ING Bank could withdraw from the group of primary dealers

ING Bank will not challenge the warning received from the NBR for its failure to participate in the public subscription in Euro-denominated government bonds, held on August 14th, 2009, Mişu Negriţoiu, general manager of the bank said yesterday. He claims however, that the way the issue went was "one of a kind", as it had a preset interest rate (5.25%). "If this will happen again, the bank will withdraw from the group of primary dealers", Mr. Negriţoiu said.

He explained: "There is a regulation of the NBR which states that primary dealers need to submit an offer for at least 10% of each bond issue of the Ministry of Finance. All the bond issues so far were competitive, meaning the interest rate was determined by auction. Every time we would submit an interest rate of our choosing. Many times, the Ministry of Finance would not accept our offers. What happened this time was something else entirely: the interest rate was set in advance. We didn"t qualify and it would have caused a substantial loss for us. We will behave the same way under similar conditions".

Mr. Negriţoiu said he couldn"t challenge the warning of the NBR, because it is in compliance with regulations.

One of the dealers in the market said that the bond issues by the Ministry of Finance are awarded through the multiple price method, but sometimes there are exceptions that primary dealers have to deal with.

Officials of the Ministry of Finance were not available for comments on the statements of the head of ING Bank.