The Dutch bank ING plans to sell its US online-banking unit, ING Direct USA, before 2013. Bloomberg reports the sale was given as a precondition by the European Union for the 14 billion euro bailout the bank received in 2008 from the Dutch government.
(Bloomberg News) ING Groep NV, the biggest Dutch financial-services company, is preparing to sell a U.S. online-banking division with a book value of $8.9 billion to meet European Union conditions for the firm’s bailout.
“We agreed with the European Commission to sell ING Direct USA before 2013, as well as our insurance and investment management operations,” Raymond Vermeulen, a spokesman for the Amsterdam-based company, said by telephone today. “To make sure you can comply with all requirements, you need to make timely preparations.”
ING executives, under orders to sell ING Direct by 2013 as a condition of a 10 billion-euro ($14 billion) state bailout, recently signaled they are open to a divestment of the business after previously seeking to avoid or delay a sale, JPMorgan Chase & Co. analysts led by Duncan Russell said in a Feb. 17 note.
“Management seems more open to strategic options,” the analysts said, including a partnership, initial public offering, or sale. ING said as recently as December that it didn’t expect to complete the divestment of ING Direct USA, headed by Arkadi Kuhlmann, before the end of 2013.
Deutsche Bank AG is advising ING on its options for the U.S. bank, said two people with knowledge of the matter. The New York Post reported the bank’s role earlier and said New York- based CIT Group Inc. has shown interest in ING Direct. Vermeulen declined to comment on the report, as did Libby Young, a spokeswoman for Deutsche Bank.
ING’s U.S. bank had total deposits of $77.7 billion at the end of last year and assets of $87.8 billion, according to the Federal Deposit Insurance Corp.
“A sale to a party with the profile of CIT would make sense,” said Jan Willem Weidema, an Amsterdam-based analyst at ABN Amro. “You would have to find a buyer that has a loan portfolio, but lacks savings deposits.” ING Direct USA has excess deposits, as indicated by its loan to deposit ratio of 52%, he said.
ING, which traces its roots to 1743, also agreed to sell its insurance unit and some Dutch retail-banking assets by the end of 2013 to gain approval for the bailout as well as the state’s assumption of risk on 21.6 billion euros of U.S. mortgage assets. Some of the EU requirements are the subject of an appeal at the EU’s General Court in Luxembourg.
ING is preparing its insurance businesses for two initial public offerings, one for the U.S. and one for Europe and Asia. The firm paid back 5 billion euros of state aid in December 2009 and aims to repay a further 2 billion euros in May.