No let up in ING asset sales
Wednesday, 11 November 2009 11:00am
ING Australia has built itself into one of the best financial brands in Australia but that is the last thing on the minds of ING's European head office battling to repay their $40 billion in government bail-out debt as fast as they can.
The pressure on ING head quarters to realise assets is so furious that in the last few months they have sold three of their US broker-dealers, transferred their US reinsurance business to RGA Inc, sold their Asian private banking business to OCBC, sold their Swiss private banking business to Julius Baer, sold their Australian and New Zealand insurance business to ANZ, sold their Chilean annuity and mortgage business to Corp Group Vida Chile SA, and sold ING Canada.
Driving this pruning down of ING to its core is their "Back to Basics" program, announced last month, which resulted in the separation of its banking and insurance operations.
Explaining the decision to split, Jan Hommen, ING chief executive officer, said the financial crisis has diminished the scale effects of the combined ING businesses while there is now "widespread demand for greater simplicity, reliability and transparency" in corporate operations.
He said the future will see the ING bank predominantly focused on Europe while the insurance business will focus on life and retirement services in the Benelux, US, Central Europe, Latin America and Asia.
What caused the grief was ING's huge exposure to US sub-prime mortgages which the Dutch government decided to indemnify rather than force into a siphoned-off so-called government sponsored ‘bad bank'.
Hommen said however that the dramatic restructure has been successful enough that they hope to repay the government loans must faster than expected. "With investors' support, we will be able to repay half of the funds we received last year from the Dutch State and maintain our capital strength," he said.
But there will be no let up in the pace of the asset sales. "We will continue to explore alternatives for exiting the remainder [of our loan obligations] in the coming period, financed from internal resources including the proceeds of divestments."
Alex Dunnin
