ING is to sell its insurance operations in Latin America for $3.85-billion (U.S.) to Colombian insurance group GrupoSura, the Dutch bank announced on Monday.
The deal moves ING closer to meeting EU demands that it split its banking and insurance operations as a condition for receiving Dutch state aid during the financial crisis.
The deal excludes ING's 36 per cent stake in Brazilian insurer Sul America, which the company plans to sell separately in the near future. ING plans to complete the divestment of its insurance arm by spinning off its American and Eurasian insurance operations in separate initial public offerings by the end of this year.
ING announced it would make a profit of €1-billion on the sale to GrupoSura, which valued the Latin American operations at 1.8 times book value and approximately 18 times estimated earnings.
"The cash earnings and the multiple were both higher than we or the market expected," said analyst Cor Kluis of Rabobank. "It's impressive that they continue to divest their insurance activities at a high speed."
Shares in ING were almost unchanged at €8.09 in morning trading on the Amsterdam exchange.
Last month ING sold its US internet-banking operation, ING Direct USA, to Capital One. Earlier this month it offloaded its auto leasing business, ING Car Lease, to BMW.
The sale of the Latin American insurance operations will reduce the total debt of ING's insurance arm by some €2.8-billion, an important step towards the IPOs of its other insurance operations. Analysts said that nearly met ING's need to reduce its insurance arm's debt by some €3-billion before the IPOs take place, in order for the spun-off insurance companies to meet capital adequacy requirements.
ING has promised to repay the Dutch state €4.5-billion, including a 50 per cent premium, by May 2012. The company received €10-billion in government support during the financial crisis and has already paid back €7-billion plus premiums.