Dumb Dutch Bankers panickING

Beating up on bankers is a bit too popular of late, but some bankers deserve to be singled out for recognition.

ING has come along way in 17 years; not long ago it was the “Postal Bank” of the Netherlands, but mergers over the years built it up into a formidable organization with a management team that was clearly not up to the task of managing the beast they had created.

Only last Friday they insisted they had no need for new capital, but they were either lying or clueless...take your pick.

The Dutch government is bailing the Dutch bankers out to the tune of $13.4 billion...which will barely restore their capital ratios to acceptable minimum levels. Apparently they just figured out there was a storm brewing:

The announcement came after top bank executives spent the weekend in urgent talks with government and central bank officials concerned about the prospect that ING might collapse when trading opened on Monday. Shares of ING fell more than 27 percent on Friday in Amsterdam after the company said it expected to post a third-quarter loss of 500 million euros as a result of 1.6 billion euros in write-downs....CEO Michel Tilmant commented “market conditions have changed dramatically in recent weeks and have led to an internationally recognized belief that going forward, in this market environment, capital requirements for financial institutions should be higher.” NYT

ING’s prowess, or lack thereof, in stock picking has long been on display at their in-house asset management operations. But they were not content to merely lose money for the clients, and apparently took a flyer in their capital account as well…

The bank has also been hurt by its exposure to the extremes of the stock market, he said, as ING had 3.5 billion euros of unhedged equity exposure in its equity investment portfolio at the end of June.

Unhedged...aka Long and Wrong. That might have cost them $2 billion over the past 4 months.

Have fun at the marathon, it will probably rain.

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The Netherlands to Provide $13 Billion to the ING Group
New York Times

ING Gets $13.4 Billion Injection From the Netherlands
Bloomberg
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