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ING To Sell Joint Venture To ANZ For Euro 1.1 Bln - Update

ANZ 0925009 1

Dutch financial services firm ING Groep NV (ING) said Friday that it has agreed to sell its 51% equity stakes in ING Australia and ING New Zealand to joint venture partner Australia and New Zealand Banking Group Ltd. (ANZBY.PK,ANZ.AX), for Euro 1.1 billion in cash. Following the sale, ANZ will become the sole owner of the business. The sale is part of the worldwide restructuring plan announced by ING in April 2009.

ING noted that the transaction will generate an estimated net profit to the company of Euro 300 million and free up Euro 900 million of capital. The deal is expected to close in the fourth quarter of 2009.

ING and ANZ merged their insurance and wealth management operations in Australia and New Zealand in 2002. The operations now employ 2,200 staff in Australia and 500 in New Zealand.

The acquisition of ING Australia Limited, which has A$45 billion of funds under management and A$1.3 billion of in-force premiums, will make ANZ the third-largest life insurer in Australia with a 12.7% market share and the fifth-largest retail funds manager with an 8.5% market share.

In New Zealand, ANZ will acquire ING NZ Holdings Limited's funds management and life insurance businesses in New Zealand, as well as ING's listed property trusts management companies. ING NZ has total funds under management of approximately NZ$7 billion. The combined funds under management for ANZ National and ING NZ will be approximately NZ$12 billion.

Jan Hommen, CEO of ING Group said, "The transaction is another important step in executing our Back to Basics strategy. The sale of our insurance and wealth management operations in Australia and New Zealand is further proof of our determination to simplify the organization by focusing on fewer, strong franchises that form a coherent group. This shows once more that our continued transformation is well on track."

ING said its business in Australia comprising the online bank ING Direct as well as ING Investment Management, ING Wholesale Banking and ING Real Estate are not impacted by the transaction.

ING is also in the process of selling off its Swiss and Asian private banking businesses. The sale of the two operations is reportedly expected to fetch US$2 billion and help the company pay down a Euro 10 billion, or US$14.22 billion aid it received from the Dutch government in October last year. The company is scaling down its operations and, by selling as many as fifteen units, it expects to raise between Euro 6 billion- Euro 8 billion.

Meanwhile, ANZ noted that the acquisition strengthens its position in wealth management and creates substantial value for its shareholders. The deal is expected to be cash accretive to the company in fiscal year 2010. Consideration for the acquisition will be funded from the company's internal capital, the company said.

Australia's fourth-largest bank expects a Tier 1 ratio of 9.5% after the ING deal. The bank noted that the estimated impact on its Tier 1 Capital ratio is A$1.9 billion, reflecting 51% interest acquired in the intangible and tangible assets of the joint ventures and reversal of the current capital treatment for the 49% interest in the joint ventures' intangible assets.

ANZ further said that under a newly revised accounting standard, it will be required to write down the carrying value of the existing 49% holding based on the fair value of the 51% stake being acquired. The company noted that this will result in a non-cash charge of around A$130 million-A$150 million in 2010.

Mike Smith, chief executive of ANZ said, "Moving to full ownership of the wealth management and life insurance joint ventures significantly strengthens our position in wealth management with a business we know well."

Smith added, "Similar to the recent RBS Asia acquisition, ANZ has been able to take advantage of the global financial crisis and ANZ's strong balance sheet to advance our strategy."

Harry Stout will continue as CEO of INGA, which will remain based in Sydney. Helen Troup will continue as CEO of ING New Zealand in Auckland.

As part of the deal, ANZ has agreed to enter into transitional service arrangements with ING Group, including continued use of the ING brand for a period of up to twelve months while future branding is determined. ANZ has also agreed to buy ING Group's interests in the ING Diversified Yield Fund and Regular Income Fund in New Zealand for A$55 million.

ANZ has embarked on a strategy to expand its regional footprint. In August, ANZ said it agreed to acquire selected Asian banking businesses of U.K.-based Royal Bank of Scotland Group Plc (RBS, RBS.L) in a near US$550 million deal. The bank noted that the acquisition would boost its strategy to be a leading super regional bank by 2012.

ANZ's peer National Australia Bank Ltd. (NAB.AX) said in mid-June that it agreed to acquire the Australian wealth management arm of U.K.-based insurer Aviva Plc (AV.L) for A$825 million in cash. The acquisition would include Aviva's Norwich Union life insurance operations and Navigator investment platform. However, it excludes Aviva's asset management business and its interest in the Professional Investment Holdings business.

Pursuant to the acquisition, National Australia Bank would become Australia's largest life insurer and investment platform provider, racing ahead of Australian life insurance market leader Commonwealth Bank and ING.

ING closed Thursday's regular trading on the NYSE at US$16.31, down US$0.44 or 2.63% on a volume of 1.63 million shares. The stock has been trading in a range of US$3.02-US$27.95 in the past 52 weeks.

ANZBY.PK closed Thursday's trading at US$19.98, down US$0.44 or 2.15% on a volume of 0.10 million shares.

On the Australian Securities Exchange, ANZ.AX is currently trading at A$23.88, up A$0.39 or 1.66% on a volume of 10.69 million shares.

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