The Capital Letter
The cornerstone of the capital adequacy assessment process at ING is the yearly Capital Letter, which contains an analysis of the capital position of ING, a review of the justification for the target capital ratios and an economic and business development forecast. It also assesses the capital needed to support the business going forward versus the expected availability of capital given profitability and the financial instruments at the disposal of capital management. The capital position of ING Group, ING Bank and ING Insurance is discussed according to the viewpoint of the various stakeholders: regulators, shareholders, rating agencies and according to the internal risk assessment. The Capital Letter also includes the results of recent stress tests and a contingency plan (for both good and bad developments). It gives an overview of the available ‘toolkit’ to manage capital at ING. The Capital Letter is produced annually in June to coincide with the start of the planning cycle for subsequent years. The document is not public information, but is approved by the Executive Board and shared subsequently with the Supervisory Board and the regulators.