The London institution, which is battling to woo back investors after a LIBOR- rigging scandal cost it its credibility and the jobs of its chairman and CEO, will acquire a £10.9 billion ($17.5 billion) deposit book at face value and a £5.6 billion mortgage book at a 3% discount, gaining 1.5 million new customers and 750 million employees.

It expects the purchase to boost its return on equity immediately and said it won't have a material impact on its Core Tier 1 capital.

The acquisition is seen as signalling recently promoted CEO Antony Jenkins' recalibration of the bank towards retail and commercial lending. Jenkins has repeatedly denied he wants to spin off its investment banking unit but is conducting a root-and-branch review of Barclays and is seen likely to announce plans to reduce the important of the division in a February strategy update.

Oriel Securities Ltd. analysts noted that the ING Direct UK purchase will add about 5% to the loan book of Barclays' retail and business banking business and around 10% to its deposit base.

"The division accounts for about a quarter of group loans and a fifth of group pretax profit," they noted. "To the extent that this deal is suggestive of Barclays renewed strategic intent (i.e. lower dependence on the investment bank), which has been an area of investment uncertainty of late, we view this deal as positive."

Barclays has in the years since the onset of the 2008 credit crisis acquired the banking business of Edinburgh-based Standard Life plc, most of Citigroup Inc.'s Egg online bank as well as several overseas credit card portfolios.

"In recent years, Barclays has established a strong track-record for acquiring bolt-on businesses on the cheap and successfully integrating them in an accretive manner," wrote Ian Gordon, an analyst at Investec Ltd.

ING CEO Jan Hommen put Reading, England-based ING Direct UK on the block in early August alongside ING Direct Canada.

It sold the Canadian business to Canada's Bank of Nova Scotia for C$3.1 billion ($3.2 billion) on Aug. 30.

Both sales extended a long-running divestment program as ING raises funds to repay Dutch government state aid and complies with a European Commission disposals mandate, the centrepiece of which is the sale of ING's insurance operations by 2013.

ING said the disposal will incur an after tax loss of €320 million ($413.8 million) and release €330 million of capital. The impact on ING's core Tier 1 capital ratio is neutral, it said.

In February, ING completed the sale of ING Direct USA to McLean, Va.-based Capital One Financial Corp. for about $9 billion, including shares in Capital One equivalent to a 9.7% stake, which it has since sold.

The Netherlands group is retaining its ING Direct units in Australia, Austria, France, Germany, Italy and Spain.

ING shares were little changed at €6.45 in Amsterdam by late morning, giving the company a market value of €24.7 billion.

Barclays shares were down 1.2 pence at 221.15 pence, equating to a market value of £27.1 billion.

The companies expect the deal to close in the second quarter.