ING Shares Fall on News of $14 Billion Goodwill Write Down

Holland’s ING announced that in order to comply with U.S. GAAP accounting standards it would write down the good will value of some recent acquisitions by 13.1 billion Euros ($14.17 billion), around 20 percent of their current value. The news stunned investors, as it is effectively equivalent to a net loss of 9.6 billion Euros ($10.4 billion) for 2002.

Under Dutch accounting standards ING had reported a 4.3 billion ($4.65 billion) profit last month. The timing of the announcement and the size of the anticipated loss in value caused the company’s shares to sink in Monday morning trading in Europe by almost 7 percent. ING’s ADR shares, traded on the NYSE, had risen sharply – over 8 percent – on Friday in New York.

The write down also resulted in lowering ING’s solvency ratio to 157 percent from 169 percent at the end of December 2002. The ratio is still well above the 100 percent required by most regulators, but the fall could impact on the company’s insurance activities.

The company is one of many victims of the sharp fall in equity values over the last two years. The decline has accelerated recently due to the uncertainty surrounding the impending war with Iraq. ING’s equity revaluation reserve has become a negative 500 million Euros ($541 million), dropping from a plus 600 million ($649 million) at the end of 2001.