Application of the Dutch Banking Code

Application

of the Dutch

Banking Code

by ING Bank N.V.

19 March 2015

1 Introduction 3

2 Supervisory Board 4

3 Executive Board 8

4 Risk Management 14

5 Audit 16

6 Remuneration Policy 18

Contents

1 Introduction

In September 2009, the Dutch Banking Association (NVB) published the Banking Code (Code

Banken). The Banking Code lays out the principles for Dutch banks in terms of corporate

governance, risk management, audit and remuneration.

The Banking Code is a form of self-regulation that took effect on 1 January 2010 on a ‘comply or

explain’ basis, and was drawn up in response to a report entitled ‘Restoring Trust’ (‘Naar herstel

van vertrouwen’), published in April 2009 by the Advisory Committee on the Future of Banks

(Adviescommissie Toekomst Banken) in the Netherlands.

The Banking Code applies to all activities in the Netherlands performed by banks that are in

possession of a banking licence granted under the Financial Supervision Act (Wet op het ﬁnancieel

toezicht (Wft)), irrespective of whether they perform their activities in the Netherlands or in another

Member State, and irrespective of whether those activities are performed by a branch.

Accordingly, ING applies the Banking Code within the following legal entities that hold a Dutch

banking license:

• ING Bank N.V.

• ING Direct N.V.

• Bank Mendes Gans N.V.

• WestlandUtrecht Bank N.V.

Banks that are part of a group can apply parts of the Banking Code at group level or on a

consolidated basis. The Management Board Banking has decided to apply the corporate governance

principles of the Banking Code at the consolidated level, i.e. for the Management Board Banking

and Supervisory Board of ING Bank N.V. The remuneration principles, insofar as they relate to

executive remuneration, also apply to the members of the Executive Board of ING Groep N.V. Other

principles relating to risk management (including the product approval process), customer due care,

business principles and remuneration are or will be implemented for all entities in the ING banking

organisation for which ING has management control.

In this booklet ING reports on how the principles of the Banking Code are applied by ING Bank

(including ING Direct N.V., Bank Mendes Gans N.V. and WestlandUtrecht Bank N.V.). ING Bank

strongly supports the principles of the Banking Code as an important step by the banking sector to

regain trust, ensure stability and protect the interests of our stakeholders. Regaining trust requires a

sustainable approach and continuous attention. Following the signiﬁcant steps taken to comply with

the principles of the Banking Code in 2010, 2011, 2012 and 2013, ING has continued this effort

over the ﬁnancial year 2014. As an international bank with global activities, ING Bank has taken its

entire operational environment into account when applying the principles of the Banking Code. ING

Bank recognizes that complying with these principles will be an on-going process.

For ING Groenbank N.V. no separate impact assessment has been made, since all activities are managed

through the Domestic NL organisation of ING Bank N.V.

ING Bank applies this principle. The composition of the

Supervisory Board of ING allows the board to fulﬁl its tasks

properly. The Supervisory Board consists presently of eight

members. The diversity in the composition of the Supervisory

Board is among others reﬂected in, gender, age and

professional background.

The broad diversity in professional background of the members

of the board ensures the complementary proﬁle of the board.

The Supervisory Board acts as a collegial body. While decisions

are formally taken by majority, the board in principle acts

on a consensus basis. All members of the Supervisory Board

except one meet the independence criteria as laid down in the

Dutch Corporate Governance Code. Each year the Supervisory

Board performs a self-assessment, a.o. on the composition of

the Board. Moreover, in the context of balancing all statutory

requirements and the overall proﬁle of the Supervisory Board,

the Supervisory Board aims at adding a third female member to

the Supervisory Board.

The Charter of the Supervisory Board of ING Bank N.V. has

been amended in accordance with this principle.

Implementation by INGText Banking CodeNr.

The supervisory board shall be composed

in such a way that it is able to perform

its tasks properly. Complementarity,

a collegial board, independence and

diversity are preconditions for the

supervisory board to perform its tasks

properly.

ING Bank applies this principle. The number of Supervisory

Board members of ING is sufﬁcient to fulﬁl the tasks of the

Supervisory Board and its committees. Each year the Supervisory

Board assesses whether it still consists of a sufﬁcient number of

members - taking into account the various committees within the

Supervisory Board - to properly perform its function.

The supervisory board shall have a

sufﬁcient number of members to properly

perform its function, including in its

committees. The appropriate number of

members depends on the nature, size

and complexity of the bank.

ING Bank applies this principle. Each Supervisory Board member

follows a tailor-made introduction programme after his/ her

appointment to become better acquainted with ING and his/her

role as a Supervisory Board member.

ING introduced a regular Knowledge Day for Supervisory Board

members to acquire additional in-depth knowledge regarding

general developments in the ﬁnancial market, customer

care, commercial activities, risk management and regulatory

developments. In 2014 trends in economy, regulatory,

technology and customer behaviour, as well as innovation and

predictive analyses, were among the topics discussed during

the Knowledge Day. In addition, cybercrime, Basel III regulation,

Dutch compensation rules, implications of SEPA and European

Banking Supervision as well as a visit to ING Bank Slaski have

been part of the Permanent Education programme for the

Supervisory Board.

The bank’s function in society and interests of all stakeholders

are taken into account by the Supervisory Board in performing

its duties.

The members of the supervisory board

shall have thorough knowledge of the

bank’s functions in society and of the

interests of all parties involved in the

bank.

The supervisory board shall carefully

consider the interests of all parties

involved in the bank, such as the

bank’s clients, its shareholders and its

employees.

Implementation by ING

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2 Supervisory Board

2.1 Composition and expertise

General

2.1.1

2.1.2

2.1.3

ING Bank applies this principle. In order to support the

Supervisory Board members in assessing the main aspects

of the bank’s overall policy in order to form a balanced

and independent opinion about the basic risks involved,

risk management is a key topic in the Supervisory Board

introduction programme and the Permanent Education

Programme. In addition to the Permanent Education

Programme, individual Supervisory Board member expertise is

also addressed in the annual selfevaluation of the Supervisory

Board and in the individual proﬁle for the appointment of new

Supervisory Board members.

This principle has been laid down in the Charter of the

Supervisory Board of ING Bank N.V. In 2014 one new

Supervisory Board member was appointed to the Supervisory

Board. Next to the general Supervisory Board proﬁle, an

individual proﬁle was used in the selection, which was based on

expertise that was complementary to the current Supervisory

Board.

For more information on the Supervisory Board proﬁle,

Go to www.ing.com.

Implementation by INGText Banking CodeNr.

Each member of the supervisory

board shall be capable of assessing

the main aspects of the bank’s overall

policy in order to form a balanced and

independent opinion about the basic

risks involved.

Each member of the supervisory board

shall also possess the speciﬁc expertise

needed to perform his or her role in the

supervisory board.

To this end, whenever a vacancy arises

on the supervisory board, an individual

proﬁle shall be drawn up for the new

member of the board.

ING Bank applies this principle. A proﬁle was drawn up for the

chairman of the Supervisory Board that focuses on the bank’s

requirements in terms of expertise and competences.

As part of the process to ﬁll the vacancy

of chairman of the supervisory board, an

individual proﬁle shall be drawn up that

also focuses on the bank’s requirements

in terms of expertise and experience

in relation to the ﬁnancial sector and

familiarity with the socio-economic

and political culture and the social

environment of the bank’s main markets.

ING Bank applies this principle. The members of the Supervisory

Board of ING are sufﬁciently available and accessible to fulﬁl

their tasks. The members of the Supervisory Board availability

is a.o. reﬂected in the attendance lists of the Supervisory Board

meetings. In 2014 on average 98% of the Supervisory Board

members were present at the Supervisory Board and committee

meetings. Outside these meetings various topics are discussed

through e-mail or by phone or individual Supervisory Board

members visit the ING ofﬁces upon request or on their own

initiative. All members of the Supervisory Board also have an

ING e-mail address.

ING has amended the Charter of the Supervisory Board.

Each member of the supervisory board

– the chairman in particular – shall be

sufﬁciently available and contactable to

properly perform his or her tasks in the

supervisory board and the supervisory

board’s committees.

Implementation by ING

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2.1.4

2.1.5

2.1.6

Implementation by INGText Banking CodeNr.

ING Bank applies this principle. The compensation of

Supervisory Board members of ING does not depend on the

bank’s results. Information on remuneration of the Supervisory

Board will be disclosed in ING’s remuneration report 2014.

Go to www.ing.com.

Implementation by INGText Banking CodeNr.

Each member of the supervisory board

shall receive suitable compensation for

the amount of time that he or she spends

on supervisory board activities.

This compensation shall not depend on

the bank’s results.

ING Bank applies this principle. In order to maintain the expertise

of the Supervisory Board and to improve their expertise where

needed, a Permanent Education Programme for the Supervisory

Board is in place. As part of the annual self-assessment

Supervisory Board members may request further training or

education on speciﬁc topics which are implemented in the

Permanent Education Programme.

This principle of the Code is also reﬂected in the Charter of the

Supervisory Board of ING Bank N.V. More information on the

Permanent Education Programme for the Supervisory Board can

be found under 2.1.3.

The chairman of the supervisory board

shall organise a programme of lifelong

learning, with the aim of maintaining

the expertise of the supervisory board

directors at the required standard

and improving their expertise where

necessary. The learning programme

shall cover relevant developments at

the bank and in the ﬁnancial sector,

corporate governance in general and in

the ﬁnancial sector in particular, the duty

of care towards the client, integrity, risk

management, ﬁnancial reporting and

audits.

Every member of the supervisory board

shall take part in the programme and

meet the requirements of lifelong

learning.

ING Bank applies this principle. The Permanent Education

Programme for the Supervisory Board is one of the subjects in

the yearly self-assessment performed by the Supervisory Board.

The Charter of the Supervisory Board of ING Bank N.V. has

been amended accordingly.

The assessment of the effectiveness

of the lifelong learning referred to in

principle 2.1.8 shall be part of the annual

evaluation performed by the supervisory

board.

Implementation by INGText Banking CodeNr.

2.1.7

2.1.8

2.1.9

In addition to the supervisory board’s

annual self-evaluation, the functioning of

the supervisory board shall be evaluated

under independent supervision once

every three years. The involvement of

each member of the supervisory board,

the culture within the supervisory

board and the relationship between the

supervisory board and the executive

board shall be part of this evaluation.

2.1.10 ING Bank applies this principle and has amended the Charter of

the Supervisory Board of ING Bank N.V. accordingly. Annually,

the functioning of the supervisory board is evaluated, while the

2014 self- assessment took place under external assistance.

Implementation by INGText Banking CodeNr.

ING Bank applies this principle. Per August 2009 a Risk

Committee of the Supervisory Board has been installed. On

a quarterly basis the Risk & Capital Management report is

discussed in the Risk Committee and subsequently in the

Supervisory Board.

The risk appetite statements are also discussed in the Risk

Committee and subsequently in the Supervisory Board. The

Charter of the Supervisory Board of ING Bank N.V. and the Risk

Committee have been amended accordingly.

For more information on Risk Management, see Chapter on

Risk Management in ING’s Annual Account section in the

Annual Report.

Implementation by INGText Banking CodeNr.

As part of its supervisory tasks, the

supervisory board shall pay special

attention to the bank’s risk management.

All discussions about risk management

shall be prepared by a risk committee or

a similar committee, which committee

shall be appointed by the supervisory

board from its ranks for this purpose.

ING Bank applies this principle. Both the members of the

Audit Committee and the Risk Committee must meet speciﬁc

requirements regarding competence and experience which are

laid down in the Charters of the Audit and Risk Committee of the

Supervisory Board.

Both the risk committee and the audit

committee shall be subject to speciﬁc

requirements as regards competency

and experience. For example, a number

of members of the risk committee

must have sound knowledge of the

ﬁnancial aspects of risk management

or the experience needed to make a

thorough assessment of risks. A number

of members of the audit committee

must have sound knowledge of ﬁnancial

reporting and internal control systems

and audits or the experience needed to

thoroughly supervise these areas.

2.2.1

2.2.2

2.2 Tasks and working methods

ING Bank applies this principle. The Management Board

Banking is composed in such a way that it is able to perform

its tasks properly. Members of the Management Board Banking

have various backgrounds and areas of expertise in banking,

ﬁnance or risk management. In the Bank’s Think Forward

strategy, we aim to create a differentiating customer experience

throughout the bank, enabled by an intensiﬁed focus on

operational excellence. Therefore, in addition to the current

composition of the Management Board Banking , a Chief

Operations Ofﬁcer (“COO”) has been appointed as a member

of the Management Board Banking per 1 May 2014 to drive

operational excellence across the Bank. The Management

Board Banking recognizes the importance of diversity within

the Management Board Banking and considers this as a clear

priority. The Management Board Banking is committed to

continue encouraging diversity through her talent management

programme. The requirements on the composition of the

Management Board Banking are laid down in the Executive

Board Proﬁle that can be found on www.ing.com. The

Management Board Banking acts as a collective body and

strives to take decisions on a consensus basis.

Implementation by INGText Banking CodeNr.

The executive board shall be composed

in such a way that it is able to perform

its tasks properly. Complementarity,

a collegial board and diversity are

preconditions for the executive board to

perform its tasks properly.

ING Bank applies this principle. Members of the Management

Board Banking have various backgrounds and areas of expertise

in banking, ﬁnance or risk management. Please go to www.ing.

com to ﬁnd the Management Board Banking members’ individual

proﬁles. The requirements on composition and competence

of the Management Board are included in the Executive Board

Proﬁle that can be found on www.ing.com. Furthermore board

members are subject to a “ﬁt and proper”-test by

De Nederlandsche Bank and since 4 November 2014 the

European Central Bank in order to ensure that the composition

of the Management Board Banking is sufﬁcient for the proper

fulﬁlment of its tasks.

On a regular basis the Supervisory Board evaluates the

functioning of the individual members of the Management Board

Banking.

Each member of the executive board

shall possess a thorough knowledge

of the ﬁnancial sector in general and

the banking sector in particular. Each

member of the executive board shall

have thorough knowledge of the bank’s

functions in society and of the interests

of all parties involved in the bank.

In addition, each member of the

executive board shall possess thorough

knowledge so that he or she is able to

assess and determine the main aspects of

the bank’s overall policy and then form a

balanced and independent opinion about

the risks involved.

ING Bank applies this principle. A collective Permanent Education

(“PE”) Programme for the members of the Management

Board Banking exists. The PE Programme covers the following

main themes (i) developments at the Bank and in the ﬁnancial

sector, (ii) corporate governance in general and in the ﬁnancial

sector, (iii) duty of care towards the client, (iv) integrity, (v)

risk management, (vi) ﬁnancial reporting and (vii) audits. The

programme is organised to provide collective Management Board

Banking PE sessions at least on a quarterly basis. Thought leaders

and experts are invited to educate on various topics. Topics

that have been included in the 2014 collective sessions cover

amongst others The Duty of Care Towards the Client, Integrity,

Risk Management and Financial Reporting. Individual training

needs and sessions differ per board member. There are also

presentations during regular board meetings which contribute

to the Board’s general education, e.g. on various content related

topics.

The chairman of the executive board

shall organise a programme of lifelong

learning, with the aim of maintaining the

expertise of the executive board directors

at the required standard and improving

their expertise where necessary. The

learning programme shall cover relevant

developments at the bank and in the

ﬁnancial sector, corporate governance

in general and in the ﬁnancial sector

in particular, the duty of care towards

the client, integrity, risk management,

ﬁnancial reporting and audits.

Implementation by ING

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Implementation by INGText Banking CodeNr.

3 Executive Board

3.1 Composition and expertise

3.1.1

3.1.2

3.1.3

Implementation by INGText Banking CodeNr.

ING Bank applies this principle and has amended the Charter

of the Management Board of ING Bank N.V. accordingly. See

Principle 3.1.3 for more details. Expertise of the Management

Board is addressed in the annual assessment of the functioning

of the Management Board members.

Implementation by INGText Banking CodeNr.

Every member of the executive board

shall take part in the programme referred

to in 3.1.3 and meet the requirements of

lifelong learning. They have to satisfy this

condition in order to sit on the executive

board.

The supervisory board shall ascertain

whether the members of the executive

board continue to fulﬁl the expertise

requirements developed by De

Nederlandsche Bank [the Dutch central

bank].

The manner of implementation of the principles 3.1.3 and 3.1.4

is described in this booklet and is refered to in the Annual Report.

Each year, the bank shall indicate in

its annual report in what manner it

implemented principles 3.1.3 and 3.1.4.

ING Bank applies this principle. In executing its duties the

Management Board Banking carefully considers both the

commercial interests of the bank as well as the ﬁnancial risks,

while taking into consideration the interest of all stakeholders,

applicable law and codes of conduct. In that consideration they

will give paramount importance to the clients’ interests.

The Charter of the Management Board of ING Bank N.V.

reﬂects this principle.

Taking into account the risk appetite

approved by the supervisory board, the

executive board shall ensure a balanced

assessment between the commercial

interests of the bank and the risks to be

taken.

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3.1.4

3.1.5

3.1.6

3.1.7 Within the executive board one member

shall be responsible for preparing the

decision-making with regard to risk

management.

This member of the executive board

shall be involved, in a timely manner,

in the preparation of decisions that are

of material signiﬁcance for the bank as

regards the risk proﬁle, especially where

these decisions may result in departure

from the risk appetite approved by the

supervisory board.

Risk management shall also include a

focus on the interests of ﬁnancial stability

and on the impact that systemic risk

could have on the risk proﬁle of the

bank.

Risk management shall also include a

focus on the interests of ﬁnancial stability

and on the impact that systemic risk

could have on the risk proﬁle of the

bank.

ING Bank applies this principle. As of 2007 ING has a Chief Risk

Ofﬁcer (CRO) in the Management Board Banking who bears

primary overall responsibility for the Risk management function.

The CRO is responsible for the management and control of risk

on a consolidated level to ensure that ING’s Bank risk proﬁle

is consistent with its ﬁnancial resources and the risk appetite.

The CRO is also responsible for establishing and maintaining

a robust organisational basis for the management of risk

throughout the organisation. The CRO in the Board does not

combine his role with any commercial focus areas.

ING’s risk management framework is based on the ‘three lines

of defence’ concept which ensures that risk is managed in line

with the risk appetite as deﬁned by the Executive Board (and

ratiﬁed by the Supervisory Board) and is cascaded throughout

ING Bank. The risk committees are part of the second line of

defence. They act within the overall risk policy and delegated

authorities granted by the Executive Board and have an advisory

role to the CRO.

The CRO is co-chairman of the Asset and Liability Committee

(ALCO) of the Bank. The ALCO discusses and approves on a

monthly basis the overall risk proﬁle of all ING Bank’s market

risks that occur in its Commercial Banking and Retail Banking

activities. The CRO is also chairman of the CRO Staff and co-

chairman of the Finance & Risk Committee (F&RC). The F&RC

Implementation by INGText Banking CodeNr.

The member of the executive board who

is responsible for preparing the decision-

making with regard to risk management

may combine his or her function with

other focus areas, on the condition that

he or she does not bear any individual

commercial responsibility for the

commercial task areas and operates

independently from those areas.

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The CRO in the board does not combine his role with any

commercial focus areas.

3.1.8

is a platform for the CRO and the Chief Financial Ofﬁcer (CFO),

along with their respective direct reports, to discuss and decide

on issues that relate to both the ﬁnance and risk domains. As

part of all this, the CRO is closely involved in risk matters and

decisions that may have a material impact on the bank. He is also

member of the Global Credit Committee Policy (GCCP), which

discusses and approves policies, methodologies and procedures

related to credit, country and reputation risks within ING Bank

and the Global Credit Committee –

Transaction Approval (GCCTA), which discusses and approves

transactions that entail taking credit risk above a certain

threshold.

As an example how ING’s Risk management includes a focus on

the interests of ﬁnancial stability and on the impact that systemic

risk could have on the risk proﬁle of the bank, ING complements

its regular standardized risk reporting with (ad hoc) stress tests.

A stress test is an instrument to check whether a ﬁnancial

institution can withstand speciﬁc negative events or economic

changes. More speciﬁc, stress testing examines the effect of

exceptional but plausible events on the capital and liquidity

position of the ﬁnancial institution and provides insight in which

business lines and portfolios are vulnerable to which type of

scenarios.

Several stress tests are conducted, both scheduled and ad hoc,

both in the form of sensitivity or scenario analysis, either for

a speciﬁc risk type or for the bank or insurance company as a

whole. The stress test can represent various economic situations

from mild recession to extreme shock In addition to regulatory

required stress tests such as those from De Nederlandsche Bank

and ECB, several ad hoc tests have been conducted.

For further information on Risk Management, see Chapters on

Risk Management in the ING Annual Report.

Go to www.ing.com.

Implementation by INGText Banking CodeNr.

ING Bank applies this principle. This principle is reﬂected in the

Charter of the Management Board of ING Bank N.V.

Stakeholder engagement has always been an important

element of ING’s overall corporate strategy.

We continuously listen to different constituencies, the most

important of which are customers, employees, supervisors,

shareholders, civil society organisations and citizens and

regulators. We seek feedback from our stakeholders on

different issues and try to engage in a constructive dialogue.

This enables us to learn which issues are most important to

them and how we can best align the interests of our business

with theirs.

Rather than having one-off consultations around speciﬁc topics,

we prefer to take an integrated approach towards stakeholder

engagement. This means that we have an ongoing dialogue

about our role in society, our products and services, our

business performance and other issues. This is done at both the

business unit and Group level.

Implementation by INGText Banking CodeNr.

In all of its actions, the bank’s executive

board shall ensure that it carefully

considers the interests of all of the

parties involved in the bank, such as the

bank’s clients, its shareholders and its

employees. These considerations shall

take into account the continuity of the

bank, the environment in society in

which the bank operates and legislation,

regulations and codes that apply to the

bank.

The duty of care for customers is embedded in ING Bank’s

strategy, and its values, policies, procedures, communication,

marketing and training. Customer focus is also a key element of

the Banker’s Oath that all employees shall take in 2015.

ING is continuously enhancing its Customer Care, based

on, amongst others, customer feedback. Worldwide an ING

Customer Suitability programme has been running since

2010. The main objective of this programme is to globally and

structurally assess existing products, services and advice processes

available to Retail customers, Small and Medium Enterprises and

Mid-Corporate customers.

Internally ING ensures that continuous training programmes - to

emphasise the importance of customer centricity to its employees

- are provided.

ING has deﬁned Customer Golden Rules. These Customer Golden

Rules are ﬁve principles which ensure that we consistently provide

customers with the right products and services, at the right price

and at the right time in their life, in the right way. The Customer

Golden Rules are an integrated part of the Product Approval and

Review Process (‘PARP’).

Customer Care is being monitored and ﬁndings acted upon,

for example the Complaints Handling processes, Net Promoter

Score (this is a tool to measure customer satisfaction) and

employee engagement survey, referred to within ING as Winning

Performance Culture Survey (“WPC”).

For example, a recent review by Financial Markets of the sale

process of structured notes to non-sophisticated clients has led

to changes in the selection of external distributors and in the

disclosure of fees.

ING Domestic Bank Netherlands has embedded the concept of

“Customer interest centrally” in everything they do” (in Dutch:

Maintaining a continued focus on

its clients’ interests is a necessary

precondition for the continuity of the

bank. Without prejudice to the principle

formulated in 3.2.1, the executive board

shall ensure that the bank always treats

its clients with due care.

The executive board shall see to it

that the duty of care for the client is

embedded in the bank’s culture.

3.2.1

3.2.2

3.2 Tasks and working methods

Implementation by INGText Banking CodeNr.

“Klantbelang Centraal” or “KBC”) by means of an integral

approach, covering all the main aspects of the organisation, from

products and services to remuneration and controls, and from

internal awareness to external dialogue.

Recent examples in ING Domestic Bank Netherlands of KBC-

embedding and monitoring - include:

• The KBC Monitor:

Yearly ING Domestic Bank Netherlands formulates its

ambition and monitors the realisation of KBC by means of

this tool. Twice a year the KBC Monitor measures scores on

these indicators:

• Vision and Strategy;

• Products;

• Suitability of Advice;

• Culture, Behaviour & Management;

• Complaints, Arrears Management and, Investment

Services.

The KBC Monitor measures the extend of embedding of

KBC within ING Domestic Bank Netherlands.

• The KBC Self Analysis (KBC Zelfanalyse):

In the process of performing this yearly Self Analysis new

possibilities and risks for KBC embedding are being identiﬁed.

Based on the outcomes, conclusions are drawn, enhancements

formulated and ambitions are adjusted, if necessary. This

provides a complete picture of the extent to which the ambition

regarding KBC is being realised within ING Domestic Bank

Netherlands, and provides input for new improvement activities

to be formulated.

To empower people to stay a step ahead in life and in business,

ING Domestic Bank offers its customers various new tools, to stay

(or become) “ﬁnancially ﬁt”. For example:

• The Financially Fit Indicator (“Financieel Fit Wijzer”) offering

the customer an overview of his ﬁnancial situation and

providing information on ﬁnancial questions;

• Customer ratings and reviews: Customers of ING Domestic

Bank Netherlands can now evaluate ING’s products, by rating

them with (up to 5) stars. So now, at ing.nl, everyone can

read what our customers think of our products and services.

• The Mortgage Stress Test (“Hypotheek Stresstest”) offering

the customer insight into whether the mortgage needs extra

attention and, if so, what steps can be made to improve the

customer’s ﬁnancial situation.

• The Personal desk for next of kin: A single point of contact to

support those customers experiencing death in the family.

Examples for business clients include:

• Alert for savings products with a bonus construction: The

bonus interest is on top off a ﬁxed interest. A customer gets a

bonus interest when the amount at the end of a year is the

same or higher as the amount at the beginning of the year.

Customers receive an e-mail alert at the moment it is

favourable for the customer to make a deposit, in order to

prevent him from missing out on receiving an interest bonus.

• The online Financing Check (“Financierings-check”) which

gives entrepreneurs a clear insight into those activities in

their business that need attention and provides tips for

further improvement. Furthermore they are offered the

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ING Bank applies this principle. All Management Board Banking

Members have signed the Moral and Ethical Conduct statement

and the Charter of ING Bank reﬂects the principle.

In addition in line with the legal requirement all ING senior

managers in scope, including all Management Board Banking

Members have taken the Banker’s Oath.

The members of the executive board

shall perform their tasks in a meticulous,

expert and fair manner, taking into

account the applicable laws, codes of

conduct and regulations.

Each member of the executive board

shall sign a moral and ethical conduct

declaration. A declaration has been

included in the explanatory notes to

this code. This declaration is a model

declaration, which means that each

bank can supplement it as it deems

appropriate.

ING Bank applies this principle. The ING Business Principles

cover all aspects of the moral and ethical conduct declaration.

Senior management of ING Bank has endorsed our Business

Principles statement.

Speciﬁc reference to the ING Business Principles is included

in employee contracts. Besides, various initiatives further

emphasize that every employee understands how their

actions and behaviours can help earn and retain customer

and stakeholder trust. The ING Business Principles continue to

form an integrated part of employee trainings in the so called

Promoting Integrity Programme across the organisation.

More information on the ING Business Principles can be found

on: http://www.ing.com/About-us/Our-stories/Features/

Features/ING-launches-ING-Values.htm

The executive board shall ensure that the

declaration referred to in principle 3.2.3

is translated into principles that form

guidelines for the behaviour of all of the

bank’s employees.

The content of these principles shall

be expressly pointed out to every new

employee of the bank when he or she

joins the bank by inserting a reference to

these principles in the new employee’s

contract of employment. Every new

employee shall be required to comply

with these principles.

Implementation by ING

Text Banking CodeNr.

Implementation by INGText Banking CodeNr.

3.2.3

3.2.4

opportunity to be called by ING in order to further discuss the

outcomes.

• The tool for Economic prospects (“Economische

vooruitzichten tool”): By means of this tool clients and

prospects can put together their own personal report,

containing all relevant economic outlooks and industry

information, on the regions where their business is active.

The above mentioned examples demonstrate how ING Domestic

Bank Netherlands is committed to its customers and its role in

society and how it responds to society’s changing expectations by

putting customer’s interest centrally long term.

ING Bank applies this principle. While the Management

Board Banking has a collective responsibility to manage the

company, one of the Management Board Banking members

has been appointed CRO who is primarily responsible for risk

management.

Each year, the risk appetite is set by the Management Board

Banking and submitted to the Supervisory Board for approval.

Any material changes within this period are also set by the

Management Board Banking and submitted to the Supervisory

Board for approval.

This principle has been reﬂected in the Charter of the

Management Board of ING Bank N.V.

Implementation by INGText Banking CodeNr.

The executive board – and primarily

the chairman of the executive board

– shall be responsible for adopting,

implementing, monitoring and, where

necessary, adjusting the bank’s overall risk

policy.

The executive board shall propose the

risk appetite to the supervisory board

for approval at least once a year. Any

material changes to the risk appetite

in the interim shall also require the

supervisory board’s approval.

ING Bank applies this principle. The Supervisory Board regularly

discusses the bank’s risk proﬁle based on Risk & Capital

Management Report. This report provides a comparison of the

actual risk proﬁle (capital and liquidity) versus the approved risk

appetite and the actual capital and liquidity levels.

Since August 2009 the Supervisory Board has a Risk Committee.

Risk Committee meetings take place at least 4 times a year. The

Risk committee prepares the discussion and the decision making

by the Supervisory Board with respect to risk management.

This principle has been reﬂected in the Charter of the Supervisory

Board of ING Bank N.V.

The supervisory board shall supervise

the risk policy pursued by the executive

board.

As part of their supervision, the

supervisory board shall discuss the bank’s

risk proﬁle and assess at a strategic level

whether capital allocation and liquidity

impact in the general sense are in line

with the approved risk appetite.

In the performance of this supervisory

role, the supervisory board shall be

advised by the risk committee formed

from the ranks of the supervisory board

for this purpose.

ING Bank applies this principle. On a quarterly basis, the Risk &

Capital Management Report is provided by the Management

Board Banking to the Supervisory Board. This enables

the Supervisory Board to discuss and assess whether the

commercial activities of the bank are appropriate in the context

of the risk appetite of the bank.

Each year, the risk appetite is set by the Executive Board and

submitted to the Supervisory Board for approval.

This principle has been reﬂected in the relevant Charters.

The supervisory board shall assess

periodically at the strategic level whether

the commercial activities in the general

sense are appropriate in the context of

the bank’s risk appetite.

The executive board shall provide the

supervisory board with the relevant

information for this assessment in such a

way that the supervisory board is able to

form a sound opinion.

Implementation by ING

Text Banking CodeNr.

Implementation by INGText Banking CodeNr.

4. Risk Management

4.1

4.2

4.3

ING Bank applies this principle. The Management Board

Banking is responsible to put in place effective internal risk

management and control processes and systems. The individual

board members are closely involved in these processes and

decisions taken by the committees for that purpose. Various

risk policies, ﬁnancial and non-ﬁnancial risk dashboards and

risk committees are in place to identify and manage material

risks in an early stage. Following on the local Non-Financial

Risk Committees (NFRC) that are long part of the internal risk

management a Bank Non-Financial Risk Committee has been

established in 2010. The Bank NFRC is comprised of members

of the Management Board Banking, the heads of the non-

ﬁnancial risk departments and senior management.

The Non-Financial Risk Committee is responsible for all risk

management activities related to the following risk areas:

• Operational risk

• Compliance risks

• Legal risk

• Reputational risk

Decisions that are of material signiﬁcance for the risk proﬁle,

the capital allocation or the liquidity impact of the bank are

ultimately taken by the Management Board Banking or by

individual board members participating in risk committees.

This principle has been reﬂected in the Charter of the

Management Board Banking.

Implementation by INGText Banking CodeNr.

The executive board shall ensure that risk

management is arranged adequately so

that the executive board is aware in good

time of any material risks run by the

bank so that these risks can be managed

properly.

The executive board shall take any

decisions that are of material signiﬁcance

for the risk proﬁle, the capital allocation

or the liquidity impact.

ING Bank applies this principle. Within the Management Board

Banking the CRO is responsible for ING’s product approval and

review process while business line management is responsible for

execution of the process.

The product approval and review process ensures that relevant risk

functions, including Legal, Compliance Risk Management, Market

Risk, Credit Risk and Operational Risk Management, are involved

to consider the risks and assessment of other relevant factors.

Through this process new products or product modiﬁcations need

to meet the requirements set by ING to drive continuous focus on

the client’s interest. These requirements are ING’s guiding principles

for doing business with its clients. These rules go beyond what is

legally required and aim to ensure that products, services and sales

practices are in line with the ING business principles.

The Policy on Product Approval and Review Process was updated in

2013 and is effective from January 2014 The policy provides a clear

overview of key mandatory principles (e.g. customer suitability) and

is used as blue print to challenge local procedures.

The product approval and review process is included in the

Corporate Audit Services (CAS) Bank yearly audit planning. The

audit activities have been determined using a risk based approach.

CAS Bank informs the Management Board Banking and the Audit

Committee about the results as part of the quarterly and annual

reporting process.

Every bank shall have a Product Approval

Process.

The executive board shall organise the

product approval process and shall be

responsible for the process working

properly.

Products that go through the product

approval process at the bank shall not be

launched on the market or distributed

without careful consideration of the risks

by the bank’s risk manager and a careful

assessment of any other relevant factors,

including the duty of care towards the

client.

Based on an annual risk analysis, the

in- house auditor shall check whether

the product approval process has been

designed properly, is present and is

working effectively and shall then inform

the executive board and the relevant

supervisory board committee (risk

committee or similar committee) about

the results.

Implementation by INGText Banking CodeNr.

4.4

4.5

Implementation by ING

Text Banking CodeNr.

Implementation by INGText Banking CodeNr.

ING Bank applies this principle. ING Bank has an internal

audit department –CAS Bank- that prepares an annual risk

based audit plan. This audit plan is approved by Management

Board Banking and the Audit Committee of the Supervisory

Board prior to ﬁnalisation. CAS Bank reports on the progress

of the audit planning realisation on periodical basis to the

Management Board Banking and the Audit Committee.

Implementation by INGText Banking CodeNr.

The executive board shall ensure that

a systematic audit is conducted of the

management of the risks related to the

bank’s business activities.

ING Bank applies this principle. CAS Bank is independently

positioned within the ING Bank organisation. CAS Bank staff

reports to the General Manager of CAS Bank. The General

Manager CAS Bankreports directly to the Chief Executive Ofﬁcer

(CEO) ING Bank and functionally to the Audit Committee of the

Supervisory Board.

CAS Bank’s independent position within the Bank is periodically

assessed as part of the external quality review performed by the

Institute of Internal Auditors Netherlands (IIA), Nederlandse

Beroepsorganisatie van Accountants (NBA) and NOREA (Dutch

organisation for IT auditors).

Each bank shall have its own, internal

auditor who shall occupy an independent

position within the bank. The head of the

internal audit team shall present a report

to the chairman of the executive board

and shall report to the chairman of the

audit committee.

ING Bank applies this principle. CAS Bank assesses whether

the internal control measures have been designed properly,

are present and are working effectively. This risk based

assessment includes the quality and effectiveness of the system

of governance, risk management and the bank’s control

procedures. CAS Bank reports on the identiﬁed key risks to the

Management Board Banking and the Audit Committee of the

Supervisory Board on a quarterly and annual basis.

The internal auditor shall have the task

of assessing whether the internal control

measures have been designed properly,

are present and are working effectively.

This assessment shall include the quality

and effectiveness of the system of

governance, risk management and the

bank’s control procedures. The internal

auditor shall report the ﬁndings to the

executive board and the audit committee.

Implementation by ING

Text Banking CodeNr.

Implementation by INGText Banking CodeNr.

5.1

5.2

5.3

5.4 The internal auditor, the external

auditor and the supervisory board’s risk

committee and/or audit committee shall

consult periodically, including as regards

the risk analysis and the audit plan of

both the internal auditor and the external

auditor.

ING Bank applies this principle. CAS Bank prepares and

discusses its risk analysis and audit plan with the Management

Board Banking, the Audit Committee of the Supervisory

Board, the external auditor and with De Nederlandsche Bank

(the Dutch Central Bank). Subsequently, CAS Bank exchanges

periodically information with these stakeholders in order to

update its risk analysis and audit plan (at least quarterly).

5 Audit

ING Bank applies this principle. EY, ING’s external auditor, issues

a management letter and audit report annually, and review

letters quarterly to the Management Board Banking Bank and

the Supervisory Board, which may include relevant ﬁndings

relating to governance, risk management and control.

CAS Bank monitors that the external auditor adheres to these

responsibilities.

As part of the general audit assignment

for the ﬁnancial statements, the external

auditor shall produce a report for the

executive board and the supervisory

board which shall contain the external

auditor’s ﬁndings concerning the quality

and effectiveness of the system of

governance, risk management and the

bank’s control procedures.

5.5

Implementation by INGText Banking CodeNr.

ING Bank applies this principle. CAS Bank organises a risk

assessment meeting with the external auditor and De

Nederlandsche Bank on an annual basis.

The internal auditor shall take the

initiative in arranging talks with De

Nederlandsche Bank and the external

auditor at least once a year to discuss

each other’s risk analysis and ﬁndings and

each other’s audit plan at an early stage

5.6

ING Bank applies this principle. The remuneration policy of

ING Bank strikes a balance between interests of its clients,

employees, shareholders and society at large, and supports the

long-term objectives of the company.

The general principles underpinning ING’s remuneration policy

are as follows:

• Create a balanced compensation mix

• Reduce variable remuneration in line with market practise

• Enhance long-term value creation

• Improve the alignment of risk, performance and reward

• Place a signiﬁcant weighting on sustainable performance

indicators aligned with our strategy.

The variable remuneration is linked to clear targets of which a

large part are non-ﬁnancial targets, e.g. operational excellence,

customer focus and top employer.

The remuneration policy for the Executive Board of ING Group

as proposed by the Supervisory Board has been approved by

the Annual General Meeting of Shareholders (AGM) on 27

April 2010 and adjustments were approved by the AGM in

May 2011 and May 2014. The remuneration policy for the

Executive Board of ING Group applies in full to the members of

the Management Board Banking. For more information, see the

Remuneration Report in ING’s Annual Reports 2010 until 2014.

Both the charters of the Management Board Banking and the

Supervisory Board reﬂect that the Management Board Banking

and Supervisory Board continue to be committed to ensure that

the execution of the remuneration policy remains to be in line

with the criteria set out in this principle.

Implementation by INGText Banking CodeNr.

The bank shall implement a meticulous,

restrained and long-term remuneration

policy that is in line with its strategy

and risk appetite, objectives and values,

taking into account the long-term

interests of the bank, the relevant

international context and wider societal

acceptance.

The supervisory board shall take this basis

into account when performing their tasks

in relation to the remuneration policy.

The executive board shall take this basis

into account when performing their tasks

in relation to the remuneration policy.

6.1.1

6 Remuneration Policy

Basis

Implementation by INGText Banking CodeNr.

ING Bank applies this principle. The Supervisory Board has

always been and will continue to be responsible for the

implementation and evaluation of the remuneration policy for

the Executive Board of ING Group and the Management Board

Banking.

The Supervisory Board has approved the remuneration

principles and policy and actively oversees the execution

of the policy by the Executive Board of ING Group and the

Management Board Banking e.g. by annually reviewing variable

remuneration pools and individual remuneration proposals

for senior management. The remuneration principles and

policies applicable to all other staff in ING Bank have also been

reviewed and approved by the Supervisory Board.

The Supervisory Board approves all proposals for Executive

Board as well as proposals for the Management Board Banking.

A policy on welcome and retention packages as well as a policy

on severance pay was reviewed in 2013 and has been cascaded

through the Bank globally. The policy is approved by the

Supervisory Board. Furthermore, it is ING’s policy to subject exit

and welcome packages that signiﬁcantly deviate from standard

local practice to a strict internal review and a governed sign-

off process. Retention packages are always subject to a strict

internal review and sign-off process.

The principle is reﬂected in the Charter of the Supervisory

Board of ING Bank N.V.

Implementation by INGText Banking CodeNr.

The supervisory board shall be

responsible for the implementation and

evaluation of the remuneration policy

adopted with regard to the members of

the executive board.

The supervisory board also approves

the remuneration policy for the

senior management and oversees its

implementation by the executive board.

Additionally, the supervisory board

approves the principles of the

remuneration policy for other bank

employees.

The bank’s remuneration policy shall

also comprise the policy on awarding

retention, exit and welcome packages.

6.2.1

6.2.2 The supervisory board shall annually

discuss the highest variable incomes at

the bank.

The supervisory board shall ensure that

the executive board assesses whether

variable incomes are consistent with

the remuneration policy adopted by the

bank, and in particular whether they

comply with the principles set out in this

article.

The executive board assesses whether

variable incomes are consistent with

the remuneration policy adopted by the

bank, and in particular whether they

comply with the principles set out in this

article.

Furthermore, the supervisory board

shall discuss material retention, exit and

welcome packages, assess whether they

are consistent with the remuneration

policy adopted by the bank and ensure

that these packages are not excessive.

ING Bank applies this principle.

In 2014 the Supervisory Board reviewed the highest variable

incomes within the organization and whether the variable

incomes are consistent with the remuneration policy of the

bank.

The Executive Board of ING Group and the Management Board

Banking review the proposed variable income for senior

management within the business to ensure they are consistent

with the remuneration policy of the bank. The existing senior

management policy complies with the views set out in this

principle.

The Supervisory Board assesses the application of the

remuneration policy and principles as adopted by the Bank and

executed by the Management Board Banking.

Governance

Implementation by INGText Banking CodeNr.

ING Bank applies this principle. The remuneration policy for the

Executive Board of ING Group and the Management Board

Banking is in line with the criteria described in this principle.

This includes benchmarking against a peer group of major

European multinationals (ﬁnancial and non-ﬁnancial)

and setting remuneration levels below median. The total

remuneration for the Executive Board of ING Group and the

Management Board Banking members is therefore below the

market median.

More information can be found in the Remuneration Report of

the Annual Reports 2010-2014.

Implementation by INGText Banking CodeNr.

The total income of a member of the

executive board shall be in reasonable

proportion to the remuneration policy

adopted by the bank. At the time when

his or her total income is decided, it shall

be slightly below the median level for

comparable positions in the relevant

markets both inside and outside the

ﬁnancial sector. The relevant international

context shall be a major factor.

ING Bank applies this principle. The remuneration policy

that applies to the Executive Board of ING Group and the

Management Board Banking fully complies with the criteria as

laid down in this principle.

In the event of dismissal, remuneration

may not exceed one year’s salary (the

‘ﬁxed’ remuneration component). If the

maximum of one year’s salary would be

manifestly unreasonable for an executive

board member who is dismissed during

his or her ﬁrst term of ofﬁce, such board

member shall be eligible for severance

pay not exceeding twice the annual

salary.

ING Bank applies this principle. The performance targets of

each member of the Executive Board of ING Group and the

Management Board Banking include measures relating to the

proﬁtability and the continuity of the bank. All variable

remuneration for these Board members is conditional upon

meeting performance targets. Moreover, 60% of the variable

remuneration is long-term focused i.e. all cash and shares

offered as part of the long-term component are subject to a

3-year tiered vesting schedule, after which a retention period

follows such that all shares are retained for a period of at least

5 years (including vesting time). The variable remuneration is

also subject to a “no proﬁt – no bonus” principle.

More information can be found in the Remuneration Report of

the Annual Report 2011-2014.

When variable remuneration is awarded

to the executive board, the long-term

component shall be taken into account

as well as proﬁtability and/or continuity

of the bank and a material part of the

variable remuneration shall be conditional

and shall not be paid until at least three

years have passed.

Implementation by ING

Text Banking CodeNr.

Implementation by INGText Banking CodeNr.

6.3.1

6.3.2

6.3.3

Shares granted to executive board

members without ﬁnancial consideration

shall be retained for a period of at least

ﬁve years or at least until the end of the

employment, if this period is shorter.

If options are granted, they shall, in any

event, not be exercised in the ﬁrst three

years after the date on which they were

awarded.

6.3.4 ING Bank applies this principle. Stock is subject to a 5 year

mandatory holding period (including vesting time) to comply

with this provision. It is noted that each Board member is

required to sell that portion of the vested stock to ﬁnance his or

her tax obligations that exist on the vesting date.

Remuneration of members of the executive board

Variable remuneration

ING Bank applies this principle. According to the remuneration

policy variable remuneration for the Executive Board of

ING Group, the Management Board Banking and senior

management is determined by performance objectives which

include long-term objectives (such as Customer & Society and

Strategic Change Initiatives). In addition, a signiﬁcant part

of their variable remuneration is long-term in nature as it is

deferred over a period of three years. For the Executive Board

of ING Group and the Management Board Banking this is 60%

of total variable remuneration. In practice the members of the

Executive Board have not received variable remuneration as of

performance year 2008.

Senior management receives part of their variable remuneration

in conditional shares through participation in a long-term

incentive program. In addition they also defer a signiﬁcant

portion of their variable remuneration thereby emphasizing

long term focus.

For the levels below senior management there is generally

also a long-term focus, although it is possible that local

arrangements may deviate (e.g. with unions or as a result of

collective labour agreements).

Implementation by INGText Banking CodeNr.

The allocation of variable remuneration

shall be related to the bank’s long-term

objectives.

ING Bank applies this principle. The variable remuneration in 2014

for the members of ING’s Executive Board and Management Board

Banking did not exceed 100% of the member’s ﬁxed income.

As described in our 2010-2014 Annual Reports, ING moved

the remuneration for its most senior management to a more

balanced mix between ﬁxed and variable pay. For Identiﬁed Staff

in general a maximum ratio of 1:1 is applied in performance year

2014. Exceptions can only be made with prior approval of the

shareholder and are strictly limited to international roles and highly

specialized functions. Exceptions will be reviewed annually and will

only be granted if justiﬁed by market practice.

For the remainder of the organization, ING applies proper

maximum ratios between ﬁxed and variable remuneration in line

with applicable regulations, including the Capital Requirements

Regulation and Directive (CRR/CRD IV) and the Regeling beheerst

beloningsbeleid Wft 2014.

As of 2012 ING and the Dutch labour unions agreed on a new

Collective Labour Agreement under which employees will no

longer receive part of their compensation in the form of variable

remuneration. In a number of cases and only if justiﬁed by market

practice, staff may still receive a discretionary variable award.

Subsequently the remuneration for Dutch general managers has

been further rebalanced with a reduced emphasis on variable

remuneration. Exceptions may exist for high value specialists and

senior management working in international roles.

Every bank shall set a maximum ratio of

variable remuneration to ﬁxed salary that

is appropriate for the bank in question.

The variable remuneration per annum

of members of the executive board shall

not exceed 100% of the member’s ﬁxed

income.

Implementation by ING

Text Banking CodeNr.

6.4.1

6.4.2

Implementation by INGText Banking CodeNr.

ING Bank applies this principle. Variable remuneration for

the Executive Board of ING Group, the Management Board

Banking and senior management complies fully with these

criteria. Performance objectives for this group include Financial,

Customer & Society and Strategic Change Initiatives.

This principle is also implemented throughout the banking

organization as a whole.

Implementation by INGText Banking CodeNr.

Variable remuneration shall be based on

the performances of the individual, his

part of the business and the performance

of the bank as a whole according to pre-

determined and assessable performance

criteria. In addition to ﬁnancial

performance criteria, non-ﬁnancial

performance criteria shall also make up a

signiﬁcant portion of the assessment of

the individual. Performance criteria shall

be deﬁned in terms that are as objective

as possible in the bank’s remuneration

policy.

ING Bank applies this principle. This power of the Supervisory

Board is reﬂected in the Charter of the Supervisory Board of

ING Bank N.V. and the Bank Remuneration Framework.

The supervisory board shall be authorised

to reclaim variable remuneration

allocated to a member of the executive

board based on inaccurate data (whether

or not the inaccurate data is ﬁnancial in

nature).

ING Bank applies this principle. Employees’ individual

performances are being assessed based on pre-determined

performance criteria. Performance criteria for the Executive

Board of ING Group, Management Board Banking and senior

management will include risk objectives. Moreover, for senior

management and the remainder of the organization the

variable remuneration is based amongst others on ﬁnancial

performance. Variable cash and equity compensation will be

adjusted for estimated risk and capital costs on an aggregate

level. However, some local arrangements made as a result of

collective labour agreements and/or arrangements with unions

may deviate from this principle in which case ING must honour

the existing obligations.

When performances are assessed based

on the pre-determined performance

criteria, ﬁnancial performances shall be

adjusted to allow for estimated risks and

capital costs.

Implementation by INGText Banking CodeNr.

6.4.3

6.4.6

6.4.4

6.4.5 In exceptional circumstances – for

example, if application of the

predetermined performance criteria

would result in undesired variable

remuneration for a member of the

executive board – the supervisory board

shall have the discretionary power to

adjust the variable remuneration if, in its

opinion, this remuneration would have

unfair or unintended effects.

ING Bank applies this principle. This power of the Supervisory

Board is reﬂected in the Charter of the Supervisory Board of

ING Bank N.V.