Single Dutch

26 October 2009 By Jeffrey Goldfarb Follow @jgfarb

The Dutch group is finally separating insurance from banking, and restructuring further by selling its US online arm. A E7.5bn rights issue will repay half the state s capital and secure loanloss insurance. These are radical shifts. Tough times have set ING on the right path.

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ING, the Dutch banking and insurance group, announced plans to split the group and sell insurance and investment management by 2013. The company also said it would pay back 50% of the E10bn of capital it received from the state with the help of a planned E7.5bn rights issue.

ING can buy back E5bn of the core Tier 1 securities issued by the state at the E10 issue price, plus a premium of up to E950m. The premium consists of an 8.5% coupon, estimated to be about E260m, and a further payment based on ING's share price, which will be a minimum of E330m and a maximum of E961m.

The company also will pay an additional E1.3bn fee to the state beyond what had been agreed earlier for its taking on a portfolio of ING's mortgagebacked securities.

As part of its restructuring deal with the European Union, ING will be forced to sell its ING Direct USA operation and to spin off a portfolio of Dutch assets. These 200,000 mortgages, 320,000 consumer lending accounts, 500,000 savings accounts and 76,000 securities contracts equate to about E37bn from the balance sheet.

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The company also will pay an additional E1.3bn fee to the state beyond what had been agreed earlier for its taking on a portfolio of ING's mortgagebacked securities.

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