ING Group is the holding company and parent of ING Bank, the main legal entity and operating company of the group. Scope has aligned ING Group’s rating to the one of ING Bank given the absence of double leverage and the similar risk profiles of the two entities.

The ratings of ING Bank are driven by the strong universal banking franchise in the Benelux region and the lean wholesale banking model, with the bank leveraging its industry lending expertise through an extensive worldwide network. ING’s presence in higher growth economies, also outside the Euro-zone, has supported continuous earning streams, cushioning the pressure of the low interest rate environment in western Europe.

Equally central to the rating is the bank’s competitive advantage: its early adoption of the direct banking model and ability to adapt its distribution model to customer behaviour. ING has proved it can run a scalable business model within and across geographies, recognising early on the importance of the digital channel and automating back-end processes.

After revelations of shortcomings in customer due diligence and anti-money laundering practices at ING Netherlands, the bank initiated a thorough review of its policies and procedures worldwide. Scope deems the review to adequately address the issues; however, further reputational challenges remain a possibility.

The funding profile is sound. Deposit-taking, mostly in retail, is combined with continuous but diversified market issuance. Capital metrics have also improved and should weather the forthcoming effects from Basel IV.

Alongside ING Bank rating at AA-, the following ratings were affirmed, all with Stable Outlook:

• ING Bank senior unsecured debt: AA-
• ING Group senior unsecured debt: A+
• ING Group AT1 instruments (CRR/CRDIV compliant): BBB
• ING Group T2 instruments: A-
• Short-term debt: S-1+

Scope has also assigned a BBB/Stable debt rating to ING Group’s USD 1.25bn 6.75% AT1 notes issued in February 2019 (XS1956051145). This is in line with Scope’s ratings on the other AT1 securities issued by ING Group. The bond’s principal loss absorption mechanism is equity conversion with a trigger of 7%, applicable at consolidated level.

ING’s full issuer report is available to be downloaded at www.scoperatings.com.

Stress testing & cash flow analysis
No stress testing was performed. No cash flow analysis was performed.

Methodology
The methodologies used for this rating(s) and/or rating outlook(s) Bank Rating Methodology and Bank Capital Instruments Rating Methodology are available on www.scoperatings.com.
Historical default rates of the entities rated by Scope Ratings can be viewed in the rating performance report on https://www.scoperatings.com/#governance-and-policies/regulatory-ESMA. Please also refer to the central platform (CEREP) of the European Securities and Markets Authority (ESMA): http://cerep.esma.europa.eu/cerep-web/statistics/defaults.xhtml. A comprehensive clarification of Scope’s definition of default as well as definitions of rating notations can be found in Scope’s public credit rating methodologies on www.scoperatings.com.
The rating outlook indicates the most likely direction of the rating if the rating were to change within the next 12 to 18 months.

Solicitation, key sources and quality of information
The rating was not requested by the rated entity or its agents. The rated entity and/or its agents did not participate in the rating process. Scope had no access to accounts, management and/or other relevant internal documents for the rated entity or related third party.
The following substantially material sources of information were used to prepare the credit rating: public domain and the rated entity.
Scope considers the quality of information available to Scope on the rated entity or instrument to be satisfactory. The information and data supporting Scope’s ratings originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data.
Prior to the issuance of the rating or outlook action, the rated entity was given the opportunity to review the rating and/or outlook and the principal grounds on which the credit rating and/or outlook is based. Following that review, the rating was not amended before being issued.

Regulatory disclosures
This credit rating and/or rating outlook is issued by Scope Ratings GmbH.
Lead analyst Chiara Romano, Senior Analyst
Person responsible for approval of the rating: Dierk Brandenburg, Managing Director
ING Groep’s issuer rating/outlook was first released by Scope on 01.07.2019.
ING Groep’s senior unsecured debt rating/outlook was first released by Scope on 05.10.2015. The rating/outlook was last updated on 31.03.2017.
ING Groep’s Tier 2 debt rating/outlook was first released by Scope on 27.04.2017.
ING Groep’s Additional Tier 1 debt rating/outlook was first released by Scope on 29.02.2016. The rating/outlook was last updated on 31.03.2017.
ING Bank’s issuer rating/outlook was first released by Scope on 02.04.2014. The rating/outlook was last updated on 31.03.2017.
ING Bank’s short-term rating/outlook was first released by Scope on 22.05.2014. The rating/outlook was last updated on 26.10.2017
ING Bank’s senior unsecured debt rating/outlook was first released by Scope on 02.04.2014. The rating/outlook was last updated on 02.06.2017.

Potential conflicts
Please see www.scoperatings.com for a list of potential conflicts of interest related to the issuance of credit ratings.

Conditions of use / exclusion of liability
© 2019 Scope SE & Co. KGaA and all its subsidiaries including Scope Ratings GmbH, Scope Analysis GmbH, Scope Investor Services GmbH and Scope Risk Solutions GmbH (collectively, Scope). All rights reserved. The information and data supporting Scope’s ratings, rating reports, rating opinions and related research and credit opinions originate from sources Scope considers to be reliable and accurate. Scope does not, however, independently verify the reliability and accuracy of the information and data. Scope’s ratings, rating reports, rating opinions, or related research and credit opinions are provided ‘as is’ without any representation or warranty of any kind. In no circumstance shall Scope or its directors, officers, employees and other representatives be liable to any party for any direct, indirect, incidental or other damages, expenses of any kind, or losses arising from any use of Scope’s ratings, rating reports, rating opinions, related research or credit opinions. Ratings and other related credit opinions issued by Scope are, and have to be viewed by any party as, opinions on relative credit risk and not a statement of fact or recommendation to purchase, hold or sell securities. Past performance does not necessarily predict future results. Any report issued by Scope is not a prospectus or similar document related to a debt security or issuing entity. Scope issues credit ratings and related research and opinions with the understanding and expectation that parties using them will assess independently the suitability of each security for investment or transaction purposes. Scope’s credit ratings address relative credit risk, they do not address other risks such as market, liquidity, legal, or volatility. The information and data included herein is protected by copyright and other laws. To reproduce, transmit, transfer, disseminate, translate, resell, or store for subsequent use for any such purpose the information and data contained herein, contact Scope Ratings GmbH at Lennéstraße 5 D-10785 Berlin.

Scope Ratings GmbH, Lennéstraße 5, 10785 Berlin, District Court for Berlin (Charlottenburg) HRB 192993 B, Managing Directors: Torsten Hinrichs and Guillaume Jolivet.