Regulatory Deadline Looms for ING to Sell-Off Insurance Business

Dutch bank ING, which has just 15 months to sell off its global insurance business under the terms of an emergency bailout agreed in 2009, is now courting buyers in southeast Asia and Hong Kong to snap up its Japanese unit.

According to a number of unnamed sources, cited by Bloomberg, the bank is hoping that prospective Asian buyers, including Manulife Financial Corp, will acquire its Japanese unit, as it is under pressure to close sales in just 18 months' time.

The European Union (EU) granted ING €10bn in 2008 and a further €5bn in 2009 in state aid, and in return the bank agreed that it would sell off its insurance business around the world.

Its life insurance and variable annuity businesses in Japan are currently valued at €2.1bn, which excludes €1bn in capital held by the firm's reinsurance unit.

While representatives at the bank would not confirm the details of this report, Victorina de Boer in Asia did confirm that ING stopped selling variable annuities in Japan in 2009 and that the business still had 384,000 policies with a total account value of about €17.9bn at the end of June this year.

ING's Asian insurance and asset management businesses have a combined book value of €6.6bn.

ING Selling off Assets

In April this year, ING sent the details of its businesses in Korea, Malaysia and Japan to a string of prospective buyers.

Potential buyers have included two US companies, MetLife and Prudential Financial and Canada's Manulife. Japan's Dai-ichi Life Insurance and Korea Life were the first to make bids for part of ING's insurance operations in southeast Asia.

Market participants have speculated that Prudential may be the most interested in ING's Japanese business, as it has been growing its presence in Japan through a series of acquisitions. In its first half results presentation, released in August, the group revealed that profits from its Asia operations had risen by a fifth to £440m, and highlighted the "growing importance" of its Asian business.

The Dutch banking giant is also exiting India altogether by selling off its stakes in businesses across the region, and has already raised €1.4bn from selling its Canadian operations separately.

In 2008, ING was ordered by the EU to sell its insurance units to shrink its balance sheet by 45 percent by the end of 2013. it was also forbidden from undercutting rivals on the price of certain banking products for a period of three years, or until it repaid the first bailout amount.

When ING received a its second tranche of emergency funding, it agreed to revised terms and conditions.