NETHERLANDS - ING will split its banking and insurance businesses and divest all of its asset management operation within four years.
The divestment will be carried out through sales, listing or a combination of these two options, ING has announced.
The decision follows a second phase of ING's back to basics programme, as submitted to the European Commission after receiving €10bn of support from the Dutch State earlier this year, Jan Hommen, the group's chairman made clear.
For the time being, ING Investment Management, with AUM of €400bn, will continue to be part of the insurance branch, consisting of the Europe, Americas and Asia Pacific divisions as well as Real Estate Investment Management (REIM), ING stated.
That said, a decision on ING's property branch REIM has yet to be be taken. "We want to diversify the business once the markets are recovering," said Hommen.
ING's chairman also said his company intends to continue selling insurance products through its banking channels, as he added: "I am expecting a significant growth in retirement provision through capital protection and guaranteed products.".
ING announced in April that it was forming a single global investment management business, and was planning to consolidate its operations by focusing on retail banking and the retirement market.
This process will continue, and ING Investment Management will be managed as a separate service provider and profit centre as of 1 January 2010, according to an ING spokeswoman.
Hommen indicated that new EC guidelines issued in July were a catalyst for ING's change of tack.
"The combination of banking and insurance has provided us with advantages of scale, capital efficiency and earnings stability through a diversified business portfolio, but the financial crisis has diminished these benefits," explained the chairman.
"The widespread demand for greater simplicity, reliability and transparency has made a split the optimal course of action," continued Hommen.
ING said it will launch a €7.5bn rights issue through IPOs to finance an early pay-off of €5bn of state aid, as it had been offered favourable conditions temporarily by the Treasury. Further repayments are to be financed from internal sources and the proceeds of divestments.
The company also added that it will make a €1.3bn additional repayment to the Dutch State, which will be booked as a one-off pre-tax charge in the fourth quarter of 2009.
ING reported a preliminary net result of €500m over the third quarter, which it primarily attributed to its insurance business. "While improving equity markets had a positive impact on asset-based fees, investment margins declined as a consequence of de-risking," it noted.
The restructuring plan of ING will be put to an extraordinary general shareholders' meeting on 25 November. ING Investment Management is active in 38 countries and employs 3,500 staff.