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ING to sell Capital One stake

by Renee Cordes | Published September 5, 2012 at 12:53 PM

ING Groep NV said Wednesday that it will sell 54 million shares, or a roughly 9.3% stake, in Capital One Financial Corp. in a secondary offering worth about $3 billion.

The Amsterdam-based financial group acquired the holding in February as part-payment for ING Direct USA, which it sold to McLean, Va.-based Capital One for about $9 billion. Based on Capital One's closing price on Tuesday of $56.49, the holding, which made the Dutch institution Capital One's largest single shareholder, is worth about $3.05 billion.

ING expects to announce the pricing later Wednesday, with settlement on Sept. 10. Capital One said it won't be selling any shares itself.

The Netherlands' largest financial group was ordered to sell the U.S. online operation in return for European Commission approval of a €10 billion ($12.6 billion) government lifeline during the financial crisis.

It has returned about €7 billion of that amount, plus €2 billion in interest and premiums.

Lemer Salah, an analyst at SNS Securities NV in Amsterdam, estimates that ING will receive about $2.7 billion to $3 billion in proceeds, which it will most likely use to pay down outstanding government bailout funding of about €3 billion. He called the stake sale positive for ING, since it's a noncore business, and maintained his buy recommendation on the stock.

As a result of the offering, ING expects to receive an after-tax gain of about €300 million, to be booked in the third quarter of 2012, and a capital release of about €1 billion.

The announcement comes less than a week after ING struck an agreement to sell ING Direct Canada to Canada's Bank of Nova Scotia for C$3.1 billion ($3.1 billion).

As a result of both deals, ING said it will have a pro forma core Tier 1 ratio of 11.9%, based on a level of 11.1% at the end of June.

Pursuant to a shareholders agreement with Capital One, Eli Leenaars, who has represented ING's nominee to Capital One's board of directors since May, has submitted his resignation from the board with effect from the closing of the offering.

Capital One had a market value of $32.47 billion as of Wednesday morning in New York, based on a share price of $55.90. ING shares were up 1.21% by midafternoon Wednesday in Amsterdam at €6.08, equating to a market capitalization of more than €23.3 billion.

Bank of America Merrill Lynch, Morgan Stanley and Citigroup Global Markets Inc. are joint bookrunners on the stake sale.

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