ING is to sell its 51 percent stake in a wealth management joint venture to partner Australia and New Zealand Banking Group Ltd for $1.6 billion as the Dutch group slims down through asset sales.
ING Groep NV, which received 10 billion euros ($14.7 billion) in state aid last October and a 22 billion euro government asset guarantee in January, is offloading assets to raise 6-8 billion euros as part of a global restructuring plan announced in April.
The deal announced on Friday is separate from the pending sale of ING’s Asian and Swiss private banking assets, which sources have told Reuters is not likely until next month. That sale is expected to fetch slightly more than the ANZ deal.
ANZ shares rose 2 percent to A$23.96 — its highest since mid-May 2008 and bucking a fall on the broader market — as investors welcomed the bank’s latest acquisition, which is expected to add more than 3 percent to its earnings per share in the next few years.
“It puts (ANZ) in control of the destiny of their wealth management business in Australia and puts them on a more even footing with the other major banks in the country,” said Jack Chemello, a fund manager with BT Investment Management.
The venture, established in 2002, was originally planned to expire in 2012, but ING’s troubles in Europe sparked a review of its deal with ANZ.
“The global financial crisis has changed the world we live in, and ING became prepared to open discussions with us,” ANZ Chief Executive Mike Smith told an analysts briefing.
“We have taken the opportunity and executed on it.”
Smith, who joined ANZ in 2007, wants to turn ANZ into a super-regional bank.
ING said it would book a net profit of 300 million euros on the deal, which will also free up 900 million euros of capital.
ING’s exit is part of a growing trend of European and Western banks leaving Asian operations to focus on their domestic markets. Earlier this year, Aviva Plc sold its Australia wealth management business to National Australia Bank Ltd.
ING Chief Executive Jan Hommen said in a statement the sale of the insurance and wealth management operations in Australia and New Zealand was part of a drive to simplify the organisation “and focus on fewer, strong franchises that form a coherent group.”
The joint venture, which had 2,700 employees, managed about A$45 bilion in assets and was the No.3 life insurer in Australia. ING said it will continue to focus on life insurance and retirement services products in Asia.
Of Australia’s big four banks, ANZ is considered to have the lightest local presence in Australia’s booming wealth management market, estimated to be worth some A$1.1 trillion.
Last month, ANZ paid $550 million for some Asian assets of distressed U.K. lender Royal Bank of Scotland.
Australian banks have been beefing up their presence in the local wealth management industry. NAB, the top lender, acquired the majority stake of Goldman Sachs’ wealth management operations in Australia two months ago.
ANZ expects a Tier 1 ratio of 9.5 percent after the ING deal, among the highest of Australia’s big banks. It said the deal, expected to close by the year-end, would result in a writedown of A$130-A$150 million in 2010.