Amsterdam: Dutch bancassurer ING will repay 5 billion euros (USD 7.35 billion) in state support on December 21, confirming its announced plans and raising hopes it can secure better terms on the remainder of its government aid.
ING shares rose 6 percent in early trading, after it said the government was ready to negotiate more favourable terms on the other 5 billion euros it owes following its October 2008 bailout.
ING has said all along that it wants to repay the state as fast as possible to escape government oversight and give it more freedom on acquisitions, pay and dividends.
Under the current terms, ING has to pay a 50 percent penalty to repay any of its aid within the first three years.
It obtained a better deal on the 5 billion euros it will repay this month, but until Friday it was not clear whether the government was open to changing terms on the rest.
"We believe renegotiation in favour of ING will succeed," SNS Securities said in a research note, adding that it expects the penalty to be revised to about 30 percent.
ING, one of the top five insurers in Europe, said the total repayment would be 5.61 billion euros, including an accrued coupon of 259 million euros and a repayment premium of 347 million. The Dutch central bank has approved the repayment.
In total SNS said the payment reflected a penalty of about 7 percent.
ING launched a 7.5 billion rights issue last month to repay the government and for other purposes. It has called the rights issue a one-off and said future repayments would come from retained earnings and divestments.