Good morning. This is Yvonne, welcoming you to ING's Q2 2013 Conference Call. Before handing this conference call over to Jan Hommen, Chief Executive Officer of ING Group, let me first say that today's comments may include forward-looking statements, such as statements regarding future developments in our business, expectations of our future financial performance and any statement not involving historical fact. Actual results may differ materially from those projected in our forward-looking statement. A discussion of factors that may cause actual results to differ from those in the forward-looking statement is contained in our public filings, including our most recent annual report on Form 20-F filed with the United States Securities and Exchange Commission and our earnings press release as posted on our website today. Furthermore, nothing in today's comments constitute an offer to sell or a solicitation of an offer to buy any securities. Good morning, Jan, over to you.

Okay, good morning, everyone, and welcome to the ING conference call for the second quarter. In this meeting, we have Patrick Flynn, our CFO; and Wilfred Nagel, our Chief Risk Officer. Also here, Delfin Rueda; and Doug Caldwell, from our insurance activities; Delfin, the CFO; Doug, the CRO, in case there are some specific questions. Let me quickly go to the presentation and go to Slide #2. You see that we have made steady progress on our restructuring U.S. IPO successfully launched, double leverage reduced significantly to EUR 4.4 billion, and the relevant parts of WestlandUtrecht Bank transferred to Nationale-Nederlanden, and that way making them ready when the IPO for Europe is done to be divested. ING Group underlying net profit of EUR 942 million, driven by good performance in all 3 segments. The bank reported another strong quarter, pretax result of EUR 1,147,000,000, supported by an improvement in our net income-- net interest margin to 142 basis points and good cost control. Operating results in Insurance EurAsia, substantial improvement supported by expense reductions. That's -- you can see here that the transformation process that we have announced last year is really beginning to bear fruit. Also, our Non-Life business had good results. Insurance U.S., solid performance again, driven by higher fees and premium-based revenues, and reflecting the inflows from Retirement and the IIM business. Slide #3, you see that reflected one more time. on the left side, you see the restructuring activities that we completed. And on the right side, you see the program that we have to pay back the Dutch state and another payment coming due in November, and then quickly then after one on March. And we are still very active in making sure that our IPO for Europe can be done next year, together with…

[Operator Instructions] The first question is from Farooq Hanif from Citigroup.

Just 2 quite simple questions on the Japanese insurance business. Firstly, could you just update us on what the drivers are of the accounting related hedging result in Japanese business, so equities, for example, interest rate level, just specifically around that? And secondly, could you give us the Japanese GAAP book value for the Insurance operations in the second quarter?

Yes, the loss in Japan follows our process of hedging, but is a losed book, and we aim to hedge the full economic risk. Hedges are primarily based on the primary metrics interest rates, equities and FX. The results of the hedges are mark-to-market through P&L, and the rising equity markets gave, I think, [indiscernible] underlying results. The reserves of the guaranteed black block, which should make up approximately 20% are not mark-to-market, so 80% of the reserves are mark-to-market, 20% is not. Hence, we have an asymmetric accounting position where we have 100% of the hedges mark-to-market, but only 80% of the reserves. And the impact of this loss does help improve the reserve inadequacy that was a net in Japan of EUR 300 million. It's down to EUR 100 million now, it's positive. Approximately EUR 80 million of the loss is unrealized, and reflects implied volatility and business risk, and this could reverse in coming quarters.

Reserve adequacy number again?

The book value that we now have...

400 million.

Could you possibly just repeat the reserve adequacy number [indiscernible]?

Yes, the net reserve adequacy number in Japan, which is the combination of the positive on the COLI and the negative on VA improved from a negative 300 to a negative 100. So it's close to breakeven.

The next question is from Michael van Wegen from Bank of America.

It's Mike van Wegen from Bank of America Merrill Lynch. Two questions, first one is on the interest in disclosure that you provide on your Dutch mortgage portfolio. Are you sure that for the pure interest-only, only 11% of the book has an LTV above 100%? Now if I were to guess for your entire mortgage book in line with the market, I would expect that to be above 30%. So I was just wondering, which part of the buckets then has a above average, if you like, percentage of LTVs above 100%? And if that is in the bucket with -- I'm sorry with the savings, investment and Life Insurance mortgages, could you perhaps indicate how that LTV compares with the assets that are built up against it so how the net position looks like? So that's question number one. Question number two is on the Investor Day that you talked about, the 19th of September. You talk about the discussion will be high level. Is it fair to expect you will provide us with an update at that stage of capital requirements for the European or Eurasia Insurance business, leverage targets and financial targets in terms of earnings and returns? Or is that too early to expect?

You'll answer the first?

Yes. Thanks, Jan. In simple answer to your first question, are you sure about the 11%, yes, we are, and the overall book is about 35% over 100% loan-to-value. What is important to keep in mind here is that you're not talking about clients. You're talking about loan parts so to speak. The average client in our mortgage book has 2.34 loan parts. So if you look at the 20% interest-only, that is a group of people who truly only have an interest-only loan, but the rest are mixes. So it becomes very difficult to answer the other part of your question, which is where exactly does it sit because you can't identify simply individual clients. It's all related to these loan products.

Question dealing with the -- what type of meeting will there will be in September. A fairly high-level. What we would like to do is introduce you to the team, the management team. It's a new team. You haven't really met them. We like to give you a lot of plannings and how we want to secure the plan to be ready for an IPO next year. And of course, we will disclose whatever we can disclose at that point in time, but this is a process. And I think, progressively, we will disclose more as the knowledge, for instance, of what will happen with capital requirements in Europe, and that becomes more clear. But the intention is to be as open as we can, to be as forthcoming as we can and to help you understanding the business we have and what the plan is to bring into market.

All right, thank you. If I may follow up on the first question, perhaps, is it fair to assume, Wilfred, that the biggest chunk of the mortgages would amount to be above 100% sits in the either the hybrid form or in the savings investment in Life Insurance mortgages or is that not necessarily fair to assume?

Well, it is actually spread across a whole number of products and product types. There's not a specific category that really has a lot more than the average above 100%. It's just a mix of all the remaining casual products in the book that you find pretty much as often above 100% as below.

The next question is from Ashik Musaddi from JP Morgan. Ashik Musaddi - JP Morgan Chase & Co, Research Division: Three questions I have. First is like -- you mentioned in one of the charts, figure number -- Slide #23 that the house price seems to be -- reached this trough. So can you just elaborate on that and give us some indication on what you're seeing as a company rather than the source NVM. So adjust to your expectation and does this mean that the NPLs will stabilize for residential mortgage. Second thing, can you give us some color about Japanese insurance, following into Farooq's question. Can you give us some color around the capital? So you have EUR 400 million local GAAP book value for Japanese insurance, and is the ING-V capital over and above that capital? Because if I remember correctly, you put in EUR 600 million capital in ING-V, which is covering Japan in the first quarter, and ING-V now has EUR 1.6 billion capital. So how should we think about Japanese capital? Is it local book value plus ING-V? Or is it just local with book values or some thoughts around that? And third will be is it possible for you to speed up the U.S. IPO process, i.e., can you break -- is it possible to break the lockout which ends at 20th of October?

To start with the first part of the question about the house prices and what we expect, indeed, we're referring to the fact that the NVN have made some positive noise about the most recent development. I think it's too early to really call a trend here. I mean, obviously, a slower drop is good news. The big question is whether that will continue or not. And I think, as I said, it's too early to really come to a conclusion there. We're not very much more optimistic or pessimistic than we were 2 months ago on that front. And as to your question on the expectations around the recent NPLs, obviously, those are not directly related to the house prices, more to the GDP developments, and again, we're still expecting overall for 2013 a drop of about 1.4% or so in that's GDP. So as an indicator of what's to be expected, we expect to see the trend as we have seen over the past few quarters for now to continue. So what we do see is a slight drop in arrears in the last quarter, which again is good news, but it's a bit too early to really call a trend there. And as we said, the NPLs have actually gone up like they did last quarter, which then led to, as we also said last quarter, if the base of deterioration in house prices in the NPLs continues at the same speed, then you will see similar additions to the provisions, which is indeed what you saw in Q2.

In respect to Japan, I think the question was about the local capital [indiscernible]. If you look at it on a holistic basis, we reinsure the VA risks from our Japanese entity to a reinsurance entity here in Europe, and you're correct, there is EUR 1.6 billion of capital there. So the aggregate is a sum of both.

With respect to the U.S. IPO, we have a lockup until October 26. And of course any time you have a break, you need to discuss that with the underwriters, and they will have to give permission. But we cannot make any comments on that one. We're very happy with the IPO, by the way, and the way that it has developed over time. It's also reflecting the improvements we have made in the insurance company in the U.S. And we're very happy with the stability of the base that we have created. This is really a strong shareholder base that we have, and we're very happy with that.

[Operator Instructions] The next question is from Martin Leitgeb from Goldman Sachs.

My 2 questions are as follows. The first one is with regarding the net interest margin in the second quarter. Could you provide the number, what would be the net interest margin excluding the financial market impact? I think, historically, you provided that number. And I think the financial market impact [indiscernible] as far as I can see, if you could just provide the number what it was? And the second question is with regards to the bank. What sensitivity does the Bank have with regard to higher interest rates, both in terms of net interest income and also impact on book value and capital? And we would like to, if possible, to know how long would it take for higher net interest income to compensate for increase in lower evaluations on the capital side?

In terms of financial markets, it was 3 -- financial markets was a negative 3 bps in the overall 4 bps increase.

So basically the key number would be 145, if I understand you right?

I mean, the aggregate of it, up 4 basis points, there were offsets. So I think the 4 basis points quoted is -- will be the -- is the right number.

The Bank sensitivity, I think we need to -- I don't have the details here on hand. I think you need to go back to our Investor Relations, and they can provide you the answer to that one.

The next question is from William Hawkins from KBW. William Hawkins - Keefe, Bruyette & Woods Limited, Research Division: I'm interested in the Benelux Insurance results, the strength of the operating profit in the second quarter. Could you clarify for us what do you think were either seasonal or just generally one-off items, particularly in the investment margin and the Non-Life results? Again, [indiscernible] quantify those? And specifically when you refer to private equity dividends, is that something which could recur in future years? Or was it really just related to the remarking of the private equity book? And then secondly, the EUR 65 million of expense savings that you've realized, how much of that -- or what's the spread of that between Life and Non-Life? And of the Life components, is that all dropped to the bottom line or has there been any elements of leakage to sort of profit-sharing or whatever with Life policyholders?

Yes, okay. Q2 does have -- is the quarter we get dividends. It is a recurring feature every year so we look at the margin both on the spot, but more on a 4-quarter rolling basis to take into account that this is a recurring income stream. So yes, you would expect dividends, I think, it was EUR 56 million in total in the quarter. You would expect dividends every Q2 [indiscernible]. It's there so it would be in effect there going forward. In respect of the one-off effects, Non-Life, you asked about. Yes, the Non-Life results improved from a loss to a 40-plus profit in the quarter, which is a big increase. We have a number of programs to improve pricing, readjust policy covers and this will lead to, expectedly to, improved profitability. But over time, I think we've seen a couple of positive reserve impacts, which boosted the results in the second quarter. Overall, this business is on a trajectory to improve. But we had a couple of positives in reserving in Q2.

On the cost savings, the EUR 65 million expense savings basically in Life, not too much in Non-Life. Most of it is in Life. And there is no leakage to the -- this is all down to the bottom line.

The next question is from Francois Boissin from BNP Paribas.

Two questions please. The first one really is on the sales dynamics that you're seeing in the Benelux and in CE. Could you -- I think sales were quite nicely in CE. Can you maybe just comment on the outlook you're seeing there in terms of pensions, namely in Poland? There are talks about nationalizing the Pillar Two [ph] pension system. And the second question is, can you clarify what would drive your decision to do an IPO for an insurance share profit and a spin-off as you mentioned earlier in the call that you might explore other opportunities for insurance shore up.

Okay. Sales in the Benelux and COE Insurance. Benelux and Life was down but in COE was up. Pension outlook in Poland, yes, that's a complex one. The government has made, let's say, there are rumors that the government will come with proposals but they're not official yet. They offer 3 options to people participating in the plan. And depending on the option that they take, it can have an impact on our pension business. Now fortunately, yes, we do have a pension business in Poland, but our Life business is much bigger there. What drives the decision -- by the way, on Poland, we expect -- of course we have an extensive lobby going on the from the industry, also from the political side in Poland. We have no answers yet, and we don't expect them until sometime next month. IPO or spend, well that's a matter of, let's say, a luxury question that will be decided at a time when that will take place. Of course, we are keeping all the options open here. But it all depends on a number of factors that we cannot control completely today. But we keep our mind open to all these opportunities here.

And a follow-up question on Poland. Can you just quantify the amount of recurring profit that you make from the pensions business in Poland?

On an annualized basis, it's about EUR 40 million, pretax.

The next question is from David Andrich from Morgan Stanley.

My first question, I was just wondering if maybe you could give a bit more color on the potential cost cutting, both in the Bank and the Insurance that you see going forward, in addition to what's already been announced? And my second question, I just wondered the increase in the loan loss provisions for the General Lending and Transaction Services, what's driving that and do you expect it to kind of stay at this level going forward?

Okay, the cost cutting, well these are ongoing activities, where if you reduce the size because you have done divestments, I think you need to make sure that your overhead costs are declining with your divestments as well. And that is an exercise that we have and are doing at this point in time, mainly in the Bank. We only flag it because it could have an impact on what you see coming in the next 2 quarters. The same in Insurance, people are always looking for opportunities to continue to drive our cost down, and it is more related to improving our processes and improving the way we work. And as a result, work with lower cost. I think that's always the basis for our cost-cutting, otherwise, it is simply cost cut and they come back a little bit later, if you're not careful. So it's improving the way we work and as a result, you get better processes that help our customers and also creates lower expenses going forward. And then, Wilfred?

Yes, on the general lending provisions, it's important to keep in mind that this is a Bank portfolio with relatively large clients, and the absolute levels of provisioning that we're seeing there are fairly low, particularly last quarter. So a few individual files can make a big difference on that number and that is exactly what happened this quarter. So it's quite difficult to say whether this will continue or not. It's certainly not something that we see as a trend, but could there be another quarter with a few like these? Definitely. But there's nothing particularly on the horizon that leads us to have more concern about this than 3 months ago.

Okay. So that can be quite a volatile number then, quarter-to-quarter?

Yes, I think that's a fair expectation.

The next question comes from Anton Kryachok from UBS.

Just 2 questions on the Bank, please. Firstly, how long do you think it might take you to get to the targeted budget size of EUR 870 billion from the current levels? And secondly, could you perhaps give us a sense what would be the impact on the Bank's net interest margin from asset transfers to NN Bank?

Yes, we are looking a bit below our target balance sheet level. I think it reflects the difficult economic circumstances we have. Loan production remains good, remains healthy. We had, I think, in retail, about EUR 6 billion in production this quarter, EUR 6 billion last quarter. But we also are seeing loans -- gross -- we're seeing some repayments as well. And typically, that's good for margin because these are our smaller -- these are older files that runoff. And then the Commercial Bank, gross production provision facilities were strong again, so the machine is working. But you also see that some of our customers are not actually fully growing down and some of them are taking out the facilities in the bond markets. So I think we're open for business. we're moving forward. But we need to see, I think, an increase, in economic activity. I mean, the transfer to NN Bank, I think it's about 1 basis point impact. Negative, obviously.

Did you get the answer?

Yes.

The next question is from David Lock from Deutsche Bank.

I've got 2 questions, just a follow-up on costs. You flagged the additional cost-savings that are being invested here. I just wondered, when you've called out cost saving programs in the past, you've said it's because you wanted to use these savings for reinvestment because of inflation and regulatory cost. Is that the same with this one? Or is this really we're talking about a real reduction in cost base going forward? And my second question is just on margin in the Bank. I just wondered if you could give a bit of color on the mix drivers of the better NIM result, whether it was asset or liability driven and whether it was a particular product, such as structured finance, which has seen a structural change in margin.

I think on cost, the most important thing, I think, to keep in mind in cost is always that you want to provide a service to your customers that is superior. And by redesigning your services and your processes, you can often do that, and at the same time, reduce your cost. That is the premise. Now we have also done that because in the past, we have seen regulatory cost going up, the number of reports we are producing these days is significantly higher than in the past. And at the same time, we have seen bank taxes that have increased. In many ways, we are paying bank taxes twice because we pay the one country, but also another country, on the same balance sheet. And we're clearly trying to overcome that by eliminating this double taxation. But it has had an impact. These cost reductions, we believe, are not necessary to offset these regulatory because they are there already. This will be bottom line cost impacts that will improve our position simply and our earnings, of course. And then NIM?

On the interest margin, it is up 242 from 138, it reflects a 3% or a EUR 90 million increase in the interest results. This one -- this quarter, it primarily relates to savings and the deposit side rather than the loan side of the balance sheet. What you see is the full impact in Q2 of the rate cuts in Q1 that happened in the Netherlands, Belgium and Germany. And also, part of the impact of the rate cuts in Q2 in Netherlands, 10, Belgium, 20, Australia, 25, Italy 20 bps. The loan volumes are moderate loan growth and we continue to focus on repricing and only lending at the levels where we feel we're getting the right return. In the outlook, I think our bet is keep it more or less at these levels. Notwithstanding the strong improvement in deposit margins, we still face some headwinds on the deposit side because of the low interest rate environment.

The next question is from Kiri Vijayarajah from Barclays.

I've got a question on Slide 10, the ROE target improvement you've targeted for the Bank, and specifically on the loan growth element, the 1.2 percentage points you've got there. I'm just trying to understand where that's going to come from, because presumably you need more capital to support the extra volume growth. And are you moving up the risk curve to make that loan growth ROE-accretive?

Sorry, could you repeat the question?

On Slide 10, you've got the ROE improvement you're targeting for the Bank. And I'm focusing on that 1.2 percentage points you've got from loan growth. And I guess my question is driven by the fact that for the incremental levels you put on, you need to hold more capital and why you think it's actually going to be ROE accretive and does that mean you're writing higher margin, higher risk loans for that to be ROE accretive?

Yes, we clearly have a focus to try and keep the mortgage level at where it is and try and grow commercial lending. We have target ROE levels, which are clearly within our target range. So yes, we would love to try and grow our balance sheet at lending, which brought -- self-capitalizes as quickly as we can.

I think, in addition to this, we -- this slide, I think, is also showing that we do have a balance sheet where we can have a little more growth, where we can do that on a relatively short maturity level, and pick up some additional interest income. We're not going to increase our book if we have a problem with our capital. I think our capital comes first. We always will maintain a strong capital position, and that will drive whether we can take on additional business or not. But at this moment, we have room. Plus, you may remember that we had an extensive program of optimizing our balance sheets. And we have done a lot in that extent already. I think we have improved the balance sheet by about EUR 57 billion. There's a little bit more room left here in optimizing the capital that we have and the liquidity that we have in the various parts in our organization, utilizing that better than we have done so far. So that is how we plan to get a little bit more margin and a little bit more lending in our results.

The next question is from Omar Fall from Jefferies.

Just 2 questions, please. Just looking at the coverage ratio. You saw a 50 basis point decline in retail Benelux. Why was that? Is there a mix effect there between business lending and mortgage NPLs? Second question would be -- could you give us the average duration of the -- of your deposit base? I ask that because your margin guidance feels a bit conservative because you've got tailwinds from the cuts on deposit rates, including more than you could do, from what I understand, in international retail. You flagged that you're still working on further asset repricing and it feels like the reinvestment income profile on a positive is nearing a floor. So if you could just give us an idea of why we shouldn't see a bit more of this to that margin.

Okay, on the first point, the coverage ratio. I mean that is a ratio that moves around a bit because it really depends on in and outflows, inflows of new NPLs that start with a relatively low provision that readily goes up. But outflows also because -- and that was effective particularly in this quarter because we tend to write off the fully provisioned loans fairly quickly, generally a lot quicker than our peers tend to do. And we have significant write-offs in Q2, which by the way still run well behind the actual provisioning levels, as Jan indicated earlier, but that is mainly what drove this number in the quarter.

The next question comes from Anke Reingen from Royal Bank of Canada.

Yes, Anke from RBC. But I think, Omar had another outstanding question on the net interest margin. But I actually wanted to follow up on this, on the -- how much -- with respect to the benefit from the deposit repricing, how much more -- what percentage of the product have already been repriced and how much should still be coming, especially for the Netherlands? And if you look at your historic spread, is there potential to reduce the deposit rate in the Netherlands further? And then just lastly, I'm not sure if I missed this, have you given the -- on Dutch mortgage NPLs, the loan-to-value ratio?

Okay, maybe to start with the Dutch mortgage NPLs and loan to values. The NPLs on Dutch mortgages went up from 1.5% to 1.6%. The loan-to-value went from 90% to 91%. And as we mentioned, the total, that sits above 100% loan-to-value, was pretty much stable at 35%.

The 91 loan-to-value ratio is the same as on NPLs?

No, the loan-to-value on the NPLs sits at around 108%.

On deposits, typically when you make a price adjustment, it's to the entire deposit book, particularly there. So it's not so much a phase piece in terms of its impact on the price cut. As to future, we have to balance the outlook, our competitive position appears to be doing a trajectory. So that's something we will only comment on once we've reached a decision or a conclusion. In terms of duration, it's a bit more complex because it depends on the type of deposit you have and how long it's been with you. So we have a complex and sophisticated process to assess the duration. I think the key point though is, I can give you a number, but I don't think it's that meaningful. But I think the key point is that for new deposits, we do take in some time to assess stickiness of things -- the duration of the newer stuff is we typically give it a lower deposit -- sorry, duration level, which means that the value it forms and the low interest rates you attribute it to is low as well. It was part of the reason that some of the new inflow does not give you a huge uplift in deposit margin.

Yes and then repricing our loans, I think what we do on repricing our loans is take an average of about 3 to 4 years. So, on average every year, 1/3 of your loan book, 25% of your loan book, comes due and you have an ability to reprice that. And I think that's constantly what we do. Also at times, when we have to accommodate certain people as repayment schedules, we do a repricing as well. So any opportunity that we have and where they're justified, I think we will take another look at is the pricing correct and do we need to make adjustments here? And we have been extremely disciplined in this whole process in the last 3 or 4 years.

I should mention there's a 10 basis point cut in deposit rates in July, in the Netherlands.

The next question is from Richard Burden from Credit Suisse. Richard Burden - Crédit Suisse AG, Research Division: One of your competitors this morning highlighted an impact on the Dutch ITD in July from the downgrade of France. I was just wondering whether you could just comment on the impact on the EurAsian Insurance, ITD development over July, and whether that impact has affected you as well?

Yes, I mean in terms of the ITD ratio, I think the order of magnitude's impact is somewhat similar, it's somewhere around the 20 basis points level, which is a stronger over 304.

The next question is from Samuel Lopez from Vanguard.

My question is about the leverage ratio that you probably shown Page #9. I was wondering if you could tell us what would be the impact if you use the new proposal by Basel III, the new definition of the total assets? And in relation to this, if we assume that this new proposal is implemented in Europe, what would be your new return on equity range target? Would you be able to keep that 10% to 13% unchanged?

The leverage ratio we publish is the total balance sheet plus off balance sheet commitments, typically committed facilities, around EUR 120 billion, and to core Tier 1 equity, we had a Tier 1 equity adds to total EUR 37 billion. So as far as we can see, we're compliant with the committee requirements. There may be some further netting, but we haven't taken that into consideration. I think, all in all, I think our number is good. I mean, the ROE is based on capital, equity capital, so I don't think it's going to be impacted by leverage.

How about the new proposal? I mean, some banks are commenting on it, and despite not giving us exact numbers or exacting part, at least acknowledging that there will be an increase in the denominator?

We're still studying it. As I said, we've included the on or off balance sheet commitments, our level of netting is very small in terms of derivatives, only about EUR 20 billion. So I don't think we're impacted by that.

So it would be a minimal impact then if that is implemented, if the new proposal is implemented?

Yes, it's more or less the same as what we're reporting.

The next question is from Benoit Petrarque from Kepler Cheuvreux.

It's Benoit from Kepler Cheuvreux. Just wanted to check with you what will be kind of the interest rate sensitivity of your quarter 1 ratio. I think we are, Dutch, run rate at around 2% now. What will be the impact on Basel III co-capital if we get -- if we say -- get one of the bps increase in the rate there? And then looking at your mortgage portfolio, I think it's much more relevant to look at vintages especially the post 2005 hedges. So how much of your book roughly has been kind of written between 2005 and 2008, and how much this quarter assets we have on this specific portfolio? And also, if you could talk about LTVs on this specific book? And do you see risk of -- higher risk quoted assets on savings such as 2005, 2008 on Dutch mortgages?

On the interest rate sensitivity, we see about, for every basis point, about a EUR 10 million impact, more or less, okay, that's quite rough. Patrick, the next one -- or Wilfred, mortgages?

Out of the total book, about 45% or so dates to the 2005 to 2008 vintages, and loan-to-values on that book as well as the NPLs are comparable with the average on the portfolio. With regard to a higher risk-weighted assets, there's a lot of discussion about risk weights, has been for a while. We have consistently said that we're comfortable with the weightings that we apply. And I think it's important to keep in mind that ING as a whole is very close to 90% on advanced, which is high compared to our peers, and that in itself has a lot of impact. You may have picked up on the report by the EBA that came out this week that also commented on this and found actually that one of the most important drivers of the differences that are being observed in risk weights is indeed the fact that banks with advanced -- higher percentage of their portfolios on advanced -- tend to report indeed lower risk weights than the ones that are not. And a lot of the differences are then driven by local regulatory changes on the big picture and local interpretation of the rules. So I'm not sure that there is really a clear trend here or a clear sort of universal thinking on the topic that would lead to higher risk-weighted assets on our mortgages specifically. One example that we have given in the past and that may still be relevant, at least as an idea of what the impact might be, is if we were to go to the so-called Swedish floor and the impact on our risk weighted assets at this point would be about EUR 7 billion, which is quite a bit less than it was a quarter or two ago, but that's because our own risk weights have also come up. So the impact of that discussion seems to be gradually becoming smaller than what it was. We're not overly concerned about this.

Do you have kind of discussion with you regulator on the way you are kind of assessing the probability of defaults on the 2005, 2008 vintages. Also looking at loans even before that we have seen housing price down mainly since 2005. So I was wondering how comfortable you are with your PT [ph] and LTV assumptions, which at the end of the day, the badge is for your risk weighted assets.

Yes. Well, obviously, all our models, A, have been scrutinized by the regulators in the countries that they apply to. But B, they get updated quarterly for the elements that you just mentioned. So whatever happens out there in the markets within a fairly short timeframe, that is translated into our models. So we're not nervous about being behind the curve either in methodology or in data.

The next question is from Steven Haywood from HSBC.

Just going back to the Japanese business again. Could you tell me what the average duration on the run-off portfolio is there and how much capital is to be released to ING over the time it runs off? And also, could you answer what you think the consequences would be of not meeting the Asian sale deadline by the end of this year?

I think in terms of the duration, it's about 5-ish years, substantially runs off by 2019.

The next question is from...

No, no, no, we didn't answer the question fully. I think the capital released over the run-off periods, depending upon -- you need to make some assumptions but could be in the neighborhood -- net present value of about, I would say, between EUR 800 million and EUR 900 million, something like that. Impact of not meeting the deadline for European Commission, we're assuming that we are not -- we're not assuming that we will not meet the deadline. We're assuming that we will meet the deadline. We're working very hard to accomplish that, and that's the basis of our working plan.

The next question is from Nateas Dewitt [ph] from KBC Securities.

I had 2 questions please. First, with regard to the Basel III capital position of the Bank, you're now guiding for a slightly higher CRD IV impact of 160 basis points compared to 140 basis points previously. I think it's reflecting unrealized gains, which came down a bit. So could you please confirm what is the case? And then secondly, on the capital position of the U.S. Insurance company, you reported the drop in RBC. Just wondering whether this is a reflection of the replacement of the contingent capital facility and so could we -- is this now completely done? And related to debt, how satisfied are you with the current RBC of 404 -- 54%. It's ahead of your target, but still below the level most peers are in the U.S. So is there any need to further strengthen the capital position there either through retained earnings or to retain proceeds from any subsequent offerings?

On the fully loaded core Tier 1 ratio, there's a slight decrease, and that's more to do with the improvement in -- small reduction, I should say, in the mark-to-market of debt securities, which go through the fully loaders.

For the U.S. questions, I would recommend you talk to our friends in the U.S. They will have a conference call a little bit later today. And Ewout Steenbergen, our CFO, I think will be more than capable to answer the question. I think my answer is no. We don't need it. But maybe you want to hear it from him as well, because he's the guy that is responsible for it.

The next question is from Marco Kisic from Nomura.

I have a question on asset quality, it was good to see our LLP sort of table in sensitive areas, but MPL was up, particularly in a few division. Is this putting downward pressure on coverage ratio and how comfortable are you with this line, maybe you could put this in the context of your expectation of the upcoming asset quality review and EDS[ph] process.

Yes, as you would've seen the overall coverage ratio is fairly stable. You do see some changes in various subportfolios. And as I said, as you go more granular, you get into situations where individual movements like writing off fully provisioned loans has quite a bit of impact. But overall, the coverage ratio was stable. If you exclude that one Spanish file that Jan also referred to, it actually went up slightly. And we're comfortable with that. And the history, as we have said on previous occasions in ING, is that we tend to be conservative with our provisioning and the ultimate write-offs have always been less than what we provisioned. We don't see any trends at this point that suggest that, that would be changing. As to the question about asset quality review, well, I guess in saying that we're comfortable with our capital and our provisioning position, we're saying we're comfortable that we are appropriately managing our books and the accounting for the books, and we don't have any specific concerns about the asset quality review from that perspective.

The final question is from Marcus Rivaldi from Morgan Stanley.

Two questions, please, around ING-V. First of all, in the event that the sale process of remaining non-European assets is not fast enough, would you consider moving, for example, Japan out from ING-V, just as you've done with ING U.S. to make sure the IPO is a pure-play European style IPO? And then secondly, the debt at the moment on the balance sheet, a large part of that clearly is internal. Would you be looking to externalize that in the coming months?

You asked good questions. That's why we would like to have a meeting in September, where we can update you on what our plans are, including the legal setup, the structure, what will happen. There's the units that we have, Japan, Korea, things like that I think we will discuss. So if you can hold off, that will be September 19. In the meantime, I can say that the ING-V structure is a structure that we haven't determined yet exactly what will be in there, but your observation that we need to do a refinancing because it's more in the internal debt I think is correct and we do have plans to do the externalization of the debt. But that will have to be discussed I think at a later point. And that's why the invitation to come to the September meeting and you will be fully updated there.

Given that you have to pass on those questions, can I just ask a very quick cheeky follow-up? Why the change in strategy to IPO ING-V? I mean previously you talked about that being wound down in an orderly fashion.

The ING-V has the benefit that we do have a clean separation legally between the Bank and the Insurance company. So it's a very clean way of bringing this to the marketplace, and I think that was important to us. Plus, the restructuring that we do, that's in this, we can do I think in a tax friendly way as well. So that's an important element in this restructuring.

There are no further questions, sir.

Okay. That ends the call. Thank you very much for being on the call. This is my final month. So next time, my successor, Ralph Hamers, will lead the call and I can tell you that everything is in good hands here. So thank you very much, and good luck.

Thank you, sir. Thank you, ladies and gentlemen. This does conclude today's presentation. Thank you for participating. You may now disconnect.