ING Groep N.V. (AMS:INGA)
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Apr 30, 2026, 4:45 PM CET
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AGM 2019
Apr 23, 2019
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 left from your left to right is Mr. Paul Farammers, Stavon from Reisbank, members of the Executive Board. And at this end is Frauke van Oosters Snelant, the Acting General Counsel to the firm. And on the stage behind me from your left to right, young Peter Falkenhete, Mariana at Georgia Hermann Joseph Lamberti, Henk Braugink, Robert Reibenstein, Eric Boiller de la Girodet and Margareta Haase. At the side is the company secretary, Cindy van Eldert Kleppe.
And on the front row in the at your right, in the front are the members of the ING Bank Board, Tanata Putraco, Isabel Fernandez, Ronald Buchaut and Roel Lauhof. And 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, Mark Hogeborn of KPMG and Jonas Pastor as the KPMG representative. And on the second row to your right is our independent notary public, Joyce Lehme Reis, who works at Allen and 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 3 is Dutch. Channel 4 is English.
As approved at the general meeting on 25 April 2006. This meeting is broadcast directly on the ING website. So welcome to the viewers who are watching us live. Now remarks. 1st, shareholders have been convened pursuant to law and articles of association.
Therefore, the meeting can take legally valid decisions and shareholders have not submitted any proposals to be addressed at this meeting. Now some formal announcements. Hopefully, on the screen, you will see the issued capital on the record date 26 March 2019. And as you will see, the issued capital consisted of 3,000,000,000 892,520,880 shares. The ING Group and its subsidiaries jointly held 929,821 shares on that date and the number of voting shares is therefore 3,891,600 and 3,059 and 1 ordinary share is eligible for one vote to be cast now.
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 23 April 2018 had been adopted and signed by the Chair, the Secretary and the designated shareholder Mr. HAJC M. Von Unen from Almirall and had been available on the ING website since 23 October 2018. And the drafts have been available for examination since 23 July 2018.
The meeting report shall be drafted by the secretary and 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.
Grodfam from Amsterdam be appointed as the shareholder who will co sign the minutes. Can you agree to this by affirmation? Mr. Chairman, you have made a serious error. Please tell me.
First, I'll tell you who I am. I'm Mr. Slauss in Amsterdam. I'm a private investor with a broad base in Corporate Finance and Business Economics. And as part of my special major administrative law at the Freund University in 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 had the VEB of which I'm a member assist me in this. But that's not on the agenda right now. Yes, but 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 public with your approval is that on 5 April was sent and on 6 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.
At the 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 okay, we've already adopted the proposal of Mrs. Rothbaum.
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. And questions explicitly need to relate to that agenda item. If it's not the case, then I reserve the right to interrupt you and to correct you about that. We don't have in any other business items, so please ask your questions at the relevant agenda items.
And if you have a question or a comment that 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. And 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. And during this meeting, no photo or video recordings are allowed to ensure the privacy of your fellow shareholders.
And as I mentioned, this meeting will be broadcast on the ING website. And then we also have a remark about the voting procedure to ensure that it will go smoothly. I'll hand you over to Fotaukia 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.
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, now agenda items 2a through 2d. We will be explaining them individually first and after the explanatory statements. You'll have 75 minutes to ask your questions about items 2a through 2d.
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. And the third round will accommodate all topics that were not yet covered at 2A through 2D. The idea is to streamline our exchange of ideas coherently, but we'll have to stick to this breakdown of the debate.
So to end the duties performed by KPMG in 2018 will then be explained by Mr. Holger Bohn from KPMG. And then you'll have 15 minutes to ask questions about that. And any questions about KPMG's explanatory statement can be put to me and I'll decide who answers them. And after that, we'll be voting on item 2E.
Now I will hand you back to Frauke to explain the voting procedure. Thank you, Mr. Chairman. Okay. 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 a gold color chip facing you as said earlier and then you should see a welcome message and your name. When the vote opens, you have 3 options. If you want to vote in favor, please press 1. If you want to vote against, please press 2.
And if you wish to abstain, please press 3. And after that, on the screen, you'll see your choice confirmed. And as long as the vote remains open, you're free to change your vote by pressing again either 1, 2 or 3 and your final choice will be the valid vote you cast. Now 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 have been received on the platform and we will be voting electronically. I just explained how all this works. At the end of the meeting, please return the handsets and the chip cards.
If you are 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 the settlement we reached with the Dutch Public Prosecution Service. Henk Breutink, 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 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 20 16, which was the period examined. As a consequence of stated shortcomings, the ING did not do enough as gatekeeper of the financial system to help prevent financial crimes. Stephen Fongodaistag, our Chief Risk Officer at a roundtable meeting in the House of Representatives, elaborated on the settlement. And he explained the steps that the 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 our 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 called, KYC, Know Your Customer, needed to increase. And this includes everything related to customer examinations, 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 20,000,000 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 3 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. So only once the minister had granted his approval to the public prosecution service did the settlement agreement was the settlement agreement signed between the public prosecution service, 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 4 September 2018, to the 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 and Young, as they used to be called, NAVAIR did so. Therefore, KPMG was not involved in the period of the investigation from 2010 to 2015. Ladies and gentlemen, the ING took measures against a few mainly former senior staff at the 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. 1 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 20 10 to 2016 are not attributable to specific individuals, that's very important, but 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 have to be taken at board level, which is why CFO, Khos Timmermans, has resigned in consultation with the Supervisory Board.
He was a member of the NBP 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 the ING once again serves in its capacity as a gatekeeper according to legislation regulations. In addition, on the ING corporate website, special pages 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, 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 Q4 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 and after we've covered the other points. Now on to 2a on the agenda, the Executive Board report on 2018 and sustainability. And I'm going to refer to the Executive Board report as included in the annual report, pages 3 through 87 and the explanatory notes to the agenda at Item 2B. And I'm going to hand you over to Ralf Hammers 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.
And the Chairman provided the introduction in 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. So you have every right to expect us to keep the bank safe and 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 and shared a large portion of the and shared a large portion of this investigation with the Public Prosecution Service to make sure that they noticed that we were taking this seriously as they took it, but also to learn as quickly as possible what was wrong.
And 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. And 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. Now the improvement program will continue through the end of 2020.
The improvement program comprises 2 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 principal decisions as to whether we want to do business with that customer. That requires 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. And 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. So first, we need to gather information about all those legal entities in all those different countries and we need it to be accurate and complete.
And 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. So 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 4th guideline in type money laundering by the EU translated into local legislations and regulation. And we're going to have to amend it based on the 5th 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. So 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. Now 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 1700 in 2017. That's just to put things in perspective for you, and 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 so that the regulator can also determine essentially 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 100 of 1,000,000 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. Now last and certainly not least, the mindset.
The mindset needs to be adapted both in terms of skill about this 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. So we need to keep improving. Now I'd also like to illustrate my points with this slide, which shows how we're onboarding customers.
So we check whether we want 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 corporate customer. And based on that, we determine whether we would like to do business with that customer.
Once we have onboarded that customer, then we'll need to examine continuously in what measure that customer acts with integrity. So 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. And if we notice certain combinations of payments by the customer, we need to see how to approach that and interpret it. And based on that, we'll decide whether we want to continue doing business with that customer. So in addition to becoming a customer, there's a continuous cycle of ensuring that a customer can remain a customer.
And 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. And 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.
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, technology playing a more important part, a future in which our customers are expecting more and more from us that we'd be able to interact with them digitally. And 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 frontrunners in their personal lives but also in their business lives.
And that is our purpose. And that is what attracts people to ING every day, day in, day out, new talent. And we continue to succeed in that. And we also said that in a world that is becoming more and more 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 3,000,000,000 interactions a year with our customers, 3,000,000,000.
More than 99% of those interactions are digital interactions. We have 38,500,000 customers, and 26% of those customers only deal with us on their mobile. That's how they do business with us. No other way. And just to give you an idea how this is going, in 2016, it was 12% of our customers.
So in 2 years' time, this number more than doubled. So 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, and we're going to continue to build on that. And that's going to lead to the right performance. And 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.
We have our own you have to innovate. We have our own innovations, but we also work with 3rd 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 Colgate. 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 which investors with which investors were going to place those syndicated loans.
But we also have our own innovations. We have our innovation called TRIP, and we have that in Spain. This is a peer to peer payment environment. And what we also did with TRIP is that not only in 8,000 locations in Spain, you can pay with TRIP, including at El Corz Ingles, but also on these eight 1,000 locations, you can also withdraw cash. So in the future, we will become less dependent on the ATM, the cash machines, and we can withdraw cash in other stores and other businesses in Spain at this point, but also in Australia where we advertise a product called Everyday Roundup.
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. But you can also say, I want that additional amount to be used to amortize my mortgage, so that you can amortize your mortgage without really noticing it, it's pain free. For those people, we'd like to have that. So it's just an idea, an example of how we try to do what the customer really needs for us from us.
And we've done the same thing with York. We've talked about York here before. It's our own aggregate. It's a consumer side. And what does Yort do?
Yort 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.
Now all these innovations and this focus of our services leads to the fact that in 7 out of 13 countries, we are number 1 in the Net Promoter Score, MPS. And we measure customer satisfaction, 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. And of course, this increases the number of customers, more primary customers, and also it leads to more business. €36,000,000,000 in new credits were issued last year. And this past year, €19,000,000,000 in additional savings was received by ING.
And as the Chairman just pointed out, 40% of these savings were received in the last quarter of last year even. So commercially speaking, we are doing well. The purpose that I referred to earlier on, allowing people to be frontrunners 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. So 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. So our sustainability policy is directly related to our purpose. And 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, So what we can do for the environment, for the planet. And actually, we have 2 pillars. 1 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. And 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 30,000,000 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.
And now it's €25,000,000 So we've got another €5,000,000 to go. And with our sustainability policy, we also aim for a low carbon society. And 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 €16,500,000,000 in portfolio, and we want it to increase by 2020.
But we're also looking at what we can do in the field of indirect impact. The 6 €100,000,000,000 loans that we already have on our balance sheet, how can we through indirect interaction, how can we reduce our indirect emissions? Now we developed an approach for that along with 2 degree initiative investment 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.
Now there are certain methods to do that, measurements to do that. But the business side, that's a bit more difficult because there we're dealing with several sectors. And some sectors, for them, it's easier to reduce their CO2 emissions than others. So we're trying to find out which technology there are for those industries to become or to reduce their CO2 emissions. And based on this approach, it is already being embraced by all sorts of institutes, and that is being followed by BNP, Societe Generale, BBVA, etcetera, etcetera.
Actually, they immediately committed to this approach. And so we also committed to the ambitions of the Paris Agreement. In other words, what we're saying is that our €600,000,000,000 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. So that's more or less what we do.
2 years ago or a year ago, when we met, we talked about strategy where we were in terms of our strategy and where we were with respect to the changes that we see happening around us. And 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 1,000,000 new customers a week. Alibaba, which is an enormous platform in China, generates €9,000,000,000 in SME credits a year.
And WeChat, also from China, has more than 1,000,000,000 more than 1,000,000,000 daily users. So 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 2 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. And for us, on the consumer side, we still have 13 different systems in all sorts of different countries. So we have to move to one single system.
So we want to integrate the Netherlands and Belgium. And Spain, France, Italy and Czech Republic, we want to integrate them. And 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 and also making sure that we can determine our layout as a digital bank, as a digital platform. And we're 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 minutes as well.
But this is the reason why we're doing all of this. And 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 €5,400,000,000 and return on equity has increased from 10.2% to 11 point 2%. And this past year, we've improved our core capital ratio to 14.5%, whereas our ambition was somewhere around 13.5%. And the results of this past year also allow us to pay out a dividend, a total year dividend of €0.68 per share. Now that we're talking about the share, here we see the development of the share price, the ING share price.
Well, quite a bit was written about that. You see a comparison here, the ING share price with what we call our peers, those are the other banks in Europe. And you see that the largest impact on the price of back shares is the economic development and the expectations also forecast with respect to economic development. And the situation that we're in now, the transformation that we're engaging in now and the 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 and next step in becoming a platform. And 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 is the number 10 app that people have downloaded on their mobile phone. Numbers 1 through 9 are Facebook or Googles. This is WhatsApp, Facebook, Google Maps, Google Search. And we are the challenging 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 and also updates concerning developments in the field of supervision.
And 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 that all those details in the report. I'm not going to say all too much about it. You can ask questions about it later on.
But first, I shall give the floor because when we start when we refer to the remuneration report 2018, which has been included in the annual report, Pages 124,213. Now I'd like to give the floor to the Chairman of the Remuneration Committee, Mr. Henk Broking. Henk? Thank you, Chairman.
Ladies and gentlemen, Mr. Vairos, in his introduction, already pointed out that I would give 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, and 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 propose of a 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. But at the point of the proposal remunerations, the full implications of the settlement was simply unknown, not yet known. It was only later that year that it became clear. And as we said earlier on, at the AGM last year and at the hearing public hearing in Parliament, ING pointed out that the Supervisory Board underestimated the sentiments with respect to this matter. And 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 neuroimmunization 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. And 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 Deutsche Palu Prosecution Service, the members of the Executive Board and of the management board banking of ING decided to waive their variable remuneration for the performance year 2018.
The remuneration played out in 2018 to the Executive Board, and other items were are included in the remuneration policy remuneration report 2018. And the 2nd time we have reported on the pay ratio as included in the Netherlands Corporate Governance Code, In 2018, this ratio, this pay ratio is 1:29, whereas in 2017, the ratio was 1 to 33. The difference is caused by several factors, including the limited salary increase, waiving the variable remuneration that I just commented on and also the lower bonus pool for other staff members of ING and therefore is very difficult to compare. And also 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 visavis2017 be decreased substantially from approximately €403,000,000 to €303,000,000 And the implications thereof were the greatest for employees at senior management level. For this group, variable remuneration, on average, decreased by 60% as with respect to 2017.
And for people who were low down in the organization, the impact was more limited. At an individual level, Mr. Veyers 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 not to pay out the outstanding variable remuneration for the performance year.
We call this a holdback. And also certain employees were removed from their position. We took into account the recalibration of job profiles in this respect. And also, the supervisory board felt that at a senior management level, responsibility had to be taken. Mr.
Veres talked about that. And therefore, in consultation with Mr. Costinum as Mr. Costinum has stepped down from the Executive Board. Within the applicable rules and regulations and taking into account his employment contract, the supervisory board granted consumer months a severance pay of 50 percent of his fixed annual salary, and this pay 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 August 2019.
Costumer Mounts dedicated his working life to ING for many, many years. In 1996, he started working for ING. And in 2000 and 6, he joined the Executive Board. Until the 31st August 2019, he should provide advice in the transfer of his work handover's work. Ladies and gentlemen, before we start with questions, I still owe Mr.
Sluss an answer. Mr. Sluss, 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% of more of outstanding shares. And more than 60 days working days 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. Sles, no, I'm not going to talk to you about it.
You gave me the floor. I'm answering you. Mr. Sles, please, please, a point of order. Mr.
Sles, 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. Hammers, Civil or Nursery. This is a serious request. My letter, the 6th April, which was sent on the 5th April with the agenda items, even though Mr.
Reyes does not want to deal with them, based on the basis of this note, I'd like to give you to give me the opportunity to address that later on in the meeting. And I have much more to say. Well, I am the one who decides about points of order, not the civil or military. So we've dealt with this. And now we're going to proceed to questions, questions on strategy, finance and sustainability.
After that, we shall talk about the settlement. And after that, we shall talk about the other items. But before you ask your question, I kindly request you to state your name, which shareholder you would represent. And I'd like to give the floor. And I would like to I will bundle 2, 3 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, too. And to be quite honest, the gentleman over there, I know him. And officially, I don't know his name, but he was the first one there. And he was so far, so I'm going to give him the floor first. And he must say who you are and who you're representing.
Mr.
Veyers, 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. Hammers. And you know very well that I'm Mr. Freke and represent We Connect You in Public Relations. This type of idea is belongs with the Supervisory Board.
Mr. Hammers deserves a CCO to ensure a proactive communication and press policy. To start where this meeting could have started, Ralf, Hommers 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 additional 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 Hammers is dealing with all the complaints about money laundering. That's not acceptable because Peter von Fullenhoven has said that from 2010 to 2013, the ING was contacted 49 times by the Nablanca Bank about money laundering, 49 times.
And who was the CEO then? That was Jan Holman. So it's unacceptable that Ralf Hammers 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 was this possible? In that period, the ING had nearly 50 warnings. Why wasn't immediate proper action taken at that time. In addition, I advised that the Supervisory Board never say anything else again about the bonus and salary of Mr. Hammers because that is merely destructive.
In addition, I advised Mr. Hammers last year, and we were talking about maintaining 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. And what also strikes me, and that's relevant in the international context, in 2,006, in China, there were 10,000,000,000 years. Now 13 years later, there are 400,000,000,000 years. That gives pause about Mr.
Hamre's remuneration. Next question. Last question that should not be a remark. What other skeletons do you have in the closet? Now microphone 1, Mr.
Varios. 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. Spiner. 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 8, paragraph 4, first sentence, but Mr.
Chairman, you're part of the Supervisory Board and you allow Mr. Hammers to set up the Commerce Bank route. Why did you forget that the state of the Netherlands and all of us and your bank that the state of the Netherlands rescued your bank with a $10,000,000,000 bailout and that we shareholders did not receive a dividend for years, you must have amnesia. If you're having Mr. Hammers set up the e Commerce Bank route?
Or should am I to understand that Mr. Hammers 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% because what he's arguing is that he thinks it's such a shame about the 20% bonus that didn't get him anywhere. That's nonsense. He makes enough to buy everybody to buy a cheese sandwich at the Lidl supermarket. And let me continue.
And 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.
Spiner, I'd like to hear your questions. You have to start asking your questions now. I'll get there. Now on to paragraph 2, 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. Okay. Last question. In the report from 2017, you say that there was €1,000,000,000 for Mr. Hammers' hobby and you've already spent €775,000,000 so the €225,000,000 remaining still remains apparently.
And you did 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 4.
Hello. I'm Mr. Vanden Vos. I'm a private investor. And I could talk about my family vehicle, but I'm here as an individual, Mr.
Hammers. 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. So 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 4.
Check with Mrs. Von Osten about that. Now let's see, where was I? What did I want to say?
I've been in the Anglicor. We
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 e mailed you explicitly requesting that you divide this meeting into one part before lunch about the money laundering and all the problems and the second part after lunch would be the regular AGM. Now in your introduction and 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 went to say something about this.
And what I also think is unacceptable is that the gentleman who was just at microphone 2, who's a shareholder and a customer, to just send him off on a wild goose chase. It would behoove you to ask Mrs. Von Osten to have a chat with that gentleman because I assume 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.
But when I get to the money laundering there, I'll be much harder on you. Well, I'm looking forward to it. I explicitly offered for the gentlemen to have a direct conversation with people from the ING. But on to microphone 5. Mr.
Veyers, that won't work. That man is a shareholder. Have Mrs. Von Osen get in touch with him and he'll be treated properly. And then the gentleman knows for certain that you're taking him into consideration because if he shows up at the bank, he'll be sent off on another wild goose chase.
Mr. Veyers, that's how it happens. Now on to microphone 5.
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 transradiatic pipeline greatly exacerbates our already rapidly warming climate. Politician 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, these arguments 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 the 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 the Southern Italy once again exploited and succumb to the interests of the strongest and the most powerful.
Could you please come to your question? This is not the time for declaration, but for questions.
So please.
So my question to the Board is this. Given the increasing price parity of renewable energies technologies and the climate and the local impacts 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 project against in the future?
Thank you. That's a very clear question.
Okay. Ladies and gentlemen, we will now consecutively answer the questions asked. I'll give the floor to Mr. Hammers first. Thank you.
Now regarding Mr. Frege, I think you've given some examples that we can certainly work with and our communications department always welcomes advice. So thank you for those ideas. I do have a question about KYC. Otherwise, I don't have that many questions listed.
Most were remarks.
Atlantic 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. And 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. But 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. So we do take here. We have a lot of requirements to follow.
And specifically, this one, as you know, is supported and also arranged and guided by the EU 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. So that's where we feel we can support this. The gas pipeline itself will not stimulate the demand for gas. So it doesn't kind of 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 as concerned 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. And 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. And once again, Mr. Slaus 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.
And to Mr. Freica, 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. And if this keeps happening, we will put this in the spotlight, but not to reopen debate about the subject. Now, of course, I will now take microphone 2. Thank you, Mr.
Chairman. Thank you, Mr. Chairman. Thank you, Mr. Chairman.
Thank you, Mr. Stevenson. Good afternoon. Legal Protection for Insurers. Yes, it was addressed for a moment, a possible merger with the Commerzbank that was in the German media.
And we'd certainly like to hear more about that. And 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. You're ahead of the other European banks. And then during the previous Investor's date, nothing was said about it.
And that is at odds with what you just said. Now 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% 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. So 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 order 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. Next, we have a question about the volatility of commission What is your policy to reduce those? There's a long throughput time between reaching agreements with the 3rd parties.
Deescalable scalable capital and with insurers and receiving the corresponding commission fees. And then a question about the envisaged increase in spending. We just spoke about cost cutting. Am I going to get another turn? Because I have several additional questions.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Well, we'll see how we're doing for time, but those were some good clear questions. Thank you very much. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Good afternoon. I'm Jacqueline Dauker. I'm here on behalf of the BDO, the Association of Investors For Sustainable Development.
And I've been banking at the ING for over 50 years. And I worked at the ING for over 10 years and greatly enjoyed it. So on my own, I would call myself a multi stakeholder. My questions at present are about sustainability. I have 3 questions on sustainability.
One concerns the sustainable development goals, another concerns climate change and finally, one about human rights. Let's start with the Sustainable Development Goals. The VPDO would like to complement the ING on being one of the founders of the principles of responsible banking. This international initiative elaborates 6 different principles, one being aligned with the Sustainable Development Goals also known as SDGs. And this considers both the positive impact of 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 2,030? Now my second question relates to climate change. Not so much about curtailing CO2, which is often the focus, but 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.
So 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 and 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. And my question is to what extent does ING consider that?
And what measure does ING consider whether customers contribute to being climate proof? You spoke about self sufficiency in your introduction, but also making your clients climate making your customers client proof. So what does ING do for customers exposed to physical risks resulting from climate change? And with the 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 because they don't 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, human rights report was drafted. And 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 and also the manufacturing sector.
And in those sectors, the ING identifies the risks of not paying a living wage by those customers or by the suppliers of those customers. But the 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. So 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. Now we're going to hear from you, and then we'll start answering the questions.
Good afternoon. I'm Jan Binkles. I'm a private investor. I wanted to start here because I wanted to speak deliberate dialect here, but I won't. I have a few remarks.
First, there's a lot of talk about settlements, customers, digitization, sustainability. And I'm delighted that the ING is going to be more socially responsible. But what I think that the ING is excluding an apology, okay? It's all very well good that the ING reached a settlement with the prosecution service, but 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. And 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. But it's important to identify changes within the ING. And 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. And finally, I'd like to make another remark that a bank is bad, money laundering is bad. So a bad bank launders money or on a different note, the ING did a bad job laundering money.
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. So thank you for highlighting that here again. And I think we've or you've highlighted a number of ways in which we can improve our customer service and how we can learn.
And we are doing 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. And this is not only giving us a score, but very often, customers give us feedback, feedback that we take on board in our improvement processes. And the customer services is not deteriorating. It's 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. And 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. Stavans. Mr.
Stavans, our core strategy is crystal clear. It's organic by nature. And for years, we've been giving guidance in terms of how we want to develop, how we see the increase of our 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. And we are going for that full force.
And in the past and again, I shall point out again that we should also look at an organic growth, not only organic growth. And that would be in 3 areas. 1st 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. So if we can do that, we may do that. And we often do acquire companies, as you all know.
So certainly, this is an there is an M and A part of our strategy. And the second area has to do with the development of portfolios and credit portfolios and knowledge with respect to portfolios. And 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. 3rd area, with respect to looking at mergers and acquisitions, we've always said this. If we operate in a country in which there is a certain degree of consolidation at some point, Then obviously, we'll have to look at it, and then 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. And we went along with that, and we entailed or entered into a merger with the Kohindra 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. So 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. And 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. So once we've sorted that out and we can maintain and keep things up, we will decrease the number of FTEs.
And to be quite sincere with you, I'm not looking at costincome. 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. And by the way, we also pointed out that we are moving away from only looking at costincome ratio because that really doesn't seem to be a good efficiency measure. We prefer to look at operating leverage as a metric for efficiency.
And of course, cost income will be reported. You can continue to look at that. But what we feel is very important is our return on our equity. That is what JullioCat and cost income is an ingredient of that, but no more than that. So it is not an objective unto itself.
So in this phase, we have to invest extra in order to sort things out. That's what we want to do. And about the volatility of our commission income, Well, that's volatile. No, not really because there are 2 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. And the second has more to do with the environment of the commercial banks, commission income for bond issues or share issues or in large credits ranging large credits. So within a quarter, there could be some ups and downs. It could be somewhat volatile between the quarters. But ultimately, it will have to grow.
And 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. And we're not convinced that our products are always the best product for the customer. We sometimes will say that products of 3rd parties, non banking products but also bank products of competitors, should also be offered.
And we do so in several respects as well in AXA agreement will our agreement with AXA will also contribute to that. And then we have Ms. Delke, if I'm not mistaken. We're going to answer this question together. And about living wage, I'm going to start with the last question.
And then the first question, Mr. Von Reisberg will then cover risk management. Living wage, a very interesting matter, a very relevant matter, 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.
And 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's not always easy to detect. It's not something you can find. It's not black and white. And so you will have to form a judgment on it.
So we are taking note of that. We're 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're doing and what kind of companies and how they deal with these matters. And we may even exclude them if we feel that they don't deal with these issues properly.
And then 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 can say, Okay, we're 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 don't know whether that would be the best way to work on these sustainable development goals. So what we did in our strategy is look at 12/8, Sustainable Development Goals 12/8 because they are really part and part of what we're doing, rooted in our work. So we have arrangements for that.
We also have targets, targets that we want to achieve in due course. That doesn't mean to say that we're ignoring or neglecting the others, but it's very difficult to have targets for all 17 of them. But the closer we get and the more we understand the matter, the more we can onboard them as targets. Thank you. Now concerning the physical risks, we have a committee.
We have a risk committee that looks at transition risk 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 risk in our credit portfolio in the meantime in terms of energy transition. Carbon, for instance, also has a risk element on how do we deal with oil and with oil rigs, sorry, if we fund it now? And what happens in the future?
There's a sustainability element here. And something else that we're dealing with is looking at our physical risks, taking stock of them, where are we funding real estate, houses, mortgages or agriculture? So that's what we're working on right now. And then your follow-up question is, well, if that's what you're doing, will you then hold customers accountable and talk to them about their conduct in terms of climate issues. We're not there yet, but that could be something we could do.
And 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. Stavros an answer as to how the supervisory board operates. I mean years ago, the supervisory boards came to the meeting at the very last minute and then was at 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. And we have when we have supervisory board meetings, we spend a lot of time keeping in touch with young people in the organization. And 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. And 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. And this year, we are going to separate the supervisory board in 3 different groups. We're going to visit 3 different countries in order to specifically look at these things. So quite apart from the fact that we have the ordinary meetings and the ordinary talks, but we have many more talks with other people in the organization to get a feel for the culture and etcetera. 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, Haanda, you've already had your turn, so you will be the last even though your comments are always very interesting. So please don't take it personally. And then number 5.
And let's start with number 5, and then I'll go around that way and 4 as well. And then we're going to talk about the settlement. Otherwise, I'll have unhappy people. About that, microphone 5.
My name is Claire Hamlett. I'm a representative of Banctrack, which is a small shareholder. So as we heard from Mr. Hammers in his speech and his answer to my colleague, ING prides itself on being a climate leader and claims that its new PACS are for lending methodology, which is part of its terror approach, which is focused on financing technology shifts for key sectors, will fully align its business activities with the Paris goals. Paxta will cover ING's activity in the oil and gas sector.
From Bank Paxta's perspective, we do not see how the Paxta approach aimed at financing technology shifts within a certain sector can effectively rein in the oil and gas industry, focus 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. So I ask the board, can you publicly state what specific long term and intermediate goals ING seeks to achieve of applying PACTA to the oil and gas sector and commit to publicly report on progress towards these goals. And 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 the 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.
Donker Bell? Thank you. Josef von Hrastreff is my name. I'm a private shareholder. Chairman, it's great to hear your voice.
It's a very clear voice. So far, we only heard people we only saw people who were silent to you at the table. It's a pleasure to listen to you. And you are keeping order. Excellent job, better than your predecessor.
So perhaps you can put in any other business at the end of the program because you're doing very well at keeping order. So first of all, strategy encompasses several years. But I would also like to look back 100 years ago, 1990, the Bostshek Gyro service was one of the predecessors that was set up. And one of the matters one of the things that we saw at the on the facade of the building in The Hague is that people who went there as a customer, the driver service, could make money. And I'm wondering why people would bring their savers to the bank.
Perhaps you can explain that and explain why in a 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. And if you mention numbers and percentages, could you also perhaps also mention absolute it in absolute terms because percentages change because of mortality rates. And 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. Blocking 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. Timmermann, since 2006, was a member of the Executive Board.
And I can remember after we took leave of Mr. Homa, things were not really good. And there was some concern here in the room. And Mr. Hammers and Mr.
Timmermans had a bit of a disagreement on the forecast. And I'm quite surprised that in 2015, that was the appointment. 2016, there was this issue with some issues coming up. And then 2017, Mr. Timmermans was appointed.
Now 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. My name is Paulo Costa, VEB, the Association of Stockholders. 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. Hammers 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, small acquisitions may be self evident. But I was rather shocked when I heard about these rumors, particularly in the light of the situation that we're facing with what happened last year, so many incidents. And you yourself, Chairman, in the annual report referred to that as negative sentiment. Obviously, you want to avert that.
And 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. And Mr.
Hamre says trust is our license to operate. Now what I'm getting at is not the settlement, but what transpired after it. Mr. Paretjesvej 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 made been disclosed. And the atmosphere with the settlement, the annual report, nothing about it in the annual report, just 3 sentences 2016, 6 sentences in 2017. And up to August 2018, there was no mention of it other than that it seemed to be seemed that it was going to be finalized. And then after a week, all of a sudden, we get this announcement about the settlement. This is disappointing.
And 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?
And 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 4 months without the ING senior management, either in Italy or especially, I would say, in the Netherlands, knowing about those events. So 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. Hammers' presentation concerning the digital future.
But unfortunately, we're dealing with this oil spill that is increasing slowly but surely. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Yes. Okay. We'll answer this question first or these questions first. Last question, I would say, is part of the 2nd round, I would say.
So we'll set those questions aside. They'll be answered later on. So please don't be concerned about that.
We all have to acknowledge that this world is in need of an energy transition, and I think world leaders have all submitted to the Paris Accord, and all but maybe 1 or 2 have engaged into that accord and are working on that. As part of that climate accord, there is a couple of 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. So we do that with all sectors. Now 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. And a large part of the power generation in the world is still very much dependent on other resources than renewables, including oil and gas. So from that perspective, there is also a reality check here. And the reality check is how quickly can you phase out the development of power generation on the back of fossil fuels.
And at this moment, we can't do that very quickly. That doesn't mean that we're not supporting that. And therefore, for those areas that we feel in fossil fuels are the most pollutive in terms of carbon dioxide, like coal, like tar sands exportation, 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. But first, we want to know the implications of it.
On strategy, Dottweiser de Vargo.
Those were the questions raised at the microphone for Mrs. Hartzert. Is that correct? Right. Okay.
So why are people bringing money to the bank? Well, we still pay out some sort of interest, but you must realize that we are losing money on the interest. I mean, the money that we get, great part or the largest part of surplus liquidities, we have to pay 40 basis points. That's an ECB requirement. And I think that the ECB policy is still focused on fostering economic growth, consumption in Europe and also doing something about inflation in Europe.
So we don't think that will all of a sudden increase. And so for a long, long period of time, the interest rates will be low, if not negative. And that also implies that the interest that we can pay on savings deposits will not we don't expect that, that will be increasing very quickly per se. But 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 and hopefully that because of this growth that there'd be inflation that the interest rates can increase. And your question about the TAM codes, for now, we have informed all our customers that the TAN code, as a way of confirming transactions or and we're phasing that out. There's an alternative for that. The alternative is using the app on the mobile phones. So we are drawing our customers' attention to the fact that we're phasing tankers out.
And your approach on appointments in the Executive Board, well, I'm very sorry, but I cannot comment on this. I really have a different perspective than you have, I think, and I really don't know how to answer that question. Mr. Verez, I'll answer that question. There's only one reason why Mr.
Timmerman stepped down, and that is that he retired because he took his ministerial responsibility as being the person most involved in this situation in his file, no other reason. Mr. Costa had a question about how I see the consolidation in Europe, the European Bank consolidation. And I think you need to separate 2 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. But once we have that, I see more advantages of European bank consolidation, cross border bank consolidation that I would have now. That doesn't mean to say that there are no advantages now. There are, in principle, 3 kinds of examples: 1st of all, capital optimization the other one is liquidity optimization and the third one is cost optimization. So these are the three factors that I believe will be a determining factor in whether or not bank 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, and I've already given that answer to Mr. Stephens. But can't you be just a bit clearer because it's sort of hovering over us? And it seems as if you're intending to engage an enormous acquisition, whereas in 8A on the agenda, this issue may be addressed, and you want to extend your capital with this issue.
And so I do think that this question is quite relevant, in my view. And 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.
And there are 3 aspects in our strategy that may not be organic, that may have to do with the 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. So really, that's what I can tell you about that. Yes. But you are already so successful in Germany with your digital strategy.
Mr. Goswery, well, 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. Mr.
Chairman, that's what I wanted to avoid. Yes, but 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, and then we'll come back to the other point that you think that this person who has been waiting at microphone 5 has waited for such a long time so patiently. I'll give that person the possibility to close this debate.
My name is Susie Snyder, and I'm representing a small shareholder. I'm here as part of the international campaign to abolish nuclear weapons. And 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 entering into force. And given the expectation that the treaty will enter into force within the coming year or so, and it will make all activities associated with the development, production, stockpiling and maintenance of maintenance, excuse me, 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? And 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. Steve? Thank you very much. I mean, I believe that the treaty on the prohibition of nuclear weapons shall enter into force in 90 days' time approximately. And in that, well enforced, these countries may translate it into non assistance of production of nuclear weapons.
So we are looking into that as well. I mean, we expect it to happen on nuclear weapons as well. And in our current defense policy, we take a restricted 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 why we're currently there.
Sorry, but the companies that I mentioned, you are currently financing and they are involved in these activities there?
Yes. So 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. And in that dialogue, we then take a decision where we finance these companies as a whole, but we do not finance specific projects. Okay.
Thank you. Thank you very well. We now Janu, now at Andre.
Thank you. Now on to the topic of the settlement. Mr. Varios, 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. And I personally have one comment.
I asked you 2 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.
So 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, but we cannot answer all questions in that time frame. So we need to make headway.
Otherwise, we will not finish at 6 p. M. Tonight, ladies and gentlemen. So we're going to discuss the settlement. Who has questions?
First, I'll give the floor to Mr. Froner Eiswag, who still has to answer the question in this context about the question from Mr. Kolster. Well, there was also a question from Mr. Spania about Ukraine and about provisions for Italy and Ukraine.
There were a few comments about that. As for Italy, and I think that answers part of the question Mr. Closter, but I'll deal with it more specifically later on. We do regularly inspect banks. That's part of our regular operations so that they're on size or deep dives or reviews at banks.
These address financially and non financial risks and also know your client. And I don't remember the interview, but they must have quoted me in some presentation that after the settlement took place in the Netherlands and in some areas, there are deep dives or investigations or inspections into KYC. In Italy, we did have an outcome. And 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. So we're working on that. And we said at the Investor Day a few weeks ago, and after we publicized an improvement program following settlement and Mr. Hammers just mentioned that in his presentation, on the one hand, this targets some adding to and improvements in our records.
So the static due diligence to be complemented by media signals and names that we don't those we don't want to do. Business with that's a bit to the left of the slide, Mr. Hammers showed of the flat 8, as I'd call it. And 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. So we're working on those ideas.
And when they've checked what the status is of KYC, Know Your Customer, until recently, it was insufficient. And at a certain point, we said, okay, we think that ING needs to get its affairs in order first. And that's part of a broader program that will, in any case, take until 2020. So first, we're supposed to get our fares 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 and 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. But 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. Veyers just said, we don't react to rumors in the press. But what we will do, especially on this topic, if we see press releases about laundromats or troika's 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 and whether ING has any role there.
And if that's the case, then we report that to the hotlines at external agencies about an unusual transaction and we abandon that customer. So we always look at it if such things come to light or their 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 prosecution service to the tune of 775,000,000 including a penalty of 675,000,000 and expropriation of 100,000,000 We don't ordinarily make any statements about provisions and 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. 3 elements are important to take a provision. We have to be certain that this is an obligation. I talk about that in the slide.
2nd, it needs to lead to an outflow of benefits, in this case, from ING to another party. And in a third case, you need to have a reliable estimate. You need to generate a reliable estimate. Now 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 was the subject at the time. Supposedly, we had facilitated money laundering. So 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 statements. So paragraph 45 in the 2016 financial statements mentioning that we're the subject of an investigation. Now 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. So more likely than not, there's a certain obligation that will arise and will lead to an outflow of resources or rather a payment. So in that financial statement, we said that we met 2 of the conditions stated in IFRS.
We thought you should know this. 2 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. And the reason we didn't know the outcome as Mr.
Weier 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. Now I need to correct what I just said. So in March 2017, we reported on the 2016 financial statements.
And then 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. That's what we did at that point. Now 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 Q2 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.
And 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's the that raises the question where SBM was recently told by AFM situations you can inform the public. I thought that I reached that I had hit a critical note. As long as not all facts are known, can you be forced to this into disclosure as a firm? If I look at your firm and I mean that in the best possible way toward ING and 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. And I'm breaking your rule, but it concerns the legal proceedings. And in this case, I'm talking about Note 47. There's one case where I wonder what it means and that relates tax cases.
And 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. And allegedly, there were withholding problems as well. That's with the IRS. And if there's one thing I know, it's that one organization you don't want to have a falling out with is the IRS. And that's another example.
Those four lines have a significant impact on the firm. So 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? And I have seen firsthand how incredibly difficult it is when you're acting as a gatekeeper. So I'm certainly not saying that this is easy.
I understand that. But 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. At the bank, we're continuously subject to investigations, deep dives, thematic reviews, etcetera 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. And if there's something to mention for the future, should be already known that regulators 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. 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 775,000,000 figure and asking whether it was known or not. And 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. But if the next week you hear that announcement, then there must have been conversations, including those with the account. Isn't it in time to indicate more specifically that this is not a case involving 100,000 or 10,000,000, but 100 of 1,000,000. I'll tell you one more thing, but 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. So once again, we indicated that it was significant and we didn't have to say that if we but we did say that there's a chance it will be significant. And that reliable estimate relates to what I argued about 0.3. I was asking about other investigations that you related directly to that settlement that aroused the influence of other regulators. I've been there and done that too.
My question is whether there were any countries where we could expect that conceivably, but then we hope for a positive outcome that might other countries where disclosures might be made. That suggests to shareholders that you have identified the risks. I hope I make my point. Thank you, Mr. Koster.
I think you provided your answer now. Some very patient shareholders deserve the floor. And I think the lady at microphone 3 has been standing very quietly for a long time. So she'll have the floor and then you at microphone 2, then you at microphone 4, you'll all get the floor. So not to worry.
I'm Marguerite Staffost. I work for PGGM. I speak and vote on behalf of our customers, including the Care and Well-being Pension Fund. I'm also speaking on behalf of MNPMTPME, Burmese Investment Management, Gautze and Menzies. I have four questions for you.
You announced that you would be taking measures to strengthen compliance and risk management. You just mentioned the 5 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 auditors audit as for non financial risks, we advise that you include the internal risk behavioral team in that assessment. And in your annual report and your presentation, you indicate that nonfinancial 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 President 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. Now my final question concerns the remuneration of the Board members. Mr.
Timmermans is compensated in 2 respects. His redundancy pay was reduced at the discretion of the Supervisory Board to have this base salary. And then there's a holdback concerning the non vested shares and 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 ENG in 2016. At all companies where we invest, we think it's important for Board members to be accountable for the policy pursuit. 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 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 20102013, ING received 50 warnings by the DNB about money laundering. How could that have been ignored 50 times? How could DNB and the handset representatives not provide proper supervision?
If you had received a penalty in 2010, it would have been it could have been €100,000,000 rather than €800,000,000 So the supervision by the HASSE representatives and the DNB is sorely inadequate. And shareholders such as the VEB and pension funds need the supervision by all these bodies to be conducted professionally. I assume that Mr. Balkanend agrees with this entirely because in 2019, he saw the meltdown in the Netherlands. In addition, the ING has repaid 10,000,000,000 and then another 15,000,000,000 yen as a penalty reduction.
ABN AMRO, which was also in serious trouble, has not been privatized yet. The ING did beautifully, dollars 6,000,000,000 in profits and then about $1,000,000,000 in penalties. But it seems like the ING is doing everything wrong that we can here. And the supervisory board, could you please tell me to what extent did you know in 2010 or 2013 when Jan Holmen was here? To what extent did you know about these 50 warnings from the Netherlands Bank?
Because 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 4. Yes, I'm holding it. Are you okay if I remain seated?
Because I can't stand anymore. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Mr. Funkesl, you have the floor. The 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 set 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 coal and put options were lost.
Their value declined on their expiration date in December 2018 as well as for the export those expiring on April 2019. Closing positions caused major losses because of the decline in the share price. This is obvious the prosecution service delivered evidence of mismanagement and accordingly imposed heavy penalty on the ING exceeding 700,000,000. 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.
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. Savas of the PGGM, 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 the Dutch Central Bank. And we constantly inform the Dutch Central Bank of our progress in that. And that, in fact, is the way we want to move forward with this. And so we made arrangements with them.
They know what this entails. And they 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. So that goes outside my line.
So 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 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. And 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. And 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. Well, obviously, you can there are several ways to deal with this. And we have a Chief Risk Officer. As such, the 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.
So we have someone who's responsible for non financial risk management. So these are very, very separate lines in the Executive Board with Mr. Van Derijsvek. So that's that. And then the last question is about?
Yes. And for that, I'd like to give the floor to Mr. Biloking, 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.
Now 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 managing Board Banking, amongst others, have not received conversation well, specific. So that's one thing.
But now specifically, why only Mr. Timmermans? And the fact is that this investigation concerned 2010, 2016, and he was not only a member of the Managing Board of 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. And now I'd like to give the floor to, yes, Stephen Yu.
There was a comment, I think it was Mr. Frege, about 49 words of warning from the Central Bank. And well, I must say, I don't really recognize this number. I only know what was said about Project Houston and the facts. And that is what Mr.
Von Vollenhofer referred to, but I don't know. 2010 to 20 13, internally within ING, there were 49 alerts that were created. So that means when there are transactions that seem unusual, then the system generates an alert, and there needs to be a response to that. And 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.
So that was the €49,000,000 The €49,000,000 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. 2,809, we faced a complete meltdown of systemic banks. And now it's insufficient again because all of a sudden, ING has to cough up €800,000,000 So it is absolutely insufficient.
And members of parliament have insufficient understanding of the matter in order to be able to supervise that. And I think we need a structural improvement in the Netherlands. Otherwise, in a couple doesn't only concern ING. It's also ABN AMRO and Rabobank. There's absolutely insufficient regulatory authority in the Netherlands.
I can say this, and I read a bit about this in the press, but I would like to hear this confirmed by the VEB. So there has to be a bit of supervision so that you can get a fine in a timely fashion and not all of a sudden be faced with a fine of €800,000,000 This is the AGM of ING. I think the last entity to be critical about this would be ourselves. So we take note of your comments, and we're going to roll up our sleeves and work very hard to solve problems. And it's not up to us to criticize anybody.
We're not going to criticize MPs nor regulators. No, you can't do that, but I can do that, says Mr. Vlaecker. And then we have a question from Mr. Frankeso.
Yes. Mr. Frankeso, you are asking for compensation. As Mr. Van Rijsveijk explained, we feel that as from the moment when we were faced by faced with the investigation of the Public Prosecution Service and all the subsequent developments, we really feel that we inform the market and shareholders adequately.
And so really, we see no reason to do that. Thank you. I shall now turn to microphone 2, microphone 1 and 4. Pepping is my name. I'm a private shareholder Until 2008, I was a minor risk manager.
So I do know something about this. And 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. So I'd 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 3 alerts a day from the system were allowed to be considered at ING. This is an example. But particularly, how come we have this culture and actually I feel cheated, I'm angry and perhaps retroactively angry at Mr. Homa. I never talked about this, but everybody has already talked about that issue, and I'm really angry why we were never informed about these things.
It was known in ING. How are you going to learn from history? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Microphone number 1. Yes, Mr. Chairman, my name is Espana.
For the minutes, I have a couple of questions. Question 1, the annual report 2017, Mr. Ioana referred to that. There was an amount of €1,000,000,000 for a potential claim. Why then for Italy and Ukraine?
Do you not include anything in the annual report? Why is it that you're so sure that nothing will come of this? We see Ukraine come up in the press, and Investor Relations is not contradicting this and is not denying this. So with the smoke, there's fire with Ukraine. Mr.
Koster, the VEB has just asked, are there any investigations that concern us? And so that's Ukraine. Why are you not talking about Ukraine? And second, this year, you have €303,000,000 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 £300,000,000 only went to employees outside Mr. Hamas here in the Netherlands. So I want to know the exact amount. And third, I also have a comment about your Department Investment Relations because when I request an annual report from Angelique Schilter or your Director, she is extremely difficult. She says, go to the website.
Go to the website. Well, and I said, but I always get a printed version. And then she said, go to the branch office.
And I
go to the branch office, and then people are, again, very difficult. I mean, they're making my life difficult. And at the end of the day, I just took it with me. Anyway, you just said in your introduction, We're going to listen to the customers. Well, I believe.
Well, these are hollow words. But in practice, you're not doing anything at all. Okay. But you do have it now, don't you? Yes.
Good. Okay. Thank you, Mr. Spaniard. You're welcome.
Microphone 4, please. Hello. My name is Wim Vesser. I have a proxy of my brother, Jeroen Visser. He's 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 Polit Prosecutor Klaus and Frobergh 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, if our company, 280,000 euros in tulips disappeared. And €200,000 we had ordered fertilizer, but it turns out that nothing was supplied. So that went missing.
And at some point, I had warned that, 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 thank me for that.
But Ms. Plos says that I'm a suspect. I'm a suspect that I had hidden the fertilizer. So I would like this police report to I want them to act on this police report. And 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. Harmers. And all we get is references to a lawyer. That's it, which I think is very, very disappointing. We have major issues with the Public Prosecution Service.
They're saying that we are taking up too much capacity, too much mining. And then 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. And I have another question. This €820,000 what happened? Where did that end up in the accounting system?
The auditor must know. Mr. Fisser, Mr. Fisser, I'm getting the impression that we're not talking about the policy of ING visavis settlement that you have an individual problem with the public prosecution service and perhaps even with the ING. I think that, that is less relevant for the shareholders who are present here today and is relevant to the agenda.
I suggest, as we agreed for individual cases that we discussed this outside this meeting, at the desks outside, so that we can take a look at your situation. But 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? And Ms. Froberk knew about our police reports, knew about our situation, so she covered it up.
Well, we'll take a very close look at this. Thank you. Microphone number 2. Thank you, Mr. Chairman.
My name you're familiar with my name, Sluuthers. I have legal and economic background. Mr. Hammad just showed the development of the share price. I found that very difficult to believe.
Prior to the 1st July 2016, the ING Group painted a much too rosy picture of their policy. And 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. Hammes just showed us.
The share price was €9.1612 January 2018, it reached an all time high €9.61 €961,000,000 Mr. Hammers, ladies and gentlemen, the value of 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.
And 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. And these shares would have been worth much more money without the fine and the settlement. And now in 2019, we have the irregularities of previous years. These irregularities, in my view, are not attributable to the shareholders but are attributed to the executive board, supervisory board, ING Group, NV.
So therefore, I hold these bodies liable, liable for the decrease in value of shares ING as a consequence of the enormous settlement and the final public prosecution service. When the money laundering became or 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. And 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? Well, they were money laundering customers. And this led to this mega settlement. And therefore, we are feeling the damages in the share price, etcetera, etcetera.
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 their bodies in front of me of ING, so I hold them liable. All the shares were sold for just more than €13 I incurred damages.
But if the share price is no higher than €11.79, We have incurred damages. The value has declined, so the sums are easy to make. So 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? So 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 IG share.
The request for conversation is a request that I was submitting to you. Thank you. Thank you for that question. Don't worry, we will comment on your questions. We'll answer all the questions first, and then you will have an opportunity to raise further questions.
Mr. Peping? Yes. Well, 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. And we analyzed the causes, the reasons why this all happened. And the we also have the facts of the Houston investigation. We, as ING, did an investigation into the causes of the short comings that came up over this period of time. There were 5 causes.
1, 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. 1st, you've got to do due diligence. You've got to conclude your due diligence first and then do business with your customer.
The We could have done that much better. And should we have done that, we would have been able to see which customers were engaging in these unusual transactions. The workflow systems that we talked about, the transition and transaction monitoring, data analysis, we should have invested in that much earlier, and we did so insufficiently. And there was also fragmentation and the cooperation between people in the business side, risk management and the internal audit service. So people were sort of prepared to do their job properly, but only in their own area.
And they didn't communicate sufficiently. And so there was no overview of the entire perspective, and that's what we need to improve. And also, the escalation culture, and 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.
So there was insufficient escalation and communication. This is what I want to say with respect to what Mr. Peping said, and I think it was also highlighted that there were 3 alerts a day, and I see this appear in a number of media. But there are several risk indicators. There are dozens of scenarios or risk indicators.
And for each and every risk indicator, there can be an alert. And for a number of risk indicators, there had been a restriction. Yes, sometimes it was 3, somewhere else it was 5, and somewhere else it was 10. It's still not good. I mean, 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. Espana.
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. But once again, you're asking about provisions. But we don't disclose provisions unless they exceed a certain amount.
So we're not going to do that here either. And I think that the question really concerned variable remuneration. Well, yes, we decreased it, and 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. And 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.
And so therefore, we reduced our variable remuneration, and this was done worldwide. So also the countries that you referred to, variable remuneration was reduced there as well. And then in answer to the question asked by Mr. Fisser no, not Mr. Fisser, no.
Yes. 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.
So we don't really believe there should be an independent committee here. And 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 forecast.
And if you think that it has to do with the settlement, that may be the case. I don't know. But the question is whether we have informed you sufficiently and at the right point in time. And as Mr. Von Reiske explained today, that is what we believe we have done.
But why didn't you issue a profit warning when this mega settlement was disclosed? You knew that the costs would only increase not only then, but also with Russia and 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 de Bosch and microphone to 4. Mr. Van de Bosch? Thank you.
Agenda item 2 d is still on the screen. I think that we are discussing agenda item 3. Why am I mistaken? No, no, you're correct. Oh, great.
No, it's 2%. And that's why I'm really going to make to shorten things. The upside is that if we end this meeting really late, there won't be any traffic. Well, I called the Chinese restaurant and that I was going to arrive home later. Anyway, I have a comment, a comment for an indirect shareholder, the VEB.
I mean, they sound like a trade union. VEB said to PostNL last week, Let's split the company. And now we're dealing with fines from 2017. Mr. Costa, as far as I know, he's a chartered accountant, perhaps not.
He doesn't work for a company anymore. But you know with IFRS 9, they're not allowed to do that. And now with the new rules and regulations, but you're not allowed to do that either. So that's just one thing. Another thing.
I myself worked for an internal accounting service. So I was there when the suspicious transactions started to be reported. Mr. Hammes, you had this wonderful presentation about all sorts of measures that you're going to take, but this is backfiring because and what do I mean? You forget to say that the bank is complying with the privacy rules because I mean, 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, the Dutch Central 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, they ask me, What are you going to have for dinner tonight? Object.
So I go to this authority, the Privacy Rules Authority, and ING will once again be fined. So that's what I'm trying to say. Something else is and that also greatly surprises me. From 2,008 onwards, ING has been sailing choppy waters. And this has got to do with the bank crisis, The and I think it's rather straightforward.
I mean 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, Coles 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. And after this bank crisis, we were faced with a euro crisis. After that, we were faced with Greece.
So that was somewhere around 2015, 'sixteen. So yes, I mean, you can hardly be an acrobat, can you? And it hurts me that Public Prosecution Service should violate its own rule, reasonableness, fairness does not apply that. I know that the government was about to take a share in Air France KLM. Euros 775,000,000 was needed for that.
So I know where that money came from. That is why the fine was capped at €775,000,000 And I hope the journalists are taking note of this, but it would have been much more convenient if Minister of Finance Hoekstra or someone else in the private prosecution would have said, Mr. Hammers, why don't you buy those shares? That way we won't offend the French, euros 775,000,000 You keep it in your portfolio, but there are. I mean, that would have been much more convenient.
I would have been cleverer. But this fine is quite stiff. If you look at all the fines that have been imposed on banks worldwide, that would be €300,000,000,000 in total, which is 5x what the Dutch state has to repay, 5x. Thank you, Mr. Van den Broek.
Thank you for that. And last question, microphone 2, and then we will proceed to 2E. Madam, Ms. Arning.
I'm Mr. Arnink. I'm a registered shareholder and I wanted to sing a different tune. There's been a lot of criticism here and the tensions have mounted because the Board has made many proposals for improvement, and I think they hold water. So 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.
And I'm delighted that there are some proposals and also elaborations of these proposals to retrain staff and to introduce improvements. And that for each country, a series of measures will be taken to function better in that society, because we need to understand that the ING Group has 54,000 staff members, of whom only 14,000 are in the Netherlands. And 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% to 51%. Of course, there is 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. And even if you disregard the settlement, your profit is better than it was the previous year? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Thank you. We'll be answering these questions and then we'll move on to 2E on the agenda.
Now Mr. Vandebosse. 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?
And 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 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. So 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.
Von Reiswag 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 prosecution service to learn from this. And I know that the minister replied to questions in 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. But once again, that does not entirely leave 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.
Anik, 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%. So 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. And 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. And for 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 IMG's head office and were available to shareholders at no charge at the instructions of the general meeting of shareholders. The auditor has audited the financial statements and issued an unqualified statement of no objection. We advise adopting these financial statements.
I would like to ask Marco Baum, 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 or auditor about our audit duties and our audit findings. I'm Marc Holgerboom.
And on behalf of KPMG, since the spring of 20 16. I've been your external auditing IMG 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.
And ordinarily, auditors have a nondisclosure 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 to 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. 1st, let's start at the beginning. What did we audit? We audited the corporate and consolidated financial statements at the ING Group for 2018 and issued a statement of no objection. And we also issued an assurance report regarding the selected non financial information as included by ENG in its annual report.
We have an approval in our assurance statement. ING is also listed on the U. S. Stock Exchange. That's why we issued a statement to the financial statement 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 Group. Both statements reflect no objections for unqualified. You see all of these summarized on the slide here. Now the highlights of our audit that have been summarized on this slide for you. Once again, First, materiality.
We used a materiality level in auditing the ING Group financial statements of €300,000,000 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. This materiality determines how intricately we review the figures. But the materiality level for auditing the remuneration of Board members is far lower. It's €100,000 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 €15,000,000 that we observe or 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 in the Netherlands, but also conduct the audit in virtually all countries where ING 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 Group 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.
Now 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 needs to meet many regulations and comply with many laws, both in the Netherlands and in other countries where ING operates. Part of our audit with 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, indicates all laws and regulations that directly impact the financial statements and accounting that I just mentioned. And 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 such as Title IX Civil Code 2, the Corporate Tax Act, Board Member Remuneration, IFRS EU and IASB. And then other laws and regulations indirectly affect the financial statements such as the law to avert money laundering and financing terrorism, GDPR, MiFID, CRD-four and so on.
These are just examples. The list of laws and rules that the 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 get any if we see any signs of non compliance, we examine whether this affects the financial statement through various audit activities such as to see whether an additional provision or explanation is necessary.
In the event of noncompliance, we report this to the management supervisory board and regulators at ING. In the past year, we did these duties concerning non compliance with laws and regulations as well. We believe that the ING has adequately depicted the effects of noncompliance with direct and indirect regulations in the financial statements and annual report for 2018. And we've reported about this to the stakeholders we just mentioned, the executive and supervisory boards and the regulators. And 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. And finally, at the left, we provided an unqualified statement of approval, as we just said. And at the right, we examine the alerts about non compliance and report about it and notify stakeholders and monitor progression. And that carries over to the 3 check marks in the box, reports to all stakeholders, reports to Board, Audit Committee and Supervisory Board and processing in the financial statements if it's material. Now on to the highlights of the audit, so the key audit matters that Yvels have 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 3 key audit matters. 1st, 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 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 we're able to base our audit on that. And if you don't mind, I'm going to leave IT for what it is, and I'll talk about the other key 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. The ING has approximately 600,000,000,000 in loans, which are valued at the amortized cost price and the provision for bad loans is approximately 4.5 €1,000,000,000 And 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 IRS 9, we work with our model specialists and corporate finance specialists, given the highly complex models that underlie this provision of BRL 4,500,000,000. 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.
And my personal assessment of the provision is that it's justified from neutral to mildly cautious. Now 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. Now 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 the 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 the Negron se Bank, the regulators of ING, received 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 Deneidou Ancebonne, and 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 the Netherlands Bank together monitor ING. We're also required to report unusual transactions to the Financial Intelligence Unit, which is the successor to the 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 3 88, listing 12 actions that we took, but I thought it was important to bring this to your attention. Now 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 €775,000,000 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 explicitly 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 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 as deemed reliable.
Based 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 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 administered by the 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 3 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 of that 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. Now following up on the above, I confirm that explanations concerning the investigation by the prosecutor concerning 2016, 2017 and 2018 by ING and its financial statements meet the set requirements.
You will 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, that by mid what it knew in mid-twenty 18, because you cannot explain something you don't know. Briefly stated, since the financial statements of 2016, ING has been explaining that the prosecution service is conducting investigation and that the financial outcome could be significant. Now 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. And 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. And 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, 121 of the annual report, where the ING Executive Board confirms that compliance with 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 noncompliance, but is committed to bringing about structural improvements while attending various auditing risk committee meetings during the previous year. I perceived this commitment on the part of the executive and supervisory boards. Now I'd like to tell you a bit about the current situation.
You've rightly asked many questions about where we stand today. And once again, the auditor has a role with respect to events after balance sheet date. So after 31 December, through the auditor statement in early March, even up to today, 23 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. So 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. Von Reiswijk 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 either. 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 and 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, 31 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, 23 April, should be caused for adjustment or explanation in the 2018 financial statements. That is not the case. Now I'm going to wrap up, Mr. Chairman.
On 6 September, the VEB so 6 September 2018, the VEB asked INGEY and KPMG questions about how the settlement on September 2018 came about, how it was processed in the accounts and what duties ING KPMG performed following the noted short comings in compliance with the Financial Supervision Act. On Friday, 19 April of this year, ING published the answers to this letter. You will have 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 reports about CDD and CAM and informed some of the responsibilities.
This is also indicated in the replies of the ENGIE to that letter from the VEP. And 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 and 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.
And I'm pleased to hand you back to
Chairman. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:]
Thank you. Who has a question for this item on the agenda? I see that microphone 4 is ready to go. You saw right. Mr.
Hochoborn, right? First of all, I would like to compliment you on the very clear presentation, the way you explain things. And the way I see it, I think that this is was indeed what happened. And of course, you refer to legislation, and you cannot make a provision if you don't know exactly what the damages will be. And there was something else that surprised me.
A loan portfolio of €600,000,000,000 €400,500,000,000 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, it was always above 1, 1.25%. So I think the provision is very low. And of course, you can say, well, we're doing well in the Netherlands.
But I have my doubts. I have another question because since 20 16, you are the successor to So there's been consultation. Work was transferred. What are the essential audit items, things that you say these things didn't work out right or with the knowledge they had at the time, they acted properly? Because in West Fristrant, 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. And something else. Last year, I thought that I had given you 6 a mark, 6 out of 10. But now it's 8.5 out of 10.
So you're doing better. Microphone number 3. I'm a private shareholder from the south of Amsterdam. I have a comment and a couple of brief questions. My first comment is and I formulated the same question last year as well.
Can't you for the private shareholders in the notes, can't you make an abbreviate version of the annual report, a balance sheet, profit and loss statement and the statement of the executive order? I mean, it's a whole lot of information. I mean, with all due respect, I read it with a great deal of interest, but not everything.
Now a
couple of questions, brief questions. 1st, Page 149, it says maturity Investments, MA No NA means not available. And then that is passed on to financial assets, FVO What's that? No idea. Financial, probably.
Other comprehensive income. Well, I always thought that operating cash flow should be positive. I think it's on Page 2019. There, indeed, you have an operational cash operating cash flow positive. And then they have this one line, Other, which amounts to €4,000,000,000 You state that separately.
What does that mean? Now my last comment question. Your core operations are quite simple. I mean attracting money and then investing money, investing money at a higher margin preferably. And then Page 149, but also on Page 185, here you say, and the difference is in amounts held to Central Banks in excess of €19,000,000,000 to €46,000,000,000 My question is, don't you think you're attracting too much money?
Because don't you think that ECB, 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 because Mr. Hochobom, he doesn't have a notepad. So I don't know whether he's keeping track of all these questions.
I don't know whether I mean, you asked all these detailed questions. I mean, what are you going to do with an abbreviated version? Mr. Van den Bosse, thank you for your questions. Question on IFRS 9 is quite an appropriate question.
IFRS 9 is a complex standard, but it is the standard that gives guidance to the for the provision. You gave part of the answer. We are in what we call a benign credit environment. So the sun is shining upon us. And the important variable in IFRS 9 are the macroeconomic scenarios.
And whether we like it or not, they look quite promising. And at the same time, we also look at the past. And ING also has a very good track record in limiting loan losses. And together, that leads to the fact that by working very hard globally, looking at all these models and all these thousands of loan files that it has been properly accounted for and properly evaluated and I would say even cautious rather than aggressive? That's your first question.
2nd question, given the global transition, yes indeed. The auditor in 2015 and before that, that was Ernst and Young. So 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.
And so we are onboarded to get to know the people, the systems. The process is very valuable because that way you can start on a good footing. And then your question, it's an excellent question. But because of my professional rules, I'm not allowed to disclose what we would have or would not have found at that 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 audit. Were there any substantial things of which you would say, well, they should have perhaps done in a different way. And as I said earlier on, if you look at the entire time line, the bank crisis, the euro crisis, the Greek crisis, that of course, they had to deal with a myriad of things. But I'm I mean, 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.
And I was I took a different perspective, and I would find things. That was our impression, yes. Please, Mr. Veyers, stop joking. No snide remarks.
If anybody is going to be give some snide remarks, it'll be me. But what I'm trying to say is that and KPMG and I'm, once again, not looking for scapegoats. I just think that the people did a good job. And I gave you better marks now, did I not? But was there anything substantial?
Yes, but that's it. Let's put a stop to this. But I can say that we started in spring 2016 and at the same time, and Mr. Stefan Rehvos pointed this out to ING, immediately after the visit of the public prosecution office and the financial Investigation Service, we started looking at things and checking whether the right decisions had been taken. And there's also this resolution, the FIB resolution.
We looked at that and we checked on things, and everything was properly done from spring 2016 onward. And I'd like to leave it at that. Yes. Loan provisions, Mr. Van den Bosch, Mr.
Horvam already answered that and that there's a prudent provision. But is this a high or low provision? Well, that's a tricky question. But we are a low NPL bank, So our losses in general are relatively low in comparison with this sector. Nonperformance loan percentage, the bad loans, is about 1.5% as per the end of last year.
So 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, or should you and if there's no crisis, I will celebrate you, pick you up and celebrate you. Okay. I'd go for the last one.
Okay. To my right, you asked an excellent question. So we had 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 manufacturing business. If you look at our operating cash flow, you see that if we have more loans outstanding than last year, so if we grow, you see a negative cash flow simply because we have more loans outstanding.
So in that respect, the cash flow statement should be read in a different light than you would for a manufacturing company. Yes, but I was talking about operating cash flow. Yes, yes, yes, exactly. So 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. And as soon as we grow in liquidity or cash to cash equivalents that we have in bonds, for instance, then the cash immediately becomes negative.
Sounds funny. But actually, what it means is that we have more working capital. The working capital is the outstanding loans with our customers. So that's why in a bank, sometimes you see, depending on whether we grow a lot or not, whether you see difference in numbers being positive and negative. Back to the fair value and other comprehensive income.
If you look at Page 150 4, you will see that we moved from IAS to IFRS 9 and that there have been many reclassifications of instruments from one balance sheet item to the next. And that obviously had an impact on the cash flow statement. And that is what you can see here. And then a third question because I think you were referring to a discussion we had earlier on. If you had to leave your money at the or if you have to leave the money with the ECB, why are you doing that?
Well, there are different ways you can look at this. First of all, we want to have primary customers. Mr. Hammers tends to refer to that. We want our customer base to grow.
And on our platform, we want more customers. And on the one hand, that means that you may be incurring losses with some deposits, but then you can make a profit with other deposits. But if you look at liquidity technical considerations, what you want to have is relatively stable capital in terms of liquidity or cash, 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%. And sometimes, you need more liquidity that you wouldn't need in terms of operations that you needed in order to have enough liquidity in times of crisis. And I hope that one day you'll pick me up and celebrate me. And that is the reason why we sometimes keep additional liquidity that doesn't really give us a return, but you do you may need it. I am going to turn to microphone.
It's quarter to 6. Quarter to 6. This is 0.2E2 of the agenda, so we really have to speed things up. A maximum of 2 questions per person. And I'm going to turn to a debutant.
Microphone, 5. Thank you. I shall introduce myself, Chris Dehn. I have a modest number of shares with my holding, Fauna BV. I'd also like to complement you on your presentation.
8.5 out of 10 is quite a high mark, too high. But I think a B is in order. Presentation is very good And 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, but also internal controls. I mean, 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?
So 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. I mean but it is encompassing, and it's important to finish this.
And I started in the spring 2016, as I said. And I can't give you an opinion on the period preceding that, but I really sincerely feel, if I look at all the measures that were taken, were taken and also 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. And with respect to the internal control measures, at the time, the marks were bad. Well, I don't like giving marks. I don't like giving marks, but I am a number man. You saw that on the left hand side.
It was a faithful reflection of equity and performance. Same time, we issued an unqualified statement for the internal controls. This 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, very serious about that. But you don't want to give us them a mark.
No. Chairman, I have one question concerning the provisions of which you said what you enlisted what it is that is allowed and is not allowed according to IFRS. And I'd like to come back to the question I asked Mr. Varjesdek 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. And the question is, how come that you do have a provision for that while you don't know what the magnitude is? Or do you know what the magnitude is, but you still don't know whether it's a serious case or not?
Well, it's not 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 the company. But 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. I look at KPMG through the Chairman, and they have just been pleading absolutely in the benefit of ING and its bodies. But at the end of the day, there are shareholders, and shareholders are owners of ING. I had 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. But 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, and 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 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. Or 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, but that is the answer. No, no, no. We're not going to dot the I's and cross the D's and discuss legalese. Thank you, Mr. Chairman.
My name is Stevenson, SRB. Two questions, 2 to Mr. Van Reiswijk and 2 to the auditor. Four questions. No, no, no.
1 for the auditor, 1 for Mr. Van Reiswijk. But you never said that. Well, I just clarified. Yes, but nonetheless, we would like to dive in to 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? It doesn't really matter. Well, you might think, well, we're going to keep an eye on them now. Do you announce that This is what happens. I know how the auditors work.
They do their audits at random. And of course, when they but 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.
Riesbeck. The €775,000,000 the €1,700,000,000 of Ms. Cush is still worrying us. So we were thinking, wouldn't it be possible to refer the government to Brussels and pick up the £775,000,000 there? Thank you.
Oh, that's a very sharp question. The English have a great word for that: remote entity risk. I mean the small entities, ING has very small entities where and nobody ever comes there. And we have surprise audits there, so we don't announce that. But in the scope, 90%, 95% of assets and profit before taxes.
So well, we do that every year. We will communicate that with the country. Netherlands, Belgium, Germany, we always visit those countries full scope. But you have a couple of countries in which that we don't really check up every year. But we vary there.
So 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 it a bit. I'm sorry. We are very much behind on schedule. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Answer to the second question.
I don't know what you mean when you refer to the €1,200,000,000 Oh well, but it's been discussed on several occasions. But I note that there are 2 entirely separate cases, and the €775,000,000 have already been paid. Mr. Espana? Mr.
Weyher, you mentioned my name. I also have 2 a couple of 2 and a couple of questions for the auditor. In which small countries did you do a raid? Could you a surprise operation? And can you mention the names of those countries?
And liability, directors' liability, €100,000 Were you also involved in the Khost Timmerman situation? And my third question you don't have a third question. I do. Well, then you should have started earlier with this meeting and not at 2 Stop, stop, 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 years. How do you know?
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Well, I saw you here the past 3 years. Anyway, you would have seen in the notes at the back of the financial statements is ING has about €1,000,000,000 €1,500,000,000 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 a question regarding IFRS 16.
The €100,000 question, that's a materiality that we use for remuneration 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, etcetera, that everything is correct. And I can tell you, based on our audit, that, that is the case. Then 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. 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. So in order to terms, that's a small country. At the same time, locally, it's one of the biggest banks. And so we reported that.
We said that it's important for us to take a look there and 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. Frauke von Auschaslingerland so that she can explain the procedure. Yes, I explained the procedure earlier on today. I'd like to leave it at that. So we can now proceed to vote on item 2e, which is annual accounts 2018.
Comments off mic. Oh, 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 percent has voted in favor.
So thank you. So item 3 of the agenda, 3a, which is the profit retention distribution policy. I'd like to refer to Pages 6164 of the annual report. And you know that ING aims at a healthy core capital ratio for fully loaded core capital ratio, in excess of that in excess of the 11.8%. 9 gs also has a comfortable management buffer that encompasses the guidance.
With 14.5% as per 31st 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, etcetera. Who would like to take the floor? Nobody.
So we can take note of that and proceed to item 3b 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? Because you've got quite a bit bearing down on your Russia and everything else, we've got a long way to go. Now what do we review? When we distribute dividend, 1st, 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 and we see how we can use those first to continue improving our capital. And then there's the impact of Basel IV for the 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 $0.68 And 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 net earnings for 2018 equaled $4,703,000,000 after adding 2,057,000,000 to the reserves. That leaves 2,646,000,000 available to the general meeting.
The proposal is to distribute a dividend for 20.18 amounting to €0.68 per ordinary share considering the interim dividend of €0.24 paid in August 2018, the final dividend will equal €0.44 per ordinary share. And as a final dividend, this will be distributed in cash, retaining 15% Dutch dividend tax. And 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.
And the stepping is Schlauten.
And the result is that 99.794 percent has voted in favor and it is hereby adopted. That takes us to Item 4 on the agenda and what we propose voting jointly on 4A and 4B. Ladies and gentlemen, this means granting discharge to an executive or supervisory board member for performance of their duties and supervision. And 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 Eric's sense of contacts with shareholders in the recent period. Some shareholders are unwilling to grant the discharge that has 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, but course, we do respect the opinions of shareholders.
Very briefly, Mr. Chairman. This concerns I apologize for interrupting you. I should have established that the financial statements have been adopted. But 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 orders throughout the ING Group and 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. I'm Marguerite Staphos from PTGM.
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 the bank and bank reputation. In 2018, 2 important issues had a negative impact on the reputation of the ING and led to negative public sentiment with respect to the Bank of First with the proposal of the Supervisory Board to increase the base salary of the CEO, which was withdrawn 5 days after it was published. The second was the settlement with the prosecution service. These two matters are cause for us to vote as follows regarding the requested discharge for the executive and supervisory boards for performing their duties in 2018.
We will not support this proposal for discharge of the executive and supervisory board members. I'm Mr. Van der Bosse. And I believe you already know my name. What bothers me, it's a tangent.
Discharge to the members and former members of the Executive Board. So the former it's a former member of the Executive Board. Unfortunately, Khos has been ejected from the troika. And why was he ejected? Because he supports the Thionor football team.
But nowadays, the government is a very capricious sorry, no matter whether it's 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 PTGM that has not granted any indexation increases for years is voting against this. But 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 because 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. So in the Mr.
Amers is a good narrator. Mr. Reichsveig sings, well, let's get rid of Koos because he supports Feyenoord football team. I can say this out loud because all you other members support the Ajax Amsterdam Football Team. But if you grant a discharge, then afterwards, the board members may be held accountable by the prosecution service because you settle.
And then a few days afterwards, the Board member has to leave. And I hope that I didn't wake any sleeping dogs at the prosecution service. Yes. I'll wait a moment, Mr. Vyers.
No, you've got my intention. You've got my attention. Well, I just waited for you to finish your comment to your colleague. And imagine if they crackdown on Mr. Hammers.
So it's all very well and good to grant them a discharge. I'm not voting. I might have voted in favor, but I'm 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. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Microphone 1.
Mr. Chu, you were extremely quick. You were going 150 miles an hour. You said if we vote in favor, then we'll also make sure that the members of the Executive Board can no longer stake any claims because then we'll be certain that Mr. Koos Timmer won't get any more problems.
And why isn't Mr. Koos Timmer months here now? That's the flaw in your policy. Thank you. Okay, Mr.
Coaster. 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 and that's standard practice at shareholders' meetings. And for the record, I would like to repeat what has been communicated at length and appears in all the documents, which is that the 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 organizational failure. So the investigation of the 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.
Valles. Okay. One more question from you. And you have one more comment or question and then we're going to vote. Well, it would behoove you to call a spade a spade that it was not the fault of Khost Timmer months.
He's known far and wide for his integrity and skill. I'm not defending anybody here, but 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 Telkraf newspaper read, KOSUS UNEMPLOYED. And you, as Chairman of the Supervisory Board, should have reacted forcefully about that. Mr. Brokink was up to that task and was qualified as an ING Supervisory Board member.
He did that at his own initiative and he has guts in my view. And if Mr. Hammers said from England, do you have the impression that any bankers are going to come here, but the media thought that Mr. Hammers was whining about his salary again? Now why don't you just look and see what somebody means?
And that's why I would say, Mr. Hammers, do not grant any press interviews for the next 2 years because the way I see it, you're being misquoted. And Mr. Bayers, I expect you to sing the praises of Mr. Timmermans.
Thank you, Mr. Vreke. Given all the comments, I propose that Jan Case to Yager or Jeroen Geiselplum serve on the ING Supervisory Board because both have an extensive track record in supervision and might benefit ING. And Mr. Daiso Blum or Mr.
Jan Kaysdiagro would have the opportunity to demonstrate their skills and supervision. And 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 Bose's remarks.
In the settlement with the prosecution service, the problem was attributed to organizational malfunctioning. There was no comment about the integrity of any staff member. And it does not bother me to say that I am convinced of the quality and integrity of Khos 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. So 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 stemming is Schlauter. 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 vote is closed. This proposal has also been rejected by 62.73% of the vote.
So the supervisory board members have not been granted a discharge. Ladies and gentlemen, this result deeply disappoints us, but 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 company wide other improvements that endure. Now on to item 5 of the agenda, which is the reappointment of the external auditor.
That's agenda item 5. 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. So for the 2016 through 'twenty nine financial years, this auditors 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 4 more years and the Supervisory Board has adopted this recommendation.
If you have questions or comments, Mr. Van der Poelst. 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. Mr. Feldenbosch, if you're only 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 don't I'm not a mercenary. It's as simple as that. Please go ahead. Thank you, Mr.
WeConnect. Mind the time. Yes, I've called them to make that Chinese interlighter. Okay. The figures were increased considerably.
So that's fine. No problem. But about 4, 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. Broking, because he's been on the board for 12 years and all the others. Mr. Hammers joined later and Mr.
Von Reiswijk joined even later. Mr. Timmermans has been at work and Mr. Flynn joined later as well. So 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 5, which is the reappointment of the external auditor. Please cast your vote.
And as you see, the proposal to reappoint KPMG has been adopted with 98.86 percent of those cast in favor, rounded off upwards. Now onto the composition of the Executive Board, item 6 on the agenda. This concerns the appointment of Tanate Futracul as member of the Executive Board at the end of this Annual General Meeting.
Thank you, Mr. Chairman. I'd 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. Von der Boels? With the previous CFO, no, not the person before him, that was Mr. Flynn. After 4 years or more in the Netherlands, he still didn't speak Dutch.
I'm curious what Mr. Tanaka I'm curious whether Mr. Tanaka 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, but 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 6, the appointment of Tanate Futracourt. Please cast your vote.
The standing is Schlauten.
The vote is closed. Okay. 99.274 percent of the votes have been cast in
favor.
Now 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 Anne Sherry in September and the upcoming stepping down and Broking 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 competition, including background, knowledge, experience, other duties, other responsibilities, conflicts of interests, other pursuits and a great many other things given the reappointment of Mariana George and the appointments of my colleagues and parent of Verhaagen as of 1 October, there will be 1 third or 31.3 percent women members on the Supervisory Board. And I believe that we meet many other criteria concerning diversity and different backgrounds. First, I'm going to open up the proposal about to reappointing Mariana Giorgia.
The proposal has been explained on the agenda at item 7A. 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. Veyers, your juggling figure is 30% women, 30% men.
The RBC should consist of 100%, at least, at least. You're talking about the supervised reporting. 100%. 100%. And one third you said 30% men, 30% women.
What happened to the other 40%? What 40%? Are they transgenders? You have you're very intelligent. I said those are the minimum criteria to fulfill.
And with the appointments of Marianne and Jorge and Herna Verhagen, we do meet the requirement of 33.1 3 percent 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. Georgia? I'm Mr.
Stavanser 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, and I apologize for that. I have accepted 2 candidates for the new mandate because I do respect and like what this band does for the Netherlands as well as for the markets it operates in. And 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 or this new mandate because I just stepped down from my position as CEO last year.
So I do hope I will have more time to dedicate to this Board. Thank you.
Thank
you.
Give the other candidates an opportunity to explain their motivations. Let's vote now on the reappointment of Maria in Georgia. 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, but and I don't understand it. So I don't know why we should vote in favor of these people.
What are their special attributes? And I am referring to all three of them. Well, the idea was for the 2 new candidates to introduce themselves in a moment, so you'll certainly hear that. That will in part be in English. That's why you have a headset, as we just explained.
Then you can understand what they're saying. I assumed that you could still remember how Mariana and Georgia introduced herself to you 4 years ago. And I wanted to be brief because we're running late, but 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 and has extensive knowledge and experience with the financial industry as well as with international trade and industry and 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. And she is a very pleasant, constructive colleague.
I hope that convinces you. And now let's vote on her candidacy. Well, 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. Now we're going to vote about Mrs. George. We're going to vote on Agenda Item 7A, reappointment of Mrs. Mariana George.
Please cast your vote.
The stemming is Geslauten. The vote is closed. And it pleases me greatly that with 98 points, 36%, you have supported the reappointment of Mariana and Georgi. Thank you, and congratulations, Mariana. So this takes us to Item 7B, which is the proposal to appoint Mike Rees as a member of Supervisory Board as per the end of this meeting.
So we are going to start with the possibility of Mr. Rees standing up and explaining why he's so motivated to take this
position. Thank you, Mr. Chairman. I'm Mike Rees. I'm a train 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 2 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 Association 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. So 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.
Thank you very much.
Ladies and gentlemen, allow me to 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 international markets, 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, it 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. And the vote is closed. And we note that this proposal has been carried with 96.66 percent of the votes. Mike, congratulations and welcome.
Item 7c, ladies and gentlemen, is the appointment of Herna Farhaa. Herna, could you please rise and introduce yourself? My name is Herna Verhacker. I'm the CEO of PostNL. I've been working for PostNL for 27.5 years.
The last 7 years, I've been CEO. And previously, I was an HR Director at TNT, which is a company that is in the middle of the transformation into an e commerce logistic company, which is something I appreciate greatly in ING. They're also undergoing transformation. And a lot has been said about that today, and that is also something I hope to contribute to, provided I am appointed. Thank you.
And I shall also explain why we think it's an excellent idea. And 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. And given the upcoming end of the last mandate of Hen Broking as Supervisory Director and also Chairman of Supervisory sorry, of the Remuneration Committee and Nomination Corporate Governance Committee, we expect that Herna, with her background and experience and her personality, it will be very complementary to the current supervisory board and will make an important contribution. Who can I get the floor?
You were the first, I think. [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] Microphone number 2. Mr. Verje, my name is Robert Frenica. I know that, but you have to state that for the minutes.
I'm sorry. I apologize. I know that. Mr. Frenica?
Herna Verhaerz is a very pleasant CEO. She's very knowledgeable and very communicative. You just made a joke about me being a headhunter. I suggested Jeroen Dasselblum. I don't really like Jeroen Dasselblum, former Minister of Finance, but he's a great regulator.
And I also mentioned your case to 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 Jorun Gaj Sublun or Janke Steljar to lead this company backing course. And I also recommended hiring a CCO. You need much better communication. And I'm prepared to take on that job in the interim. Okay, okay.
But we were talking about Mrs. Verhaacher. 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 and given the possible expansion of ING and Ralf Amers could possibly also do that very well. All these forms of expansion, merger acquisitions, he should lead ING into the future.
Ralf Amers is entitled to that. Van Rieke, I'm a private shareholder. I must say it is my impression that Ms. Verhacker is being appointed just to comply with the 30%. I disagree with you that she would be fit for the job, but 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 Posta now, the share price has dropped to €2 or €3 And I would recommend hiring 1 of the 2 gentlemen that this gentleman just recommended and not Mrs. What's her name? Hagen. My name is Van Nippur.
I'm a shareholder from Amsterdam.
Again, 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.
[SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:]
Microphone 1. Mr. Espana, yes, I know. Yes, gentlemen. I'll say my name for the minutes.
Otherwise, I'll get into trouble. Page 7, column 1, second paragraph, line 3. It says HR and that she's very good at that. But if we look at her own annual report, Page 1, in the message of the CEO, paragraph 2, we see that her employees are very dissatisfied, and now you're going to hire her. And this is a political affair because Ingrid von Engelshoven, a minister, said on March 8 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, I mean, because ING, I mean, 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 Polsternel for 14 years. There was Peter Bacher as CEO my big friend, Harry Colstra and Anne Marie.
Well, anyway, I wish Ms. Faragher would have been in the board at that time. I mean, that would have avoided a lot of problems. So I will vote in favor or I would vote in favor. But I congratulate ING with the appointment or but anyway, if we vote in favor, if Ms.
Verhacker ends up in the Supervisory Board, She's very knowledgeable as a manager. And 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. Faragher would be an important addition to the supervisory board.
And 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. And then we've got something else, orange, the town of Volendam. Microphone number 1. My name is Deqa, Mr.
Chairman. 1st and foremost, I would like to highlight that I may not have all that much confidence in the stock exchange listing of PostNL, but 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. So in that respect, I very much favor this appointment. However, I would like to add the following. At this ING, the group is becoming or we saw how the group became larger and larger and more megromaniac at some point, I would say.
With Mr. Thilmar, I think that we reached a high point, very painful. Things were corrected after that, I think. But I'm quite worried about what I've seen over the past few years in management. So in AECUS, I would like to say that I think that you should listen more to society at large.
And please be careful. This is an organization that operates in a very difficult environment, and this company really is not in control. And please be careful with major acquisitions. Plus, there are rumors, and I really have no idea whether these rumors are correct or not. But in the Netherlands, we tend to get the feeling that the Germans do things better than the Germans themselves.
So that has led to many, many accidents. And so I would say, please hire someone who is expert, knowledgeable, someone like Ms. Verhaagen. But please take it seriously. Caution is more important with the bank than expansion.
Well, that was a very clever way to address another point while we were discussing the appointment of Ms. Farhaech. Thank you very much for your comments. One more thing about diversity. Let there be no misunderstanding.
1st 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 in the supervisory board, etcetera, etcetera. And we also look at diversity because we're absolutely convinced that diversity is an added value to the board. So from that perspective, we put forward these 2 proposals. Also, Ms. Farhaa, diversity, men, women, gender diversity will provide added value to the supervisory board.
That is the sequence and no other one. And 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. Yes, we will proceed to the vote. 7, the appointment of Ms. Harana Faraga.
The vote is open. And the standing issue Vote is closed. And it pleases me to inform you that with 88.30 percent of the votes, the proposal has been carried. Welcome, Hannah. Ladies and gentlemen, we're going to proceed to a number of items that are recurring that we have to go through, but I will not encourage an extensive and detailed discussion.
Let me put it that way. Item 8 of the agenda, authorization to issue ordinary shares. I shall refer to the verbatim text of the proposal in the agenda. And 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 15,556,915.20 That is the 40%. I see 2 people who were 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 being no doubts whatsoever with the regulators in terms of what ING will do.
ING has to show that it is 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.
But now this feeling, I'm just wondering what does ING want to do in Germany. Will it be yes comments or no comments? Or is it just a fable? I mean, I do understand there are a lot of banks in Europe. There's going to be an enormous consolidation process.
So 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. So here, I'm in two minds here. So if you say, well, Mr. Hammers and Mr.
Van der Esweck and should Mr. Timmermans have still been here, I would have said, okay, I trust him with my wallet. But as I said, in two minds, okay, we'll have to wait and see then what happens. Microphone 3. Stavast, PGGM for the minutes.
Today, I'm speaking on behalf of PGGM, but also APG Asset Management and BMT, BME, Burmese Investment Management, De Galsamensis. 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 10% which is 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 because we find it important that shareholders be involved in the decision making process in possibly making any major acquisitions. Mr.
Espana? Yes, Mr. Varios, good evening. Yes, indeed, good evening. Yes, 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. And so why don't you say, Well, we'll just withdraw this item because 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, but we can explain in detail in a moment, Mr. Vrank, 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.
But I don't see any WakaWakas. WakaWaka went bankrupt. But 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. But keep your head office in the Netherlands. That's incredibly important. Rothammers can develop platforms that they can only make in Europe and China American China rather. And I think it's good, whatever Rolf Hammers 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 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. And that is what we envisage with this proposal. Okay, ladies and gentlemen, time to vote.
Yes, we will vote on Item 8A, the agenda, which is an authorization to issue ordinary shares. The vote is open. The proposal has been carried with 92.85 percent of the votes. AB 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 AB.
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, But 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 rights 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. But I don't think that's a vote. It is. You're not the only shareholder.
You're a Dutch shareholder, but we also have shareholders in many, many other countries where we have to comply with other rules and regulations. We are a Dutch company. And yes, correct, but there are also other rules that we need to comply with. Well, this is a question I can't answer. Mr.
Vannebosch, brief, please. Mr. Veijs, does this not have to do with ordinary shares and the depositary receipts of shares? Because in an acquisition of ING, what I remember from the past that ING was had a share price well under the net asset value and that there was a possibility that you therefore have the depository receipts. And I understand you say with or without preemptive right, will ordinary shareholders have a greater preemptive right than depository receipt holders?
No, no, no, 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 3,891,728 €8.80 We will proceed to the vote on Agenda Item 8 B, not AB, B. And the vote has been carried with 98.79 percent of the votes.
Thank you for that. This takes us to item 9 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 9. The authorization will be for a maximum of 10% of issued share capital for a period of 18 months. We would like to take the floor.
No one. So we can proceed to the vote. Yes. We'll proceed to the vote on Agenda Item 9, and the vote is open. Vote is closed.
And this proposal has been carried with 97.90 percent of the vote. So thank you. Ladies and gentlemen, Mr. Rose, I have a point of order. This year, there's no any other business?
Correct. I regret that. And And wouldn't there be a possibility for people to use to have the opportunity to raise questions? No, no, no. It's 7 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 ladies and gentlemen. I am going to slowly but shortly 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, the 2, are available in 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. And I would invite you to visit the 3 stands if you still love 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 ING Fund. Questions on services can also be answered in the central lobby. And I would request you to hand in the handsets and the chip cards when you leave the room.
And thank you very much for your questions, your commitment to ING. Thank you. Meeting is closed.