Shares of big Dutch bank ING Groep NV (NYSE: ING) took a tumble after the firm said its earnings fell 22%, mostly due to exposure to Spain’s sovereign paper. Expect other large EU-based banks to have further trouble based on their holdings of bonds in the nation’s financially weakest nations. According to MarketWatch:
The Netherlands’ largest bank by assets said net profit came in at 1.17 billion euro ($1.45 billion), down from €1.51 billion in the same period a year ago. Earnings were squeezed by higher provisions for bad loans, which rose 78% to €541 million, mainly because of the weakening European economy.
In response to the deteriorating crisis in the euro zone, ING also said it brought down its exposure to Spain to “reduce the funding mismatch in that country.” The total exposure was cut to €34.9 billion by July from €41.1 billion at the end of the first quarter, mainly through selling covered bonds and residential-mortgage-backed securities. ING said that process led to a loss of €234 million.
Douglas A. McIntyre
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