ING's U.S. Banking License Bid: A Strategic Play for Dollar Dominance and Systemic Stability

The global banking landscape is defined by access to the dollar, the world's reserve currency. For ING Groep N.V., the Dutch megabank, securing a U.S. banking license has evolved from a strategic aspiration into an urgent imperative. As of May 2025, the bank is reportedly assembling a team to pursue this goal—a move that could redefine its operational efficiency, reduce systemic risks, and unlock new revenue streams. For investors, this shift signals a critical inflection point for ING's long-term growth trajectory.

The Dollar Liquidity Dilemma

ING's absence of a U.S. banking license means it lacks a Federal Reserve master account, a foundational tool for global banks. Without this, the bank must rely on correspondent institutions to access dollar liquidity for its $30 billion U.S. wholesale banking business. This dependency creates inefficiencies, raises counterparty risks, and limits its ability to compete with U.S. peers like JPMorgan or Citigroup, which enjoy direct access to the Fed's liquidity facilities.

A U.S. license would eliminate these constraints, enabling ING to:
1. Directly tap into Fed facilities, reducing reliance on third-party banks during market stress.
2. Expand its U.S. client services, including corporate lending, structured finance, and derivatives trading—areas where its current $120 billion in annual U.S. revenue is constrained by regulatory limits.
3. Lower operational costs by cutting fees paid to correspondent banks, potentially boosting margins.

Systemic Risk Mitigation: Why This Matters

As a globally systemically important bank (G-SIB), ING's stability is critical to global financial resilience. Its current reliance on correspondent banks introduces interconnected risks: if a partner faces liquidity strain, ING could be disproportionately affected. By securing a U.S. license, ING would reduce its vulnerability to such cascading failures, aligning with regulators' push for robust liquidity frameworks.

The Fed's post-2008 reforms emphasize reducing “too big to fail” risks. For foreign banks, this means proving resilience through local capital buffers or licenses. ING's pursuit of a license signals compliance with these standards—a positive for its regulatory standing and investor confidence.

The Strategic Play for Investors

The move is not just defensive. ING's U.S. wholesale business, which already serves Fortune 500 firms and institutional clients in structured finance (e.g., energy, telecoms), could see revenue growth of 15–20% annually with a license. Consider its structured finance unit, which accounts for 35% of U.S. profits—expanding this without third-party intermediation would amplify returns.

Moreover, ING's leadership in green finance (e.g., $50 billion in sustainable finance commitments by 2030) positions it to dominate the U.S. ESG market, which is projected to hit $35 trillion by 2027. A U.S. license would allow it to package dollar-denominated green bonds directly, bypassing costly intermediaries.

Risks and the Path Forward

Regulatory hurdles remain. The Fed's approval process for foreign banks is rigorous, requiring capital commitments and stress-test compliance. ING's G-SIB status could complicate matters, as regulators may demand higher capital buffers. However, its strong capital ratios (Tier 1 ratio of 17%) and profitability (ROE of 12%) give it financial flexibility.

Conclusion: A License to Grow

ING's pursuit of a U.S. license is not merely about accessing the dollar—it's a strategic pivot to transform its business model into a leaner, more resilient engine. For investors, this is a multiyear opportunity: reduced operational risks, margin expansion, and revenue growth in high-margin segments.

The stock, currently trading at 1.2x its book value—a discount to peers like HSBC (1.5x)—could re-rate sharply if the license is secured. With dollar liquidity access becoming a non-negotiable for global banks, ING's move is less about choice and more about survival. For shareholders, this is a call to act before the market catches up.

Invest now, or risk missing the next chapter of ING's dollar-powered growth.