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ING looks to sell car leasing division

Dutch bancassurer ING is seeking to accelerate its restructuring by selling its auto lease division in a deal with a possible enterprise value of about 4bn euros.

By Matt Steinglass in Amsterdam

Dutch bancassurer ING is seeking to accelerate its restructuring by selling its auto lease division in a deal with a possible enterprise value of about 4bn euros ($5.7bn).

The government provided ING with 10bn euros of support during the financial crisis, 7bn euros of which the company has already paid back.

The group has sold a string of assets, including the US arm of its ING Direct online banking division last week, to comply with European competition authority rulings on state aid. But it still has to dispose of its Asian and US insurance arms.

A disposal of ING?s car leasing unit, which was not required by competition regulators, would improve its capital position and could help it pay back some of its remaining 3bn euros debt to the Dutch state.

But ING Car Lease is heavily indebted, and analysts said the equity value of a deal would be worth about 300m euros, meaning the impact in paying back state aid would be relatively small.

In a statement released on Monday, the company said it was ?reviewing strategic alternatives for ING Car Lease, including discussions with third parties interested in a potential acquisition?, but that the deliberations ?may or may not lead to a transaction?.

ING Car Lease has 235,000 vehicles under contract, making it one of the top five leasing firms in Europe, according to the company.

Rivals with which ING is reported to have held discussions include the Volkswagen subsidiary LeasePlan, BNP Paribas?s Arval, Rabobank?s Athlon, BMW?s Alphabet and GE Fleet Services. None of the companies would confirm the discussions.

Analysts said the move would improve ING?s capital adequacy ratio in the run-up to the adoption of new standards for systemically important financial institutions (Sifi), which are expected to require tier one capital ratios of 9-10 per cent.

?We see more and more banks searching for Sifi preparation plans,? said Cor Kluis of Rabobank.

ING had a core capital ratio of 10.01 per cent as of March 31. That is expected to rise to 11 per cent after the sale last week of ING Direct USA to Capital One. The sale, for a total of 6.2bn euros in cash and securities, will release 2.9bn euros of capital when it closes late this year.

But ING will need that capital to make good on its promise to repay the Dutch state a total of 4.5bn euros, including a 50 per cent premium, by May 2012. The group is preparing initial public offerings of its insurance arms in Asia and the US.

It also needs to sell its Latin American insurance unit and to carve out its WestlandUtrecht Bank from its Dutch retail banking business.

? The Financial Times Limited 2011

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First published on: 22-06-2011 at 03:54 IST
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