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July 8, 2011 10:33 am
ING will sell its auto leasing service, ING Car Lease, to BMW for an estimated €700m ($1bn) as part of the Dutch bancassurer’s efforts to focus its portfolio on core activities and to repay its remaining €3bn debt to the Dutch state.
The deal, expected to close at the end of the year, will see BMW paying ING €637m cash based on the unit’s 2010 book value, plus its earnings through the close of 2011. That puts the sale at roughly two times the unit’s book value.
ING has promised to repay the Dutch state a total of €4.5bn, including a 50 per cent premium, by May 2012. The government provided ING with €10bn in support during the financial crisis, €7bn of which the company has already paid back. European competitions authorities ordered ING to spin off its insurance operations in exchange for approving the aid, and the company must still dispose of insurance arms in Asia and the US through sales and IPOs.
The deal will result in a capital release of €550m and a net result of €330m, ING said. ING Car Lease will be integrated into BMW’s Alphabet auto leasing unit.
The result will improve ING’s tier one capital ratio by 17 basis points, based on its March 31 level of 10.01 per cent, the bank said. The core ratio is expected to rise to near 11 per cent late this year with the closing of the sale of ING Direct USA to Capital One for €6.2bn, announced last month.
“This is a good deal,” said Jan Willem Weidema of ABN AMRO. “It sends a signal that as ING rationalises its portfolio, it’s able to get prices that are above book value.”
ING shares were up 0.61 per cent to 8.52 in morning trading on the Amsterdam exchange.
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