I feel your pain, says ING boss

Bruce Malpas, co-ordinator of the Tauranga Frozen Fund Protest Group, says ING's offer is a joke. Photo / Alan Gibson

ING investors at a public meeting last night demanded to know if chief executive Helen Troup's salary had been cut since the company had suspended two funds.

Several at the gathering of more than 250 people said it was impossible for her to know how they felt about losing money.

While not revealing how much she was earning, Troup, who came from Australia to take the position in September, said all ING senior executives' salaries were frozen about 18 months ago. She was earning only a fixed salary while her short-term and long-term incentives had been taken away.

That would probably not satisfy investors, but she said she understood what they were going through.

"I've been on the road with you all week. I've heard your stories, I feel your pain.

"We're in the business to support you and this is not what we wanted."

The meeting, at Tauranga's Sebel Trinity Wharf Hotel, is one of several being held by the company throughout the country to explain ING's final offer to investors in two funds frozen in March last year which contained money from more than 13,000 people.

ING is offering 60c a unit for the Diversified Yield Fund (DYF) and 62c a unit for the Regular Income Fund (RIF). Investors have the choice of taking the cash up front or keeping it in an ANZ on-call account with an 8.3 per cent interest rate for five years. ANZ is a 49 per cent shareholder in ING.

If investors accept the offer to buy back the units, they must sign a release which stops them from taking or benefiting from legal action or claims.

Investors must decide by July 13 whether to accept the offer.

One man at yesterday's meeting, chaired by media trainer Brian Edwards, quizzed ANZ managing director of advisory services John Body over why he was told by a bank adviser that his investment was as safe as a term deposit.

Body said he should not have been told this.

"I accept some ANZ advisers have provided bad advice to ANZ clients."

He said 20 per cent of the bank's advisers had left the company in the past 18 months partly because it was "tough being an adviser in the current economic climate" and partly because the job was "not for them".

Several investors told the Herald they left the meeting still feeling annoyed and confused.

Tauranga man Bruce Malpas stood outside the hotel before the meeting trying to attract new members for a group he formed to protest against ING's offer.

The group has staged two protests - one outside ANZ in central Tauranga and one outside the bank in the suburb of Greerton - and are to hold another at the Bayfair shopping centre in Mt Maunganui tomorrow.

Malpas, aged in his mid-50s, and his wife invested "enough for a brand new six-cylinder car" in 2006 with the intention of creating a retirement nest egg.

"That egg has now fallen out of the nest and broken."

He said he was "persuaded" to invest by ANZ and told it was a low to moderate investment.

Malpas said ING's offer was a joke and he believed the company could bump it up.

"They need to restore public confidence. We will continue to protest until they do, which can only harm their reputation. No business, in this economic climate, can afford to have bad publicity."

The Auckland investor meeting is at the Ellerslie Event Centre at 9am today.

FROZEN FUNDS

* ING New Zealand set up the Diversified Yield Fund in July 2003 and the Regular Income Fund in October 2005.

* ING marketed the two funds as low to moderate risk, selling them through financial advisers and ANZ bank which owns 49 per cent of ING New Zealand.

* More than 13,000 retail investors are thought to have put in money. The exact number is not known because some of the unit holders are trusts.

* The funds were invested in complicated securities called collateralised debt obligations (CDOs) which bundle different types of loans into packages where institutions like ING can buy in at different risk levels.

* The underlying loans were not investment grade but when packaged together the risk was seen to be spread. ING says it bought in mainly at a D risk level which was rated BBB or investment grade.

* But the debt products were hit badly in the credit crisis as financial institutions lost confidence in the ratings attributed to the investments and stopped trading them, making the market illiquid.

* The funds were frozen in March last year after their value plummeted and investors began pulling their money out.

* As of December 31, 40 of the 138 CDOs held in the funds had defaulted.

* The value of the two funds has fallen from $1 a unit to 22c for the Diversified Yield Fund and 18c for the Regular Income Fund. Prospects of a recovery are not thought to be good because the underlying loans are more likely to default now due to the pressure faced by corporates.

* ING has made a settlement offer of 60c a DYF unit and 62c an RIF unit. Investors can take the cash or keep it in an ANZ bank account paying interest of 8.3 per cent a year for five years.

* Those who accept the settlement must also waive their right to make any claims or take legal action in relation to the funds.

* The alternative is staying in the funds.

* The Commerce Commission is investigating whether the funds were mis-sold under the Fair Trading Act. Its investigation will not be completed before the July 13 deadline by which investors must make their decision.