ING to divest $10.6 billion of assets, withdraw to consolidate
09 April 2009ING Group NV, the biggest Dutch financial-services firm, will divest up to €8 billion ($10.6 billion) in non-core assets and trim its geographical spread in a bid to refocus its business and boost capital, according to a speech being presented Thursday by CEO-designate Jan Hommen.
Hommen says ING plans to concentrate on markets where it already holds a strong position and that its previously announced €1-billion cost reduction program is well underway. Derisking measures are on track with its Alt-A back-up facility finalised and equity and interest rate risk reduced significantly, he says. ING has realised half of its planned €110-billion bank balance sheet, he added.
The company has increased the number of business to be divested to between 10 and 15 in coming years and expects to raise €6 billion-€8 billion, freeing up €4 billion worth of capital. It had previously said it expected to make €2 billion-€3 billion worth of divestments.
ING expects to sell between 10 and 15 businesses ''over time and as market conditions permit,'' leading to proceeds of €6 billion to €8 billion, the Amsterdam-based company said today in a statement. ''A group of smaller businesses with no clear outlook for market leadership consumes a disproportionate amount of capital,'' ING said. Unloading the units would allow ING to free up about €4 billion in capital, the company said.
The firm, which traces its roots to 1743, said in February it was reviewing operations after posting a fourth-quarter loss of €3.71 billion, a second straight deficit. ING's retail business in Ukraine will be ''unwound,'' while life insurance activities in China and Japan are under review. In the US, ING will explore ''strategic options'' for its employee benefits, group reinsurance and existing annuities book.
Going forward, the banking business plans to concentrate on operations in the Benelux region, as well as Poland, Romania and Turkey. In insurance, ING will focus on life and retirement services in the Benelux countries, central Europe, the US, Latin America and Asia. The company will operate its banking and insurance units separately under ''one group umbrella to reduce complexity,'' ING said.
In February ING reported a €3.7 billion fourth-quarter net loss and said it will focus in 2009 on reducing its activities and markets, simplifying its portfolio and cutting costs further. The full-year net loss for 2008 was €729 million. In October last year, it received a €10 billion cash infusion from the Dutch state, followed in January by a €27.7 billion state guarantee on its toxic assets.
Its shares closed Wednesday at €5.26. They have fallen by around 28 per cent so far in 2009 and are down 79 per cent over the last year.