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ING breaks up Asian auction

by Renee Cordes | Published August 8, 2012 at 3:22 PM

Dutch financial services company ING Groep NV said Wednesday that it will sell its Asian insurance and investment management business in "multiple transactions" as it released disappointing second-quarter results.

The company has shifted gears on the planned auction after failing to find a single buyer for the entire business, which has a book value of €6.4 billion ($7.89 billion).

It is under orders from the European Commission to sell its global insurance operations as a condition for regulatory approval of its €10 billion state bailout in 2009.

The Amsterdam-based group is reportedly in discussions with Canada's Manulife Financial Corp. and the pan-Asian AIA Group Ltd. for its Southeast Asian operations, which are expected to account for half the proceeds, as well as KB Financial Group Inc. for activities in South Korea. Two private equity firms are believed to be vying for ING's Japanese operations.

Speaking to analysts on Wednesday, ING chief executive Jan Hommen predicted that "some units will go quicker than others," while declining to give a timetable for the planned sales or any other specifics. "Certain things will go relatively quickly," while joint ventures will take "more time" to sell, he said.

Separately, the group said that it is making progress toward planned initial public offerings of its U.S. and European insurance businesses.

It also reiterated that ING Direct remains a key part of its activities, even though the company is reviewing options for its ING Direct Canada and ING Direct UK divisions.

While it is too early to predict the outcome of those reviews, "it certainly will help us to be in a position to repay the Dutch state," Hommen said Wednesday.

ING shares shed 1.93% on the NYSE Euronext Amsterdam exchange to trade at €5.64 in early afternoon, translating into a market value of €21.6 billion.

The group's plan to break up its Asian insurance and investment management operations is receiving mixed reviews.

"On the one hand this way they can get more proceeds, but on the other hand doing it in multiple transactions will extend the timeline," said Lemer Salah, a banking analyst at SNS Securities NV in Amsterdam who expected the first transaction toward the end of this quarter.

"As of next year all eyes will be on the U.S. insurance IPO, which ING will want to do as soon as possible," Salah added. He remains bullish on the stock, leaving his buy recommendation unchanged at a share price target of €9.50.

ING on Wednesday reported a greater than expected 22% fall in second-quarter net profit to €1.17 billion after booking bad loans and selling Spanish investments -- including covered bonds and residential mortgage-backed securities -- at a loss.

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Tags: AIA Group Ltd. | European Commission | ING Groep NV | KB Financial Group Inc. | Manulife Financial Corp.

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ING breaks up Asian auction

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