're not allowed to do it either. That's just one thing. Another thing. I myself worked for an internal accountant service, I was there when the suspicious transactions started to be reported. Mr. Hamers, you had this wonderful presentation about all sorts of measures that you're going to take, but this is backfiring. What do I mean?
You forget to say that the bank is complying with the privacy rules because money laundering, how far do you want to go with this whole money laundering thing? There's so many factors that come into play. The government, De Nederlandsche Bank, nobody is prescribing procedures. What it is that you can ask a customer to give you and what you're not allowed to ask. Imagine, I'm a customer at ING, and they ask me, "What are you going to have for dinner tonight?" I object. I go to this authority, the privacy rules authority, and ING will once again be fined. That's what I'm trying to say. Something else is, that also greatly surprises me. From 2008 onwards, ING has been sailing choppy waters, and this has got to do with the bank crisis. I think it's rather straightforward. What's more important?
Supervising money laundering, I'm not downplaying it, or allowing your company to survive? ING was able to survive, thanks to Financial Director Koos Timmermans. I'm going to ask everybody to give him a big hand because he deserves that, because in very choppy waters, he was able to allow ING to sail its course. After this bank crisis, we were faced with a Euro crisis. After that, we were faced with Greece. That was somewhere around 2015, 2016. Yes. You can hardly be an acrobat, can you? It hurts me that Public Prosecution Service should violate its own rule. Reasonableness and fairness has not applied that. I know that the government was about to take a share in Air France-KLM, EUR 775 million was needed for that. I know where that money came from. That is why the fine was capped at EUR 775 million.
I hope the journalists are taking note of this, but it would've been much more convenient if Minister of Finance Hoekstra or someone else in the Public Prosecution Service would've said, "Mr. Hamers, why don't you buy those shares?" That way we won't offend the French. EUR 775 million. You keep it in your portfolio, but they're ours. That would've been much more convenient. That would've been cleverer. This fine is quite stiff. If you look at all the fines that have been imposed on banks worldwide, that would be EUR 300 billion in total, which is five times what the Dutch state has to repay, five times.
Thank you, Mr. Van den Bos. Thank you for that. Last question, microphone two, then we will proceed to 2E.
My name is Armink. I am Mr. Armink. I am a registered shareholder, I wanted to sing a different tune. There's been a lot of criticism here, the tensions have mounted because the board has made many proposals for improvement, I think they hold water. I think that settlement was a good idea because both the executive and the supervisory boards understood that they could no longer tolerate large or even small customers conducting illegal practices with respect to society and the tax department, as well as especially social relations. I am delighted that there are some proposals and also elaborations of these proposals to retrain staff and to introduce improvements, that for each country, a series of measures will be taken to function better in that society.
We need to understand that the ING Group has 54,000 staff members, of whom only 14,000 are in the Netherlands. Still, there's a strategy that needs to emphasize not the growth in the Netherlands, but growth in other countries, such as in Eastern Europe and other countries, such as in Asia. I would like to ask about the share in the Bank of Beijing, which was raised from 13%- 51%. Of course, there's a mindset and a strategy underlying that change. I wanted to throw that question into the forum and ask the board. I want to compliment the ING that despite all the unfortunate things we heard about here, that you nonetheless are posting a fine profit. Even if you disregard the settlement, your profit is better than it was the previous year.
Thank y`ou. We'll be answering these questions, then we'll move on to 2E on the agenda. Mr. Van den Bos. Basically, what you're saying is how can we pursue the policy against money laundering more effectively? It starts with us. What can we introduce to be more effective? It's about what we can do in our process, procedures, policy, organizational structure, and the different resources that we deploy to know our customer and to ensure that we have built-in alerts in our systems and analyze those alerts properly. That's where it all starts.
The next question is, in a world where dealing with these organized groups, discovering them, and dealing with them is increasingly complicated, how can we do that? We can do it by sharing information that according to certain legislation, we're not allowed to disclose. We can't do that, obviously. We have to find other ways of making this happen. Privacy legislation does restrict us. We have to face that reality. However, I know that Mr. Steven van Rijswijk is working with the Tax Investigation Service and other banks to see what we can learn from each other and what kind of feedback we can obtain from the Public Prosecution Service to learn from this.
I know that the minister replied to questions in the House of Representatives last week by explaining that he's looking for changes to propose in our interaction or possible legislation so that he could work with the Justice Department to see in what measure we can combat financial economic crime more effectively. Once again, that does not entirely relieve us of our obligation to operate as good gatekeepers, and that's why we launched this program and insist that we need to continue taking it very seriously, even though it may not always yield the desired results. As for Mr. Anic, thank you very much for your compliments. As for where we envisage growth, we grow especially in Europe because we offer our digital services and are distinctive from many other banks. We're also exploring growth opportunities in Asia.
To say it entirely correctly, we have a 13% share in the Bank of Beijing, and we're looking to launch a joint venture with the Bank of Beijing, specifically concerning digital banking in China, in which we would have 51%. That doesn't mean we won't have a share in the Bank of Beijing any longer. That's a very solid strategic partner for us in China. It's always good to have a local partner, and together with that local partner, the local regulator asked us to examine whether we can launch digital banking through regulations. That's a joint venture we're presently considering. We haven't completed the decision-making process about that. Ladies and gentlemen, we're going to move on to 2E on the agenda, the financial statements for 2018. See pages 143 through 382.
On 4 March 2018, the financial statements were compiled by the executive board in English, and they've been available since 7 March 2019 online. They're also available for examination at ING's head office and were available to shareholders at no charge. At the instructions of the general meeting of shareholders, the auditor has ordered the financial statements and issued an unqualified statement of no objection. We advise adopting these financial statements. I would like to ask Marc Hogeboom, our external auditor at KPMG, to take the floor and to provide an explanatory note. Thank you, Mr. Chairman. From the perspective of an auditor, it's important to me that you as shareholders have the opportunity to interact with me, your auditor, about our audit duties and our audit findings. I'm Marc Hogeboom, and on behalf of KPMG, since the spring of 2016, I've been your external auditor auditing ING Group.
In various countries and business units, local audits are performed. Then we gather our findings centrally and then write our final opinion. In the past year, we questioned the management critically and described our findings about the company that you hold shares in. Ordinarily, auditors have a non-disclosure obligation, but according to common practice, ING has relieved us of our non-disclosure obligation for this AGM so that we can elaborate on our audit statement and our audit duties and answer your questions on that topic. If you approve, I propose that we do the following in this section. First, I'll describe our duties and findings, and that will take me about 15- 20 minutes of your valuable time. After that, we will have a discussion to answer your questions, provided that the chairman gives us time.
I'll start my explanatory note based on the audit statement that you'll find from page 384 in the financial statements. First, let's start at the beginning. What did we audit? We audited the corporate and consolidated financial statements of the ING Groep for 2018 and issued a statement of no objection. We also issued an assurance report regarding the selected non-financial information as included by ING Groep in its annual report. We have an approval in our assurance statement. ING Groep is also listed on the U.S. Stock Exchange. That's why we issued a statement to the financial statements submitted to the SEC, known as Form 20-F. We also issued a statement about the effectiveness of internal audit measures concerning financial reporting by ING Groep. Both statements reflect no objections for unqualified. You see all of these summarized on the slide here.
The highlights of our audit that have been summarized on the slide for you. Once again, first, materiality. We used a materiality level in auditing the ING Groep financial statements of EUR 300 million. As you see projected on the screen behind me, the materiality is approximately 4% of the earnings before taxes, and that's within the usual benchmark for large banks such as the ING Groep. This materiality determines how intricately we review the figures. The materiality level for auditing the remuneration of board members is far lower. It's EUR 0.1 million because the nature requires this, and elaborating on the remuneration board members needs to meet far more legal requirements, which is why we use a far lower materiality than for auditing the financial statements overall.
All audit differences in the figures above EUR 15 million that we observe are communicated in writing to the audit committee and the supervisory board. The next important point concerns the scope of the audit. As stated, we are not only the external auditor for ING Groep in the Netherlands, but also conduct the audit in virtually all countries where ING Groep operates. We determine the depth and scope of the audit for group purposes and discuss the results of local audits with the teams on-site. We visited some of the countries and examined the records of the local auditors there as well. On the screen behind me, you will also see summarized that approximately 90% of all the ING Groep assets and 80% of the earnings before taxes were subject to direct audits by local auditors in multiple countries.
The remainder has been hedged to our activities for the group as a whole. I'm going to continue to the next slide. Our role in legislation regulation. That's an important topic, and several questions were asked about that. ING Groep needs to meet many regulations and comply with many laws, both in the Netherlands and in other countries where ING Groep operates. Part of our audit of the financial statements entails assessing in the event of failing to comply with the legislation regulations, we evaluate the potential effect on those financial statements. As you see, the gray bar, that's our occupational regulation, ISA 250, and indicates all laws and regulations that directly impact the financial statements and accounting that I just mentioned. At the right, you see our responsibility for the laws that do not directly relate to the financial statements. I'll tell you more about that in a moment.
There are laws and regulations that directly affect us, such as Title Nine, Civil Code two, the Corporate Tax Act, board member remuneration, IFRS EU, and IASB. Other laws and regulations indirectly affect the financial statements, such as the law to avert money laundering and financing terrorism, GDPR, MiFID, CRD4, and so on. These are just examples. The list of laws and rules that ING needs to comply with is very long. The laws and rules that directly influence the financial statement that you see on the left of the slide have been established as having been processed accurately and fully. That takes us to the right-hand side of the slide.
As for the laws and rules that indirectly affect the financial statements, if we see any signs of non-compliance, we examine whether this affects the financial statements through various audit activities to see whether an additional provision or explanation is necessary. In the event of non-compliance, we report this to the management supervisory board and regulators at ING. In the past year, we did these duties concerning non-compliance with the laws and regulations as well. We believe that ING has adequately depicted the effects of non-compliance with direct and indirect regulations in the financial statements and annual report for 2018. We've reported back this to the stakeholders we just mentioned, the executive and supervisory boards and the regulators. You see that summarized at the right.
If you look at the signs of non-compliance and the effect on the financial statements and whether a provision or an explanatory note is necessary. Finally, at the left, we provided an unqualified statement of approval, as we just said. At the right, we examine the alerts about non-compliance and report about it and notify stakeholders and monitor progression. That carries over to the three check marks in the box report to all stakeholders, reports to audit committee and supervisory board, and processing any financial statements if it's material. Now onto the highlights of the audit. The key audit matters that you've all had the opportunity to read in our long-form audit report. Key audit matters are the most significant points in auditing the financial statements. In our statement, we've included three key audit matters. First, the provision for losses on loans.
Next, key audit matters concerning non-compliance with laws and rules concerning money laundering and terrorism financing. Last but not least, IT. As for the IT key audit matters, this essentially concerns access to IT system and whether the separation of functions has been sufficiently safeguarded. We qualified them as adequate, and were able to base our audit on that. If you don't mind, I'm going to leave IT for what it is, and I'll talk about the other IT audit matters. First, the provision for lending losses. That's what's essential at ING. First, I'd like to talk with you about the uncertainty of estimates. ING has approximately EUR 600 billion in loans, which are valued at the amortized cost price, and the provision for bad loans is approximately EUR four and a half billion. This provision comprises collective provisions and specific provisions.
Estimating the provision requires judgment by management, such as estimating underlying macroeconomic scenarios, assessing the solvency of debtors, and where necessary, manual corrections to the provision. To compare the amount of provisions based on the new standard of IFRS 9, we work with our model specialists and corporate finance specialists, given the highly complex models that underlie this provision of four and a half billion. Together, we examine the assumptions, methodology, cash flows, and collateral values, and include them in the audit. Of course, we also examine, independently, the global credit records to check the specific provisions. Based on these duties, we agree with the valuation of this credit portfolio. My personal assessment of the provision is that it's justified from neutral to mildly cautious. I'm going to tell you about our second key audit matter, instances of non-compliance or alerts concerning non-compliance with the laws and regulations.
How did we report our findings to the executive and supervisory boards in the cases of failing to comply with the Financial Supervision Act and the resulting settlement? Since we were appointed in the spring of 2016, we learned that the Public Prosecution Service was investigating ING. Since then, we've spoken each quarter with the board and reported to the audit committee and the supervisory board regarding our findings on investigations into the procedures to prevent money laundering and the European Central Bank and De Nederlandsche Bank, the regulators of ING, receive reports about our findings concerning procedures to prevent money laundering and pending investigations. Monitoring compliance with the Financial Supervision Act and its enforcement is mainly the purview of De Nederlandsche Bank. We also informed the AFM about this.
We also review the content of our reports at least twice a year and present them to the joint supervisory team where the European Central Bank and De Nederlandsche Bank together monitor ING. We're also required to report unusual transactions to the Financial Intelligence Unit, which is the successor to the MOT hotline, which operates within the national police. We assess the need to file a report in performing our regular audit duties. In its financial statements for 2016, ING had already reported the pending investigations by the Prosecution Service and uncertainties about the outcome as to what extent enforcement through, for example, penalties might be significant. There are some slides relating to page 388, listing 12 actions that we took. I thought it was important to bring this to your attention. This brings me to an important question, ladies and gentlemen.
Could you have been informed earlier about the amount of settlement in September 2018? I think that many questions have already been asked about this in the past hour. On page 388 of the annual report, you have read in our statement that we believe that the EUR 775 million settlement with the Prosecution Service was listed timely, accurately, and fully in the 2018 financial statements and has been adequately explained. I have deliberately used the term "timely" to provide an explicit answer to the question as to whether this item should have been listed at an earlier point, for example, in the half-year figures for 2018 or in the financials for 2017 as a provision. No is the answer. I firmly believe that ING could not have disclosed the financial impact of the settlement with the Prosecution Service or a potential penalty earlier.
For example, in the half-year figures for 2018 or the 2017 financial statements. The IFRS accounting rules do not allow a provision to be included if it cannot be assessed specifically or is deemed reliable. Based erring on the side of caution and including an amount is not allowed without having a sufficiently reliable estimate and could even mislead you as shareholders. In addition, in the Netherlands, settlements are set forth in the instructions concerning high transaction and special transactions issued by the government. This is good reading material because it discloses whether or not settlements come about. This instruction argues that the intended transaction needs to be submitted to the minister by the Public Prosecution Service so that the Minister of Justice can determine whether he would like to take political responsibility for the intended settlement or believes that this should be submitted to court.
In addition, the party concerned can always refuse such a transaction and have the case go to court. Until the moment the transaction was approved on 3rd September, ING had no cause to be certain whether a settlement would come about or the case would go to trial. The guidance of the financial consequences of a court case or settlement was so broad and ranged from a potential penalty following a court case to an amount of the potentially agreed settlement. The uncertainty concerning estimating the potential settlement was therefore so great that management could not possibly make a reliable estimate to enter the provision according to the reporting rules. My coworkers and I challenged management extensively on that and reviewed all the records.
Following up on the above, I confirmed that explanations concerning the investigation by the prosecutor concerning 2016, 2017, and 2018 by ING and its financial statements meet the set requirements. You'll have seen the slides, and if you read them properly and compare them, you'll be able to see exactly how the case progressed. Consider that in 2016, ING did not know, for example, what it knew in mid-2018 because you cannot explain something you don't know. Briefly stated, since the financial statements of 2016, ING has been explaining that the Public Prosecution Service is conducting an investigation and that the financial outcome could be significant. About the improvement program, which you see at the right of the slide. I just spoke about that. The ING board launched a global program to improve procedures to avert money laundering by its customers. This should be ongoing.
This improvement program derives from the shortcomings observed in the Netherlands. In my view, you as shareholders should be well-informed about this program. This information helps assess risks and as such helps you value your share. We've spoken with the management about this repeatedly. In the annual report, the global program has been elaborated in detail and explained and is likely to continue until the end of 2020. Throughout the year, we regularly attended board meetings, Audit Committee meetings, and Supervisory Board meetings. Note that the improvement program is receiving sufficient consideration by all these bodies. Given the extent, duration, and complexity of this improvement program, we expect that it will continue to require time and attention in the years ahead.
It's therefore important for you to take note of the corporate governance statement that you have undoubtedly read on pages 120 and 121 of the annual report, where the ING Executive Board confirms that compliance with the law and regulations is their top priority and that the global ING organization is working hard to ensure structural improvement of KYC and CDD to avert money laundering and to improve procedures against it. It also says that the Executive Board cannot exclude the risk of non-compliance but is committed to bringing about structural improvements while attending various audit and risk committee meetings during the previous year. I perceived this commitment on the part of the Executive and Supervisory Boards. I'd like to tell you a bit about the current situation.
You've rightly asked many questions about where we stand today. Once again, the auditor has a role with respect to events after balance sheet date. After 31st December, through the auditor statement in early March, even up to today, 23rd April. I'm going to elaborate on this. In our audit, we also examined the potential impact on the 2018 financial statements of events that occurred after the balance sheet date but prior to the date on our audit statement for March 2019 and before the publication date. Based on our professional rules, we assess whether such events materially influence and require listing in the financial statements or a separate explanation. It's a good idea to identify the ING Italy situation specifically for you, after all questions have been asked about that.
On the date of our audit statement, the local regulator, Banca d'Italia, was known to be investigating procedures to avert money laundering at ING Italy. ING, as Mr. van Rijswijk mentioned, always has pending investigations by regulators. On page 274 of the financial statements, I quote.
Are involved in governmental, regulatory, arbitration, legal proceedings, and investigations in the Netherlands, and in a number of foreign jurisdictions.
On the date of the audit statement of the financial statements, there was no report available of the local regulator. Therefore, the outcome of this investigation was not known. Neither of this has been confirmed in writing by the ING management and by our external auditor for ING Italy. Previously, we as well as the management, reported to the Audit Committee and Supervisory Board that local authorities in Italy had launched an investigation and that the outcome of this investigation was not available yet. Management therefore concluded regarding the events after balance sheet date, that the investigation in Italy had no financial impact on the 2018 financial statements and did not require a separate explanation complementing the general explanation that I just read out to you.
Based on our duties, as confirmed by my counterparts in Italy, we support management's conclusion that the progression of this investigation between the date of this financial chart, 31st December, and the date of our audit statement publication of the financial statements do not require adjustment or additional explanation in the 2018 financial statements. Finally, we assessed whether these events before the date of our audit statement and today, 23rd April, should be cause for adjustment or explanation in the 2018 financial statements. That is not the case. Now I'm going to wrap up, Mr. Chairman. On sixth September 2018, the VEB asked ING, EY, and KPMG questions about how the settlement on third September 2018 came about, how it was processed in the accounts, and what duties ING, KPMG performed following the noted shortcomings in compliance with the Financial Supervision Act.
On Friday, 19th April of this year, ING published the answers to this letter. You all have had the opportunity to read it prior to this meeting, and it was also part of your information kit. I'll elaborate on this without any assessment of the period from 2010 through 2015, because we and I have been the auditors only from the spring of 2016. From the spring of 2016, KPMG reported its findings to the Executive and Supervisory Boards about CDD and CAM and informed them of their responsibilities. This is also indicated in the replies of the ING to that letter from the VEB. I can tell you that to the extent that the answers in this letter concern the role of KPMG, the answer is correct. This is the end of my explanatory note, I'll be happy to enter into a discussion with you.
Because of the size of my audit record, I may ask for help from my coworkers behind me and here in the room. That was it, I'm pleased to hand you back to the Chairman.
Madam chair.
Thank you. Who has a question for this item on the agenda? I see that microphone four is ready to go. You saw right. Mr. Hoogeboom, right?
First of all, I would like to compliment you on the very clear presentation, the way you explain things. The way I see it, I think that this was indeed what happened. Of course, you refer to legislation, and you cannot make a provision if you don't know exactly what the damages will be. There was something else that surprised me. A loan portfolio of EUR 600 billion, EUR 4.5 billion has been reserved, which is 0.75%. Don't you think this is a bit on the low side? Because the way I see it was always above 1%, 1.25%. I think the provision is very low.
Of course, you can say, "We're doing well in the Netherlands." I have my doubts. I have another question. Since 2016, you are the successor to EY. There's been consultation, work was transferred. What are the essential audit items, things that you say, "These things didn't work out right." With the knowledge they had at the time, they acted properly. In West-Friesland, we always say, "It's always easy in hindsight to see how things should have been." Of course, after the fact, everybody knows what should have been done. Those are my points. Something else. Last year, I thought that I'd given you a mark six out of 10, but now it's eight and a half out of 10, you're doing better. Thank you. Microphone number three.
I'm a private shareholder from the south of Amsterdam.
I have a comment and a couple of brief questions. My first comment is, I formulated the same question last year as well. Can't you, for the private shareholders in the know, can't you make an abbreviated version of the annual report, a balance sheet, profit and loss statement, and the statement of the executive board? It's a whole lot of information. With all due respect, I read it with a great deal of interest, but not everything. Now, a couple of questions. Brief questions. First, page 149. It says maturity investments MA. N/A means not available, and then that is passed on to financial assets, FVOCI. What's that? No idea. Financial probably. Other comprehensive income. I always thought that operating cash flow should be positive. I think it's on page 19.
There, indeed, you have an operating cash flow positive. They have this one line, other, which amounts to EUR 4 billion. You state that separately. What does that mean? My last comment, question. Your core operations are quite simple. Attracting money, investing money. Investing money at a higher margin, preferably. Page 149, on page 185, here you say, the difference is in amounts held to central banks in excess of EUR 19 billion-EUR 46 billion. My question is, don't you think you're attracting too much money? Don't you think that European Central Bank, if you place your money there, you've got to pay for that? I'm looking forward to your explanation.
I'm not quite sure. Mr. Hoogeboom, he doesn't have a notepad, I don't know whether he's keeping track of all these questions.
I don't know whether you asked all these detailed questions. What are you going to do with an abbreviated version?
Mr. Van den Bos, thank you for your questions. Question on IFRS 9 is quite an appropriate question. IFRS 9 is a complex standard. It is the standard that gives guidance for the provision. You gave part of the answer. We are in what we call a benign credit environment. The sun is shining upon us. The important variable in IFRS 9 are the macroeconomic scenarios. Whether we like it or not, they look quite promising. At the same time, we also look at the past. ING also has a very good track record in limiting loan losses.
Together, that leads to the fact that by working very hard globally, looking at all these models, all these thousands of loan files, that it has been properly accounted for, properly valuated, I would say even cautious rather than aggressive. That's your first question. Second question. Given the global transition, yes, indeed. The auditor from 2015, and before that was Ernst & Young. This is part of a worldwide transition. ING is not only a Dutch bank. It's also one of the largest systemic banks in the world. We are onboarded to get to know the people, the systems, the processes. Very valuable. That way you can start on a good footing. Your question.
It's an excellent question. My professional rules, I'm not allowed to disclose what we would've or would not have found at the time. Well, it's not that I'm looking for a scapegoat. The thing is, once again, in view of what we knew at the time, you did your audits. Were there any substantial things of which you would say, "Well, they should have perhaps done in a different way"? As I said earlier on, if you look at the entire timeline, the bank crisis, the Euro crisis, the Greek crisis, that, of course, they had to deal with myriads of things. Let me refer to myself. I had a different audit approach than my colleagues had, for instance, which is why my colleagues, unfortunately, actually never found anything. I took a different perspective. I would find things. That was our impression. Yes.
Please, Mr. Wijers, stop joking. No snide remarks. If anybody's going to give snide remarks, it'll be me. What I'm trying to say is that EY and KPMG, I am once again not looking for scapegoats. I just think that the EY people did a good job, and I gave you better marks now, did I not? Was there anything substantial? Yes, but that's it. Let's put a stop to this. What I can say that we started in spring 2016, and at the same time, and Mr. Ferreira pointed this out, ING, immediately after the visit of the Public Prosecution Service and the Fiscal Information and Investigation Service, we started looking at things and checking whether the right decisions had been taken and there's also this resolution, the FIOD resolution. We looked at that and we checked on things, and everything was properly done from spring 2016 onward.
I'd like to leave it at that.
Yes, loan provisions, Mr. Van den Bos, Mr. Horvem already answered that, and that there's a prudent provision. Well, is this a high or low provision? Well, that's a tricky question. We are a low NPL bank, so our losses, in general, are relatively low, in comparison with this sector. Our non-performance loan percentage, the bad loans, is about 1.5% as per the end of last year. That just gives you some idea of the provisions in your balance sheet at the end of the year, that they're relatively limited. Well, that is with the knowledge that we have now, and of course, if we're faced with a crisis, I'll shoot you. If there's no crisis, I will celebrate you, pick you up and celebrate you. Okay, I'd go for the latter one. Okay.
To my right. You asked an excellent question. We really had to look through the financial statements, but if you look at the cash flow statements, in a bank, things work differently than in a manufacturing business. If you look at our operating cash flow, you see that if we have more loans outstanding than last year, if we grow, you see a negative cash flow simply because we have more loans outstanding. In that respect, the cash flow statement should be read in a different light than you would for a manufacturing company. I was talking about operating cash flow. Yes. Exactly. Operating cash flow has all sorts of instruments and valuations and growth in our investments that we need to make for reasons of liquidity, for instance, or our good loans.
As soon as we grow in liquidity or cash equivalents that we have in bonds, for instance, then the cash immediately becomes negative. Sounds funny, actually what it means is that we have more working capital. The working capital is the outstanding loans with our customers. That's why in a bank, sometimes you see, depending on whether we grow a lot or not, whether you see a difference in numbers being positive or negative. Back to the fair value and other comprehensive income. If you look at page 154, you will see that we moved from IAS to IFRS 9 and that there've been many reclassifications of instruments from one balance sheet item to the next, and that obviously all had an impact on the cash flow statement. That is what you can see here.
A third question, because I think you were referring to a discussion we had earlier on. If you have to leave the money with the ECB, why are you doing that? There are different ways you can look at this. First of all, we want to have primary customers. Mr. Hamers tends to refer to that. We want our customer base to grow, and on our platform, we want more customers. On the one hand, that means that you may be incurring losses with some deposits, you can make a profit with other deposits. If you look at liquidity-technical considerations, what you want to have is relatively stable capital in terms of liquidity or cash equivalent position. Sometimes, you may have money, but you want to have enough liquidity, and that's also what our regulators demand. Liquidity Coverage Ratio is also important.
That has to exceed 100%. Sometimes you need more liquidity that you wouldn't need in terms of operations, but you need it in order to have enough liquidity in times of crisis. I hope that one day you'll pick me up and celebrate me. That is the reason why we sometimes keep additional liquidity that doesn't really give us a return, but you may need it. It's quarter to 6:00. This is point 2E on the agenda. We really have to speed things up. A maximum of two questions per person, I'm going to turn to a debutant. Microphone 5.
Thank you. I shall introduce myself, Chris Dane. I have a modest number of shares with my holding, Fauna BV. I'd also like to compliment you on your presentation.
Eight and a half out of 10 is quite a high mark. Too high. I think a B is in order. Presentation is very good, compliments for your performance, your financial performance, I think, as well so far. Very clever. Question to the accountant. There was a lot of talk about culture improvement program this afternoon, quite extensive. What is your opinion on the culture from 2016 when you started and now? I'm talking about people, culture, internal controls. What kind of mark would you give to the internal controls in 2016, and what kind of marks would you give it now on your way to the 10 out of 10 in 2020? Culture and how do you assess internal control measures? Please go ahead.
Culture and tone at the top, very important elements. At the same time, it's very difficult to give it points.
It is encompassing, it's important to finish this. I started in the spring 2016, as I said, I can't give you an opinion on the period preceding that, I really sincerely feel if I look at all the measures that were taken, the improvement program, that the culture, the tone at the top, the management, Executive Board, Supervisory Board, that is good. Is it simple? No. Is it complex? Yes. Does it have to be global? Yes. Is it going to take a long time? Yes. Thank you. With respect to the internal control measures, at the time, the marks were bad. I don't like giving marks. I don't like giving marks, I am a number man. You saw that on the left-hand side. It's a faithful reflection of equity and performance.
Same time, we issued an unqualified statement for the internal controls. This is proof of the fact that management is not only taking this seriously, but is also, well, in control in terms of reliable financial reporting, and they're very serious about that. You don't want to give them a mark. No, Chairman, I have one question concerning the provisions of which you said, well, you enlisted what is allowed and is not allowed according to IFRS. Now I'd like to come back to the question I asked Mr. van Rijswijk about U.S. taxes. There's this sentence here that says, "While a provision has been recognized, the review of such issues is ongoing." Okay. The question is, how come that you do have a provision for that, but you don't know what the magnitude is?
Do you know what the magnitude is, but you still don't know whether it's a serious case or not? Well, I can help you. It's not a serious case. It is well under control. Since Q1 2017, we are taking a very close look at this. There's a minimal provision, which is correct and full, and this program will reach its end shortly. Well, that helps. Thank you. Question about sanction policy that is being pursued in order to avert any violations and sanctions. Is that also part of your new approach? Yes. Well, we're in charge of a number of things, but not sanction policies of a company. We do look at the measures taken by management or in management, have been processed and accounted for properly in the financial statements, and I can confirm that that is the case. Thank you. Microphone two.
I look at KPMG through the chairman, and they have just been pleading absolutely in the benefit of ING and its bodies. At the end of the day, there are shareholders, and shareholders are owners of ING. I heard lots and lots of questions here at the shareholders meeting to which no proper answer was given, not even by the VEB, and I'm also a member of that, and I also made a number of comments about the whole money laundering thing. My question is whether you can guarantee the completeness, the correctness, and the reliability of the information that was given, and given everything that has been discussed at the annual statement and that has not been answered satisfactorily. I would like to hear a crystal clear answer from the responsible people in the Executive Board and the Supervisory Board. No release of liability.
That will be discussed later on, and we'll be asking questions then. My answer is clear already. I would like to hear your comment. What kind of comment would you like? Well, you just argued in favor of the Executive Board and Supervisory Board, so you should answer. Well, perhaps you could ask the question in one sentence. Well, a lot has been discussed. Not all questions have been answered. Can you, at this AGM, guarantee the completeness, the correctness, and reliability of the information provided, also in view of what has just been communicated in the arguments in favor of ING Group? You can rest assured that we did our utmost to answer all your questions as completely as possible. Yes. Well, no. That is the answer. No. We're not going to dot the I's and cross the T's and discuss legalese.
One more question from microphone two and one in microphone one.
Thank you, Mr. Chairman. My name is Stevens, SRB. Two questions. Two to Mr. van Rijswijk and two to the auditor. Four questions. One for the auditor, one for Mr. van Rijswijk. You never said that. Well, I just clarified. Nonetheless, we would like to dive into the essence of the investigation, of the audit, rather. When you do audits at these tiny branch offices, branch offices that probably think, "Oh, well, they're not going to audit us very carefully, are they? Doesn't really matter." Well, you might think, "Well, we're going to keep an eye on them now." Do you announce that beforehand, or you drop by unexpectedly? This is what happens. I know how the auditors work. They do their audits at random.
When they announce that they're coming, all of a sudden everything is in order. Thank you. You don't have to explain. Now the question to Mr. Wijers. The EUR 775 million, the EUR 1.7 billion of Miss Kuch is still worrying us. We were thinking, wouldn't it be possible to refer the government to Brussels and pick up the EUR 775 million there? Thank you. Oh, that's a very sharp question. The English have a great word for that. Remote entity risk. The small entities, ING has very small entities where nobody ever comes there, and we have surprise audits there, so we don't announce that. In the scope 90%, 95% of assets and profit before taxes. Well, we do that every year. We will communicate that with the country, the Netherlands, Belgium, Germany. We always visit those countries full scope.
You have a couple of countries that we don't really check up every year. We vary there. In order to make sure that we check the situation in all corners of these countries. I'm sorry, we're not going to engage in a debate. I'm sorry. We are very much behind on schedule. Answer the second question. I don't know what you mean when you refer to the EUR 1.2 billion. Well, it's been discussed on several occasions. I note that there are two entirely separate cases, and the EUR 775 million have already been paid. Mr. Spanjer.
Mr. Wijers, you mentioned my name. I also have two and a couple of questions for the auditor. In which small countries did you do a raid, a surprise operation, and can you mention the names of those countries?
And liability, director's liability EUR 100,000, were you also involved in the Koos Timmermans situation? My third question- You don't have a third question. I do. Then you should have started earlier with this meeting, not at 2:00 P.M. Stop. That's it. My third question is IFRS 16, what are the implications? Go ahead.
Let me start with IFRS 16. You will have followed ING closely for years and years. How do you know? Well, I saw you here the past three years. Anyway, you will have seen in the notes at the back of the financial statements as ING has about EUR 1 billion, EUR 1.5 billion in off-balance sheet commitments, which includes lease liabilities, and according to the new standards, you have to go through things contract by contract and determine whether or not they will be placed on balance.
ING has done that work, and part of the amount will be on balance, and a small amount will be off balance, and that hardly has an impact on the results. That is the answer to question regarding IFRS 16. The €100,000 question, that's a materiality that we use for remuneration of directors. Given the sensitivity and the nature, I can tell you that we look at it bit by bit in order to confirm that in terms of primary, secondary remuneration, incentives, et cetera, that everything is correct, and I can tell you based on our audit that that is the case. There was a third question. No, there was never a third question. Oh, yes, there was.
Can I answer the third question? Well, okay. Okay. An important country that we have in scope for the first time this year is Romania.
It's very small in terms of ING. It's less than 1% of assets. In auditor's terms, that's a small country. At the same time, locally, it's one of the biggest banks. We reported that. We said that it's important for us to take a look there to see what is going on there. Thank you, ladies and gentlemen. We are going to vote. We are going to vote on the financial statements. Financial statements 2018 need to be adopted, and I shall give the floor to Ms. Froukje van Osch-Zeelenberg so that she can explain the procedure. Yes, I explained the procedure earlier on today. I'd like to leave it at that. We can now proceed to vote on item two E, which is annual accounts 2018. Vote is open. You can cast your vote. One minute. Something's not working. Please vote. Cast your votes.
Does anybody need assistance in voting? Please raise your hand. Vote is closed now. There's one person who seems to need assistance and hasn't received it. What is the outcome? 99.99% has voted in favor. Thank you. Item three of the agenda, three A, which is the profit retention distribution policy. I'd like to refer to pages 61 and 64 of the annual report. You know that ING aims at a healthy core capital ratio for fully loaded core capital ratio in excess of the 11.8%. ING also has a comfortable management buffer that encompasses the guidance with 14.5% as per 31st of September 2018. We comply with these requirements. ING also aims for a payment of a progressive dividend, in which dividend proposals are also based on growth possibilities for the group and developments in rules and regulations, et cetera. Who'd like to take the floor? Nobody.
We can take note of that and proceed to item three B of the agenda. Oh, I'm sorry. I apologize. I have a brief question. Is your cash flow on track to distribute a good dividend in the future? You've got quite a bit bearing down on you, Russia and everything else, we've got a long way to go. Now, what do we review when we distribute dividend? First, we check our present capital buffer, then we examine the impact on our present capital buffer in terms of the Crimea exercise, and then we examine the earnings we expect to generate in the future. We see how we can use those first to continue improving our capital. There's the impact of Basel IV to be accommodated in the capital to continue growing and to continue paying dividend.
As for this year, we feel comfortable that paying out the EUR 0.68. That takes us on to 3B on the agenda, which is the dividend for 2018. That proposal has been included in the explanatory notes to the agenda as part of the convening notice on net earnings for 2018 equal EUR 4.703 billion after adding EUR 2.057 billion to the reserves. That leaves EUR 2.646 billion available to the general meeting. The proposal is to distribute a dividend for 2018 amounting to EUR 0.68 per ordinary share. Considering the interim dividend of EUR 0.24 paid in August 2018, the final dividend will equal EUR 0.44 per ordinary share. As a final dividend, this will be distributed in cash, retaining 15% Dutch dividend tax. The Supervisory Board advises accepting this proposal. Who would like the floor? If nobody wants the floor on that, we will vote.
We will start voting on agenda item 3B, which concerns the dividend for 2018. Please cast your vote. The vote is closed. The result is that 99.794% has voted in favor. It is hereby adopted. That takes us to item four on the agenda. We propose voting jointly on 4A and 4B. Ladies and gentlemen, this is granting discharge to an Executive or Supervisory Board member for performance of their duties and supervision. This waives any claim on the Executive or Supervisory Board member, and this leads to discharge from responsibility of that Executive or Supervisory Board member with respect to the company. As described at length this afternoon, 2018 was a very disappointing year in several respect, including for the Executive and Supervisory Board members. Considering the disappointment that also became apparent from our extensive contacts with shareholders in the recent period.
Some shareholders are unwilling to grant the discharge that have been requested. We understand that shareholders are expressing their disappointment in this manner. Of course, we take a different view and do not need any encouragement. Of course, we do respect the opinions of shareholders. Who would like the floor on this item? Very briefly, Mr. Chairman. I apologize for interrupting you. I should have.
Establish that the financial statements have been adopted. This is the discharge item here. That's what I want to talk about. It was discussed at length, including the incomplete answers to the VEB, that there has been internal audits throughout the ING Group. The policy that has not been exhaustively accounted for, leads me to the conclusion that I presented to you regarding holding the Executive and Supervisory Board members liable, that these board members should not be granted a discharge because of their misleading policy that is not appropriate or acceptable. Thank you. Microphone three. I'm Margriet Stavast from PGGM. We believe that as ING shareholders, we have an obligation to our participants to account for votes on the policy and supervision of the firm in which we invest.
The most important task of the board supervised by the Supervisory Board in a system bank is to safeguard public confidence in the bank and the bank reputation. In 2018, two important issues that had a negative impact on the reputation of ING and led to negative public sentiment with respect to the bank. The first, with the proposal of the Supervisory Board to increase the base salary of the CEO, which was withdrawn five days after it was published. The second was the settlement with the Public Prosecution Service. These two matters are cause for us to vote as follows regarding the requested discharge for the Executive and Supervisory Board for performing their duties in 2018. We will not support this proposal for discharge of the Executive and Supervisory Board members. I am Mr. Van den Bos. I believe you already know my name.
What bothers me, it is a tangent. Discharge to the members and former members of the Executive Board. It is a former member of the Executive Board. Unfortunately, Koos has been ejected from the troika. Why was he ejected? Because he supports the Feyenoord football team. Nowadays, the government is a very capricious Sorry. No matter whether it is fine or inclement weather, you never know where you stand with the government. No matter what we vote in favor of, including the pension funds and the PGGM, that has not granted any indexation increases for years, is voting against this. By granting discharge, you leave open the possibility that individual board members may be prosecuted by the ministry, by the Public Prosecution Service. That lady we all know.
The point here is that you reached a settlement, and then you suddenly cry out that public opinion requires somebody being ejected from the Executive Board. Somebody has to pay the piper. Mr. Hamers is a good narrator. Mr. Dijsselbloem sings, "Well, let us get rid of Koos because he supports Feyenoord football team." I can say this out loud because all you other members support the AFC Ajax football team. If you grant a discharge, then afterwards the board members may be held accountable by the Public Prosecution Service because you settle, and then a few days afterwards, the board member has to leave. I hope that I did not wake any sleeping dogs at the Public Prosecution Service. Yes. I will wait a moment, Mr. Wijers. No, you have got my attention. Well, I just waited for you to finish your comment to your colleague.
Imagine if they crack down on Mr. Hamers. It is all very well and good to grant them a discharge. I am not voting. I might have voted in favor, but I am not voting. My question is whether Executive Board members can be held accountable for all of this afterwards, because I think that the government is capable of that. Microphone one. Mr. Tjip, you were extremely quick. You were going 150 miles an hour. You said if we vote in favor, then we will also make sure that the members of the Executive Board can no longer stake any claims. We will be certain that Mr. Koos Timmermans won't get any more problems. Why is not Mr. Koos Timmermans here now? That is the flaw in your policy. Thank you. Okay, Mr. Koster. Although many things went well, unfortunately, I oppose the discharge.
This is simply because, in my view, there are important aspects of the internal audit that do not properly disclose where we stand now as a result of everything that happened in 2018, and I hope it's not so bad in the end and that I feel differently next year, but right now, I'm not able to grant that discharge. Very well. We've had questions about what that discharge entails and what it does not. I'm giving you the floor now. Yes. The discharge is requested at the shareholders meeting for the executive and supervisory board members in the company to indemnify them from any claims by the firm holding them liable. That's what it involves legally, that's standard practice at shareholders meetings.
For the record, I would like to repeat what has been communicated at length and appears in all the documents, which is that the Public Prosecution Service did not find any conduct or actions in the course of its investigations on the part of individuals indicating actively facilitating money laundering, but that it was simply an organizational failure. The investigation of the Public Prosecution Service didn't qualify any individuals as having engaged in conduct meriting reproaches. That was the reason for the settlement. I have one more question, Mr. Wijers. One more question from you have one more comment or question, then we're going to vote. It would behoove you to call a spade a spade, that it was not the fault of Koos Timmermans. He's known far and wide for his integrity and skill.
I'm not defending anybody here, I and many people I spoke with at the top of other companies listed on the stock exchange are hurt that the headline in the De Telegraaf newspaper read, "Koos is unemployed." You, as chairman of the supervisory board, should have reacted forcefully about that. Mr. Breukink was up to that task and was qualified as an ING supervisory board member. He did that at his own initiative, he has guts in my view. If Mr. Hamers said from England, "Do you have the impression that any bankers are going to come here?" The immediate thought that Mr. Hamers was whining about his salary again. Why don't you just look and see what somebody means?
That's why I would say, Mr. Hamers, do not grant any press interviews for the next two years, because the way I see it, you're being misquoted. Mr. Wijers, I expect you to sing the praises of Mr. Timmermans. Thank you. Mr. Freke. Given all the comments, I propose that Jan Kees de Jager or Jeroen Dijsselbloem serve on the ING supervisory board because both have an extensive track record in supervision and might benefit ING. Mr. Dijsselbloem or Mr. Jan Kees de Jager would have the opportunity to demonstrate their skills in supervision. Given all the criticism that might accommodate the discharge that people are unwilling to approve. Thank you for your voluntary advice. I'd like to respond to Mr. Van Boosschut's remarks. In the settlement with the Public Prosecution Service, the problem was attributed to organizational malfunctioning.
There was no comment about the integrity of any staff member. It does not bother me to say that I am convinced of the quality and integrity of Koos Timmermans, and we're very sorry to see him take the consequences that he did. Ladies and gentlemen, we are now going to vote on this agenda item. Excuse me. We cannot have a joint vote on 4A and 4B. First, we will vote on the discharge of the members and former members of the Executive Board from their responsibilities as they performed them in 2018. You may now cast your vote. The vote is closed. 62% has voted against this item, so no discharge has been granted to the Executive Board. We will now vote on item 4B, which is the discharge for members and former members of the Supervisory Board for their responsibilities in 2018.
Please cast your vote.
The voting is closed.
The vote is closed. This proposal has also been rejected by 62.73% of the vote. The Supervisory Board members have not been granted a discharge. Ladies and gentlemen, this result deeply disappoints us. It is not entirely unexpected given our contacts with shareholders in recent months. We understand that this expresses the disappointment after the huge settlement that we reached. We, as the Executive and Supervisory Boards, see this as encouragement to work on our know your customer improvement program that we've been working on since 2017, and to introduce some company-wide other improvements that endure. On to item five of the agenda, which is the reappointment of the external auditor. That's agenda item five. We propose appointing KPMG accountants, reappoint them to audit the financial statements for the 2020 through 2023 financial years. At the 2015 AGM, KPMG was appointed as external auditor of the ING Group.
For the 2016 through 2029 financial years, this auditor's firm will conduct the audit and report on it. The Supervisory Board's proposal deriving from a thorough evaluation by the Supervisory Board Audit Committee, covering independence, quality, relations and composition of the audit team, and compensation led the Supervisory Board to recommend a reappointment of KPMG for four more years, and the Supervisory Board has adopted this recommendation. If you have questions or comments. Mr. Van den Bos. First, I'll give the floor to the gentleman who's younger than I am for the sake of decency. Mr. Chairman, the first question that comes to mind is whether that same auditor also audited the period when, let me put it this way, mismanagement was taking place. That question was already answered. The answer is no. I agree. Thank you.
Mr. Van den Bos, were you only the director here or do you have a remark? I have a remark. Otherwise, I wouldn't be standing at this microphone. I'm not a mercenary. It's as simple as that. Please go ahead. Thank you, Mr. Wijkenecht. Mind the time. Yes, I've called them to make that Chinese dinner later. Okay. The figures were increased considerably, that's fine. No problem. About four, I'm also disappointed you didn't give me the floor earlier. I'm also disappointed as a discerning shareholder, and I personally believe that the only person that could be held to answer regarding the entire course of events, but once again, looking back in time, the only person could be Mr. Breukink, because he's been on the board for 12 years, and all the others, Mr. Hamers joined later, and Mr. van Rijswijk joined even later.
Mr. Timmermans has been at work, and Mr. Flynn joined later as well. From my perspective, what can we accomplish? That's why I don't understand that the entire policy and 4A and 4B, I don't understand that massive vote of opposition. I think it's very odd. Now we're going to vote about the appointment of KPMG, as was just expressed. We're going to vote on agenda item five, which is the reappointment of the external auditor. Please cast your vote.
The voting is closed.
The vote is closed. As you see, the proposal to reappoint KPMG has been adopted with 98.86% of votes cast in favor, rounded off upwards. Now onto the composition of the Executive Board, item six on the agenda. This concerns the appointment of Tanate Phutrakul as member of the Executive Board at the end of this annual general meeting.
Thank you, Mr. Chairman. I'll just be very brief because you read my CV already. The only thing I would like to say is that I've been divisional CFO for various part of ING for a number of years, and if elected, I look forward to helping ING as a member of the Executive Board. Thank you very much.
Thank you so much. Who has a question or a comment? Mr. Van den Bos.
With the previous CFO, no, not the person before him. That was Mr. Flynn. After four years or more in the Netherlands, he still didn't speak Dutch. I'm curious whether Mr. Tanate will master Dutch quickly, because if I understand correctly, he worked in Belgium for a while too. Now I am aware that many Belgians speak Dutch. The question is whether he might be proficient in the Netherlands and be able to speak it at the next AGM. Well, that's not a job requirement for his position, but I would imagine that he practices his Dutch when he buys a loaf of bread now and then. It's not a requirement for this position. I would like to open the vote on his appointment if there are no more questions. We're going to vote on agenda item six, the appointment of Tanate Phutrakul.
Please cast your vote.
The voting is closed.
The vote is closed. Okay. 99.274% of the votes have been cast in favor.
Ladies and gentlemen, we now move to item seven, the composition of the Supervisory Board.
The composition of the Supervisory Board. Ladies and gentlemen, we aim to have at least 30% women and 30% men on the Supervisory Board. Regarding the unexpected resignation of Ann Sherry in September and the upcoming stepping down of Henk Breukink led us to start an intensive search for new members of the Supervisory Board. It's not that simple because many legal requirements need to be met with respect to the composition, including background knowledge, experience, other duties, other responsibilities, conflict of interests, other pursuits, and a great many other things. Given the reappointment of Mariana Gheorghe and the appointments of Mike Rees and Herna Verhagen, as of 1 October, there will be one third or 31.3% women members on the Supervisory Board. I believe that we meet many other criteria concerning diversity and different backgrounds. I'm going to open up the proposal about reappointing Mariana Gheorghe.
The proposal has been explained on the agenda at item 7 (8). We have clearly indicated that we are delighted and very much look forward to having her on the Supervisory Board. Given all the hats she wears, who would like to ask a question or make a comment? Mr. Warris, you're juggling figures, 30% women, 30% men. The FVC should consist of 100%, at least. You're talking about the Supervisory Board, 100%. One third, you said 30% men, 30% women. What happened to the other 40%? What 40%? Are they transgenders? You're very intelligent. I said those are the minimum criteria to fulfill. With the appointments of Mariana Gheorghe and Herna Verhagen, we do meet the requirement of 33.3% of the Supervisory Board in that type of diversity. There are other types of diversity that also matter.
Who would like to discuss the candidacy of Mrs. Gheorghe? I'm Mr. Stevens from the SRB. We would like each of the individuals standing for election to the Supervisory Board to explain why they want to become or remain Supervisory Board members. Okay, Mariana.
Explain why you are available for next term.
I'm afraid I have to speak in English. I apologize for that. I have accepted to candidate for the new mandate because I do respect and like what this bank does for the Netherlands as well as for the market it operates in. It gives me a great honor to be in this board. It's very challenging, I have to tell you. I think it's easier for me this year for this new mandate because I just stepped down from my position as CEO last year. I do hope I will have more time to dedicate to this board. Thank you.
Thank you. We will give the other candidates an opportunity to explain their motivations.
Give the other candidates an opportunity to explain their motivations. Let's vote now on the reappointment of Mariana Gheorghe. Mr. Chairman, may I recommend to you, it seems wise that before opening the vote on this, you have these individuals specify their qualities because we just heard something in English. I don't understand it. I don't know why we should vote in favor of these people. What are their special attributes? I am referring to all three of them. Well, the idea was for the two new candidates to introduce themselves in a moment. You'll certainly hear that.
That will in part be in English. That's why you have a headset, as we just explained. You can understand what they're saying. I assumed that you could still remember how Mariana Gheorghe introduced herself to you four years ago. I wanted to be brief because we're running late. I have no problem explaining why we think she's such a wonderful candidate. She is highly experienced in running a large company listed on the stock exchange. Has extensive knowledge and experience with the financial industry as well as with international trade and industry. Especially in the way she recently performed her work as a member of the Risk Committee and the Nominations and Corporate Governance Committee in her previous term. She is a very pleasant, constructive colleague. I hope that convinces you. Now let's vote on her candidacy.
I'm delighted to hear that. In any case, I think it's advisable to explain this at every new appointment. Absolutely. That's also in the proposal you just received, but I'm happy to repeat it. We're going to vote about Mrs. Gheorghe. We're going to vote on agenda item 7A, reappointment of Mrs. Mariana Gheorghe. Please cast your vote.
The voting is closed.
The vote is closed.
And it-
It pleases me greatly that with 98.36%, you have supported the reappointment of Mariana Gheorghe. Thank you, and congratulations, Mariana. This takes us to item 7B, which is the proposal to appoint Mike Rees as a member of the Supervisory Board as per the end of this meeting. We are going to start with the possibility of Mr. Rees standing up and explaining why he is so motivated to take this position.
Thank you, Mr. Chairman. I'm Mike Rees. I'm a trained chartered accountant. I spent 36 years in international banking. 12 of those, I lived and worked in Asia. In those 36 years, I did roles in risk, finance, head of global markets, head of wholesale bank, and latterly, group deputy CEO. I retired from banking two years ago, and in that time, I've been working with technology startups, particularly focusing on financial services, cyber, and AI, and recently helped set up a fintech members' association for Africa. I've known ING for a very long time as a peer bank. You may be surprised to know that banks actually work well together. We do a lot of work together. I've known ING for a long while as a peer bank.
I think they've done a great job since the financial crisis, and I want to see how I can add to the next stage of the journey, both the challenges and the opportunities. Okay, Mr. Chairman.
Thank you very much.
Ladies and gentlemen, allow me to explain why we would like to have him appointed. Well, that is in view of his successful career in the international market, his experience in wholesale banking, his knowledge in the field of fintech, and also with his experience and expertise, also as a deputy CEO of Standard Chartered Bank, he would be an added value for us as Supervisory Board, and this would be complementary to the expertise and experience that we already have in the Supervisory Board. Who would like to ask a question or make a comment? Well, if not, I would like to vote on the matter. Yes, we shall proceed to vote on agenda item 7B, which is the appointment of Mike Rees. The vote is open. The vote is closed. We note that this proposal has been carried with 96.66% of the votes.
Mike, congratulations and welcome. Item 7C, ladies and gentlemen, is the appointment of Herna Verhagen. Herna, could you please rise and introduce yourself?
My name is Herna Verhagen. I'm the CEO of PostNL. I've been working for PostNL for 27 and a half years. The last seven years, I've been CEO. Previously, I was the HR director at TNT, which is a company that is right in the middle of the transformation into an e-commerce logistics company, which is something I appreciate greatly in ING. They're also undergoing transformation, a lot has been said about that today, that is also something I hope to contribute to, provided I am appointed.
Thank you. I shall also explain why we think it's an excellent idea. That is, amongst other things, based on the fact that she's had earlier positions with responsibilities in the field of HR general management, including governance-related matters. She has a lot of experience in working in a strictly regulated and complex environment that has a strong connection with society.
The upcoming end of the last mandates of Henk Breukink as supervisory director and also chairman of the Remuneration Committee and Nomination Corporate Governance Committee. We expect that Henna, with her background and experience and her personality, will be very complementary to the current Supervisory Board and will make an important contribution. Who can I give the floor? You were the first, I think. Microphone number two. Mr. Wijers, my name is Robert Freke. I know that, but you have to state that for the minutes. I'm sorry. I apologize. I know that. Mr. Freke. Henna Verhaag is a very pleasant CEO. She is very knowledgeable and very communicative. You just made a joke about me being a headhunter. I suggested Jeroen Dijsselbloem.
I don't really like Jeroen Dijsselbloem, former Minister of Finance, but he is a great regulator. I also mentioned Jan Kees de Jager, and both gentlemen know Europe very well and know all there is to know about regulatory authorities in Europe. What we experienced just now is absolutely unique. No discharge of liability was granted to the Executive Board and the Supervisory Board. Alarm bells are not going off. I strongly recommend either Jeroen Dijsselbloem or Jan Kees de Jager to lead this company back in course. I also recommended hiring a CCO. You need much better communication, and I'm prepared to take on that job in the interim. Okay. We were talking about Mrs. Verhaag. This is what we have on the agenda.
What is very important at this point in time, that we have really someone who can supervise, that knows all the networks in Europe, from back to front. Given the possible expansion of ING, Ralph Hamers could possibly also do that very well. All these forms of expansion, merger, acquisitions, he should lead ING into the future. Ralph Hamers is entitled to that. Van Riet. I'm a private shareholder. I must say, it is my impression that Ms. Verhaag is being appointed just to comply with the 30%. I disagree with you that she be fit for the job. She worked for SNS. I hope that share price of ING doesn't drop to the share price level of SNS and that SNS be taken off the stock exchange.
If I just look at what is going on at PostNL, the share price has dropped to EUR 2 or EUR 3. I would recommend hiring one of the two gentlemen that this gentleman just recommended and not Mrs. what's her name, Verhaag. Microphone three. My name is Van Iperen. I'm a shareholder from Amsterdam.
Against this lady.
Nonetheless, I would like to make a few remarks. You say 30% minimum of minorities of women. I hope you don't make any concessions concerning quality. I am going to vote against this proposal, not that I have anything against this lady, but because of the performance of PostNL. Microphone one, Mr. Spanjer. Yes, I know. Yes, Chairman. I'll say my name for the minutes. Otherwise, I'll get into trouble. Page seven, column one, second paragraph, line three. It says HR and that she's very good at that. If we look at her own annual report, page one, in the message of the CEO, paragraph two, we see that her employees are very dissatisfied. Now you're going to hire her. This is a political affair because Ingrid van Engelshoven, a minister, said on March 8th that you need more women on the board.
I think that you're organizing a party meeting for the Democrats in the Netherlands. Whereas there is someone else who already has enough on her plate, and she's got to sort out her own company. ING won't even exist because it's full of holes. Mr. Van der Bos, last comment. Yes, please. Yes, indeed. My name is Van der Bos. I'm flabbergasted. Somewhat flabbergasted. I've been attending the AGMs of PostNL for 14 years. There was Pieter Bakker as CEO, my big friend Harry Koorstra, and Anne-Marie. Well, anyway. I wish Ms. Verhaagh would have been in the board at that time. That would have avoided a lot of problems. I will vote in favor, or I would vote in favor, I congratulate ING with the appointment, or, well, anyway, if we vote in favor, if Ms. Verhaagh ends up in the supervisory board.
She's very knowledgeable as a manager. When I say knowledgeable, I mean that she knows how to find her way in interaction with the government. Well, we've been dealing with all these Post issues with Sand and liberalization, all these problems. Ms. Verhaagh would be an important addition to the supervisory board. Something else that argues in her favor is that PostNL obviously is orange, and ING is orange as well, and the Dutch football team is orange as well. Then we've got something else orange, the town of Volendam. Perfect. Thank you. Microphone number one. My name is Decker, Mr. Chairman.
First and foremost, I would like to highlight that I may not have all that much confidence in the stock exchange listing of PostNL, that is quite a different matter from the management of the CEO, because I think she's an expert, and she's trying to arrange things as best as possible. In that respect, I very much favor this appointment. However, I would like to add the following. At this ING, we saw how the group became larger and larger and more megalomaniac at some point, I would say. With Mr. Tilmant, I think that we reached a high point, very painful. Things were corrected after that, I think. I'm quite worried about what I've seen over the past few years in management circles.
I would like to say that I think that you should listen more to society at large, please be careful. This is an organization that operates in a very difficult environment, this company really is not in control. Please be careful with major acquisitions. Plus, there are rumors, I really have no idea whether these rumors are correct or not. In the Netherlands, we tend to get the feeling that the Germans do things better than the Germans themselves. That has led to many, many accidents. I would say, please hire someone who is expert, knowledgeable, someone like Ms. Verhagen. Please take it seriously. Caution is more important with the bank than expansion. That was a very clever way to address another point while we were discussing the appointment of Ms. Verhagen. Thank you very much for your comments.
One more thing about diversity. Let there be no misunderstanding. First and foremost, we check to see whether people are experts, whether they're knowledgeable, whether they can contribute to the supervisory board, to the team spirit and the supervisory board, et cetera. We also look at diversity because we're absolutely convinced that diversity is an added value to the board. From that perspective, we put forward these two proposals. Also, Ms. Verhagen, diversity, men, women, gender diversity will provide added value to the supervisory board. That is the sequence and no other one. We're very proud that we found someone with such expertise, experience and qualities and personality, which is why we're proposing her, and we're going to proceed to a vote. We will proceed to the vote, 7C, the appointment of Ms. Herna Verhagen. Vote is open. Vote is closed.
It pleases me to inform you that with 88.30% of the votes, the proposal has been carried. Welcome, Anna. Ladies and gentlemen, we're going to proceed to a number of items that are recurring that we have to go through, I will not encourage an extensive and detailed discussion. Let me put it that way. Item 8A of the agenda, authorization to issue ordinary shares. I shall refer to the verbatim text of the proposal in the agenda, I shall now give you the opportunity to ask questions, should you absolutely so require. There's a bit of confusion on my part here. I have to say, the powers that be in the organization say that in terms of the 40%, that this boils down to a nominal amount of EUR 15,566,915.20. That is the 40%. I see two people who are not discouraged by my discouraging remarks.
Thank you, Chairman. I think I tried to say this earlier on. It seems to me that given the circumstances concerning the internal state of affairs at ING, I think that it is an absolute must that you sort that out, that there be no doubts whatsoever with the regulators in terms of what ING will do. ING has to show that it has sorted out matters, and that only then should there be possibilities for acquisitions. At this point in time, it seems to me that authorizing you to issue shares up to 40% would seem inappropriate, and we would like to see this proposal changed into 10%. Actually, yes, I have the same question. You're asking shareholders to sign a blank check. Ordinarily, I would say, "Right. Okay, I'll just vote in favor." Now, this feeling, I'm just wondering, what does ING want to do in Germany?
Will it be yes, Commerz, or no Commerz, or is it just a fable? I do understand there are a lot of banks in Europe. There's going to be an enormous consolidation process. It seems to me that it's not unreasonable for ING to say, "Well, we'll buy the Commerzbank." On the other hand, I do understand that ING should say, "Okay, we're not going to put all our cards on the table until we make an offer, because that could be interesting information for another party." Yeah, I'm in two minds here. If you say, well, Mr. Hamers and Mr. van Rijswijk, and should Mr. Timmermans have still been here, I would've said, "Okay, I trust him with my wallet." As I said, in two minds. Okay. Well, we'll have to wait and see then what happens. Microphone three. Stavast , PGGM, for the minutes.
Today, I'm speaking on behalf of PGGM, but also APG Asset Management and Burmese Investment Management, De Geuzenhouses. I'll be brief. You propose to authorize the executive board to issue shares for any purpose, including capital strengthening, mergers, funding, acquisitions. We request you to limit this authorization to the plus 10%, which is usual in the Netherlands, and only use the excess for financial emergencies to strengthen capital in those situations in which, in all reasonableness, it would take too long to convene an extraordinary general meeting. We find it important that shareholders be involved in the decision-making process in possibly making any major acquisitions. Mr. Spanjer. Yes, Mr. Wijers. Good evening. Yes, indeed. Good evening. Yeah. Well, it seems like evening. I'm wondering, why do you want the 40%? 10% is the ordinary request. Well, we just voted you off.
The executive board was voted off. Why don't you say, "Well, we'll just withdraw this item," Apparently we were never given a mandate. First of all, we've got to make sure that we get a mandate, and then we'll see next year. We gave the explanation to the proposal. We can explain in detail in a moment. Mr. Vlink. This item on the agenda. Last year, I suggested that ING would come up with a WakaWaka, an orange WakaWaka. The WakaWaka has an SOS button. I don't see any WakaWakas. WakaWaka went bankrupt. A great investor continued the business. What's important, that 10 years ago, there was a meltdown of ING. 10 years later, we're facing a situation in which no discharge of liability was granted to the supervisory board and the executive board.
I advise you, whatever you may do, expansion is wonderful. Keep your head office in the Netherlands. That's incredibly important. Ralph Hamers can develop platforms that they can only make in Europe and China, America and China, rather. I think it's good, whatever Ralph Hamers may do, that the head office stay in the Netherlands. I'm just going to ask for a brief explanation in terms of what we envisage with this proposal. With this proposal, we envisage the following. This is a proposal that we've made for years and years, and that has always been supported. That in those periods in which we would need this, that we get the possibility to engage in a capital issue, and we could use that for several purposes. That is what we envisage with this proposal. Okay, ladies and gentlemen, time to vote.
Yes, we will vote on item 8A of the agenda, which is an authorization to issue ordinary shares. The vote is open. The vote is closed. The proposal has been carried with 92.85% of the votes. 8B of the agenda, authorization to issue ordinary shares, with or without preemptive rights of existing shareholders. The proposal with explanatory note is stated under agenda item 8B. I'm not going to read it out and explain it in detail. We've been voting on this for a couple of years. Who would like to take the floor? How can you vote with or without? You can't vote with or without. Either you are in favor or against. You can't do both things. We're going to vote on it. Are you in favor or against? Seems quite simple to me. That's not the way I read it.
It says, "Authorization to issue ordinary shares with or without preemptive rights." You can't do that. It has to be without preemptive right or with preemptive right, not both. Well, with or without preemptive right, depending on the situation that occurs. It's up to the company to determine that. I don't think that's a vote. It is. You're not the only shareholder. You're a Dutch shareholder, we also have shareholders in many other countries where we have to comply with other rules and regulations. We are a Dutch company, yes, correct, there are also other rules that we need to comply with. Well, this is a question I can't answer. Mr. Van den Bos, brief please. Mr. Wijers, does this not have to do with ordinary shares and the depository receipts for shares?
In an acquisition of ING, what I remember from the past, that ING had a share price well under the net asset value and that there was a possibility, and that you therefore had the depository receipts. I understand you say with or without pre-emptive right, will ordinary shareholders have a greater pre-emptive right than depository receipt holders? No. It's got nothing to do with that. We're going to vote. For the minutes, just to be complete, the amount that we're talking about here is EUR 3,891,728.80. We will proceed to the vote on agenda item 8B. Not A, B. Vote is open. The vote is closed. The vote has been carried with 98.79% of the votes. Thank you for that.
This takes us to item nine of the agenda, which is authorization of the executive board to acquire ordinary shares in the company's capital. This has been explained under agenda item nine. The authorization will be for a maximum of 10% of issued share capital for a period of 18 months. Who would like to take the floor? No one. We can proceed to the vote. Yes. We'll proceed to the vote on agenda item nine. The vote is open. Vote is closed. This proposal's been carried with 97.90% of the votes. Thank you. Ladies and gentlemen. Mr. Wijers, I have a point of order. This year, there's no any other business. Correct. I regret that. Wouldn't there be a possibility for people to have the opportunity to ask questions? No. It's 7:00 P.M. There was no any other business on the agenda.
We're not going to reinstitute it. I understand the signal. Something we will take on board and consider for next year. I disagree. It is 7:00 P.M., ladies and gentlemen. I am going to slowly but surely close the meeting. I do have a number of announcements. The adopted minutes can be requested. They can be sent to you. The request forms thereto are available at the desks in the central lobby area. The final outcomes of the votes will be posted on the ING website. We have drinks and a bite to eat served in the lobby of the building, the Grand Cafe, the entrance.
You can take the lift downstairs if you want, I would invite you to visit the three stands if you still have the energy, where we have very motivated staff members that will tell you everything you need to know about climate, sustainability, what ING does to help people with a handicap in digital banking, and what ING is doing with the ING Fund. Questions on services can also be answered in the central lobby, I would request you to hand in the handsets and the chip cards when you leave the room. Thank you very much for your questions, your commitment to ING. Thank you. Meeting is closed.