Crisis Lessons: ING Goes Back To The Basics

The financial crisis is far from over, while the economic crisis has just begun, according to Misu Negritoiu, CEO of ING Bank - Romania.

He believes that liquidity injections were a good idea, but \"it is very hard to determine how much money is actually needed, without stepping over the line.\"

The lesson learned by ING Bank while facing the challenges posed by distressed financial markets is that they need to go back to basic products, which \"the country and the people need,\" according to Negritoiu.

\"It\"s not sophisticated products that we are focusing on,\" he added. The bank\"s objectives are to become one of the top five banks in the country, expand the network of branches through organic growth and have one million happy customers.

• Retail banking division to become profitable next year

The retail banking division of ING bank was established five years ago and has achieved the objective of having one million customers. The target of 200-250 branches is currently 90 per cent completed.

\"The reason why we targeted one million customers is that this is the break-even point for us,\" Deputy CEO Albert Roggemans.

\"We will starting making a profit from retail banking next year and thus contribute to the bank\"s overall performance,\" Roggemans added.

Near-future plans include the introduction of new products tailored to the specific needs of the customers. Roggemans further stressed that the bank had never ceased to issue loans, even at the peak of hardship. \"Interest rates for loans are very high on the market; we will try to offer rates by two or three per cent below the market, but for short-term loans,\" he added.

• First Home Programme would have been too expensive for ING

ING Bank - Romania intended to join the State-driven housing programme First Home, but changed plans at the last moment and introduced a proprietary New Home Plan.

\"The guarantee was not 100 percent sure, the bureaucracy was too great and it would have been too much of a burden to develop the necessary IT solutions. All this would have taken too long, so we decided to take the lending risk ourselves,\" Roggemans said.

The ING New Home Loan Plan comes with a variable interest rate of 5.5 per cent p.a. equal to an actual annual rate of 6.11% calculated for an 80,000 EUR loan for 30 years. The variable interest rate can be updated once per year.

Unlike the loans available under the First Home Programme, the ING New Home Loan Plan requires customers to make a down payment of 25 percent. However, the ceiling is 80,000 EUR, as opposed to the 60,000 EUR limit on the First Home loans.

Additionally, the bank will offer such loans for the purchase or construction of a main residence, even if the applicant already owns other properties. For comparison, the First Home Programme is only available to persons who do not have any property. Another advantage is that, one year after disbursement, the ING New Home Loan Plan allows customers to make payments ahead of schedule without any penalty.

ING Bank - Romania has also introduced the ING Personal, a personal loan available for an interest rate of 15.5 per cent p.a. equal to an actual annual rate of 18.23 per cent, calculated for a loan of 60,000 RON for five years plus insurance.

The bank is encouraging parents to save money for their children by offering a preferential interest rate for both RON- and EUR-denominated savings.