ING plans to sell assets to raise $10.6 bln in capital

Bloomberg

ING expects to sell between 10 and 15 businesses "over time and as market conditions permit," leading to proceeds of 6 billion euros to 8 billion euros, it said yesterday in a statement.

"A group of smaller businesses with no clear outlook for market leadership consumes a disproportionate amount of capital," Amsterdam-based ING said. Unloading the units would free up about 4 billion euros in capital, it said.

The firm, which traces its roots to 1743, said in February it was reviewing operations after posting a fourth-quarter loss of 3.71 billion euros, a second straight deficit. ING’s retail business in Ukraine will be "unwound," while life insurance activities in China and Japan are under review. In the U.S., ING will explore "strategic options" for its employee benefits, group reinsurance and existing annuities book, it said yesterday.

The Dutch company’s results in the first quarter were significantly better than the fourth quarter, Hommen said on a conference call yesterday.

ING already raised 1.4 billion euros in February by selling its 70 percent stake in ING Canada Inc., the country’s largest property and casualty insurer.

Similar efforts by American International Group

The company can accelerate the additional sales if necessary, Chief Executive Officer-designate Jan Hommen told investors yesterday.

ING’s plan to shed assets coincides with efforts by New York-based American International Group to dispose of units and repay the U.S. following a $182.5 billion bailout.

ING received a 10 billion-euro government lifeline in October and transferred the risk on most Alt-A mortgage assets to the state. The firm has already eliminated more than half of the 7,000 jobs it planned to cut to reduce operating costs by 1 billion euros this year. ING had earlier said it may sell as much as 3 billion euros of assets.

Going forward, the banking business will concentrate on operations in the Benelux region, as well as Poland, Romania and Turkey. In insurance, ING will focus on life and retirement services in the Benelux countries, central Europe, the U.S., Latin America and Asia. The company will operate its banking and insurance units separately under "one group umbrella to reduce complexity," ING said.

Hommen denied that the company is moving toward a split-up of its banking and insurance businesses. He said the online-banking unit in the U.S. is one of the company’s growth opportunities outside of Europe. The German Internet banking division is "one of the building blocks going forward," he said.

ING plans to integrate its investment-management units in Europe, the Americas and Asia and include real-estate investment management. The company will review options to expand the combined business, while keeping management control, it said.