ING Belgium International Finance (Luxembourg) 6Y USD Strategy Performance Notes 01/18. Description of the coupon fixing mechanism

Transcription

1 Promotional Document ING Belgium International Finance (Luxembourg) 6Y USD Strategy Performance Notes 01/18 The product offered is a debt instrument issued by ING Belgium International Finance and guaranteed by ING Belgium. When subscribing to this product you are lending to the Issuer who undertakes to pay coupons on the Coupon Payment Dates. At the End Maturity of the Notes the Issuer also undertakes to repay you 100% of their nominal value (in USD). In the event of bankruptcy or default by the Issuer and/ or the Guarantor, you might not receive the amounts to which you would have been entitled and could lose the capital invested. This instrument is for investors with sufficient experience to understand the product parameters and with sufficient knowledge to assess, based on their financial situation, the advantages and risks inherent in an investment in this complex instrument, in particular knowledge of the underlying and interest rates. The ING Belgium International Finance (Luxembourg) 6Y USD Strategy Performance Notes 01/18 (in short ) are for investors looking for an investment: in the long term (6 years) in American dollars (USD) which implies an exchange risk when the amounts in USD are converted into euros. which gives right to a 100% redemption of the capital (in USD) by the Issuer at End Maturity, except in the event of bankruptcy or default by the Issuer and/or the Guarantor which offers the possibility of benefiting from a gross annual coupon of at least 1.50% 1 and at most 6.00% 1 which will depend on the average performance of a basket of 20 equi-weighted and internationally allocated shares (in Europe, North America and Asia) Description of the coupon fixing mechanism Each year a gross coupon will be paid according to the trend (in percentage) of a basket of shares, with a minimum of 1.50% 1 and a maximum of 6.00% 1. This return on the basket will equal the arithmetical mean of the return of its component shares. The return of the basket, i.e. its average performance, will determine the rate of the gross coupon paid out. The return of each share is calculated by comparing its closing price three business days before the Payment Date of the relevant coupon with its starting price. For each share, the starting level retained will correspond to its closing price on the Payment Date, although the positive trend of each share is nonetheless capped at 6% 1. By way of an example if the starting level of one of the shares in the basket corresponds to 100 and its closing price three business days before a Coupon Payment Date is 115, the 15% performance will be limited to 6.00% 1. If, conversely, the closing price of such share three business days before a Coupon Payment Date is 60, the negative performance of -40% will be retained. The gross actuarial return is at least 1.15% 1 and at most 5.57% 1 in the event that the investor holds on to the Note until End Maturity and taking into account the issue price (i.e. 102%), any coupons possibly paid out and a redemption price at End Maturity of 100%. 1 The coupon amounts shown in this document are gross amounts before the deduction of any taxes and duties (see "Taxation" below). Real equity performance Performance booked to calculate the average performance of the basket 65% 6% 30% 6% 4% 4% 0% 0% -5% -5% -15% -15%

2 The basket of shares is made up as follows: Name Stock market Sector ISIN code ALTRIA GROUP INC ASTRAZENECA PLC London AT&T INC BAXTER INTERNATIONAL INC. BRISTOL-MYERS SQUIBB CO BT GROUP PLC London US02209S1033 GB US00206R1023 US US GB In line with ING Belgium's investment strategy, the basket is made up of defensive shares from the, Consumer Staples and sectors. The aforementioned sectors are considered as defensive in ING's current strategy given their low cyclical nature. This means that the impact on the price will be more limited in the event of an economic slowdown. The current valuation of these sectors by ING Belgium indicates that they are "underevaluated" and that these sectors incorporate any unfavourable information in their current price. Therefore, the levels of these sectors are relatively low, which allows for a higher growth potential. Selection was based on the criteria of high dividends and/or major stock market capitalisations. In addition, at the time of selection at least two thirds of the stock analysts who monitor such shares at the various financial institutions must have given a positive or neutral opinion about the said shares. CHINA MOBILE LTD Hong Kong FRANCE TELECOM SA Paris KIMBERLY-CLARK CORP HK FR US Investors can enquire at any branch of ING in Belgium for further information about the shares in the basket. The selection of the shares in the basket is influenced by other parameters (e.g. correlation) which can limit the possible return on the investment. KONINKLIJKE AHOLD NV Amsterdam NL L'ORéAL Paris FR MICHELIN Paris FR NOVARTIS AG-REG SHS Zurich CH PROCTER & GAMBLE CO US SWISSCOM AG-REG Zurich CH TAKEDA PHARMACEUTICAL CO LTD Tokyo JP TESCO PLC London GB UCB SA Brussels BE VERIZON PLC US92343V1044 WELLPOINT INC US94973V1070

3 Examples showing how the coupon is calculated The figures below are purely hypothetical and serve only to inform investors about the calculation method of the gross annual coupons on the basis of different scenarios. The actual realisation of any of these scenarios in the future cannot be guaranteed. Best-case scenario Let us say that three business days before a Coupon Payment Date, the closing price of each share in the basket has risen more than 10% against its starting level. As the trend of each share is capped at 6%, the average performance of the basket will correspond to 6%. Baseline scenario Let us say that three business days before a Coupon Payment Date, the price of some shares has risen against their starting level. Consequently the average performance of the basket will be 4% on an annual basis. Worst-case scenario Let us say that three business days before a Coupon Payment Date, the price of each share has dropped against its starting level. Therefore the average performance of the basket on a year on year basis will be negative. A gross coupon of 6% will be paid out for the relevant period. A gross coupon of 4% will be paid out for the relevant period. Whatever the negative performance of the basket, a gross coupon of 1.5% will be paid out for the relevant period. Risk class A Structured Note's risk class is determined by an analysis of its price behaviour in various market scenarios and is based on past observations of parameters determining the market price, including volatility. The greater the historical price volatility, the higher the risk category. We differentiate between a total of seven risk classes, ranging from 0 (lowest risk) to 6 (highest risk). The are in the risk class 2: Please note that the specific model used by ING Belgium SA/nv to determine the risk class does not take into account major types of risk, such as the credit and liquidity risks inherent in ING Belgium SA/nv, or the market risk in the event of divestment before the End Maturity of the Note. Let us also state that the exchange risk run by an investor who converts euros into USD upon subscription to or acquisition of the Notes and resells the USD received on collection of the coupons and on redemption of the capital at End Maturity is not taken into account in the risk class. ING Belgium SA/nv will communicate all the regularly updated information relating to the ING 6Y USD Strategy Performance Notes 01/18 as well as the basket of shares - including any major change to the risk profile as well as the value of the product - to investors via its website ( In a later stage, it is possible that ING Belgium SA/nv will use other communication channels to correctly inform investors.

4 More information Please read the technical data on the last page. Risks Several types of risks are inherent in this Note: Currency The Notes are issued in US dollars. This presents certain exchange rate risks if an investor's financial activities are mainly in a currency other than the USD. In particular, the amount repaid to investors at End Maturity, converted into euros, could be below (or above) the capital initially invested in euros. This exchange risk is also present when coupons received in USD are converted into euros. Share price trends The value of the Notes is correlated to changes in the price of the underlying shares which constitute the basket. A drop in their price could lead to a drop in the price of the Notes. A rise in share prices could impact positively on their value of the Notes. At End Maturity, even if the value of the shares drops, the Notes will be redeemed at 100% of their nominal value (in USD) (except in the case of bankruptcy or default by the Issuer and/or the Guarantor). General risks: Before subscribing to the Notes, any potential investor should read the Prospectus, and in particular the "Risk Factors" section (Chapter 1 of the Base Prospectus) and its summary. Prospectus The Base Prospectus relating to the EUR 10,000,000,000 Issuance Programme of the Issuer was approved by Luxembourg's Financial Sector Supervisory Commission (Commission de Surveillance du Secteur Financier) on 5 July The Prospectus consists of the Base Prospectus as well as the Final Terms of the ING 6Y USD Strategy Performance Notes 01/18 of 25 November The Prospectus is available only in English, with the exception of the summary of the Base Prospectus, which is also available in French. These documents can be consulted at the website under the headings "Investments" and then "In the spotlight". A copy is available, free of charge, from any ING branch in Belgium or simply by calling Market interest rate trends The value of the Notes is correlated to market interest rate fluctuations. In case of resale before End Maturity, a rise in interest rates can impact negatively on the market price of the Notes and a drop in market interest rates can impact positively on the value of the Notes. Issuer/Guarantor Investors are exposed to the Issuer's and/or the Guarantor's risk of insolvency (bankruptcy or default), which may result in the partial or total loss of the capital initially invested as well as any coupons due but unpaid (see Rating below: Technical data). Liquidity Despite the listing of the Notes on the Luxembourg stock exchange and daily fixing of an indicative price, the market may not be very liquid. In addition, on the secondary market it will only be possible to sell the Notes once a week. Furthermore, if an investor sells his/her Notes on the secondary market, the amount received may be lower than the issue price (capital loss risk).

5 Disclaimer This Promotional Document is produced and distributed by ING Belgium SA/nv. Therefore it is not and should not be interpreted as a recommendation to subscribe, or advice or recommendation to conclude any transaction. Although ING Belgium SA/nv has taken all reasonable measures to ensure the accuracy of the information provided in this Promotional Document, neither ING Belgium SA/nv nor any of its staff can be held liable for any direct or indirect loss or costs suffered as a result of the use of this Promotional Document or of a decision taken on the basis of this Promotional Document, except in the case of serious fault on the part of ING Belgium SA/nv or one of its staff members, or if the information is misleading, inaccurate or inconsistent in relation to the Prospectus. Moreover this Promotional Document is communicated or made available by ING Belgium SA/nv to some or all of its customers and is not based on an examination of the individual situation of a particular customer. Customers must decide whether the financial instrument to which this Promotional Document relates is appropriate in view of their situation. This Promotional Document is intended for the use of the original recipient and must not be reproduced, redistributed or passed on to any other person or published, in whole or in part. The financial instruments concerned will not be registered pursuant to the United States Securities Act of 1933, as amended, and cannot be offered or sold in the United States, nor to American citizens, even outside the United States, nor to Green Card holders. To subscribe or for more information: - call surf to - go to an ING branch.

6 technical data Issuer Guarantor and Distributor Guarantor s current rating Nominal amount Subscription period Denominations/nominal value Issue price ING Belgium International Finance SA, 52 route d Esch, L-2965 Luxembourg. ING Belgium SA/nv, 24, avenue Marnix, B-1000 Brussels. Standard and Poor s: A-1 / A+ (Stable); Moody s: P-1 / Aa3 (Stable) and Fitch: F1+ / A+ (Stable) Ratings are given for purely information purposes and are not recommendations to buy, sell or keep securities of the Issuer. Rating agencies can suspend, change or withdraw them at any time. Rating notices can be viewed on the following website our-company/investor-relations/ratings.htm. A minimum of USD5,000,000. From 28 November to 30 December 2011, unless closed early. USD100/100% 102% of the nominal value Payment date 6 January 2012 End maturity 15 January 2018 Gross coupon Coupon Payment Dates Repayment at End Maturity Form Listing and Secondary Market Securities code Taxation Fees Each year a gross coupon will be paid according to the trend (in percentage) of a basket of shares, with a minimum of 1.50% and a maximum of 6.00% (see above). 15 January 2013, 15 January 2014, 15 January 2015, 15 January 2016, 16 January 2017 and 15 January 2018 The Notes will be redeemed at 100% of their nominal value (in USD) at End Maturity, except in the case of bankruptcy or default by the Issuer and/or the Guarantor. Delivery solely on a securities portfolio with a financial institution. Custody in an account with ING Belgium SA/nv is free. Please enquire with other financial institutions about the safe-custody fees they apply. Quotation of the Notes on the Luxembourg stock exchange has been requested. Any sale of the Notes before End Maturity will be conducted at the market price (see "Risks" below). Investors may obtain an indicative price for the Notes from their financial intermediary throughout their lifetime. Every three months ING Belgium SA/nv will communicate the market value of the product via the Internet ( > Retail > Investments> Practical information > Net asset values and rates). As a market maker ING Belgium SA/nv ensures a certain level of liquidity by offering purchase prices. Under normal trading conditions, the spread - i.e. the difference between the buying price and the selling price on the secondary market - applicable in the case of a resale of securities before the End Maturity will be in keeping with market conditions (approximately 1%). Furthermore, brokerage charges of a maximum of 0.50% will be applied to the established price. ISIN: XS Income from the Notes collected by private individuals residing in Belgium for tax purposes is liable to the current 15% Belgian withholding tax. In the event of a sale on the secondary market, the amount of securities income must be indicated in your personal income tax return. Furthermore the stock market tax (TOB) will be levied (0.07% maximum 500). In the case of private individuals residing in a Member State of the European Union other than Belgium, the income from this Note will come under the current scope of the Savings Directive. Belgium will transmit information about the interest payments of this Note to the relevant Member State. The Chapter 1 "Taxation" section of the Base Prospectus describes the taxation system more extensively. The Issuer pays the Distributor a placement fee of 2% included in the Issue Price. A fee for structuring and distributing the securities of a maximum of 1% on an annual basis is also included in the Issue Price. ING Belgium SA/nv Bank avenue Marnix 24, B-1000 Brussels Brussels RPM/RPR VAT: BE BIC: BBRUBEBB IBAN: BE Publisher: Philippe Wallez cours Saint-Michel 60, B-1040 Brussels E 11/11 Editing Team & Graphic Studio - Marketing ING Belgium.