Moody's cuts ING Bank, holding company ratings

NEW YORK Oct 21 (Reuters) - Moody's Investors Service on Tuesday downgraded ratings on ING Bank NV [INGBKL.UL], and said a deterioration in profitability since 2007 will likely continue as an economic slump and turbulent financial markets hit home.

Moody's cut the bank's long-term senior debt rating by one notch to "Aa2," the third-highest investment grade. The agency also cut the bank's financial strength rating (BFSR) to "B-" from "B."

Moody's cut the senior debt rating of ING Groep NV, the main holding company, to "Aa3," the fourth-highest investment grade, and lowered the senior debt of ING Insurance to "A1" from "Aa3."

The outlook on all ratings remains stable, Moody's said in a statement.

"Given the importance of ING Bank to the group overall, the downgrade of ING Bank's BFSR indicates that the credit profile of the entire group has diminished, with a consequent rating impact on ING Group and ING Insurance," Moody's said.

ING reported a preliminary third-quarter net loss of about 500 million euros as it booked 1.6 billion euros in impairments. The company agreed to a 10 billion-euro cash injection from the Dutch government after weekend negotiations, in a deal structured to avoid a dilutive share issue. It also said it will sell its Taiwan insurance business, cap executive pay and suspend dividend payments. For details, see [ID:nLK178687]

The capital boost came after shares slumped more than 27 percent on Friday.

Moody's said the government move is likely to offset the capital deterioration at the holding company and to mute any further impact that could emerge due to the exposure to troubled assets.

The nature and extent of government action "is a strong example of systemic support available for the group, as well as providing a material improvement to its capital position," said the agency. (Reporting by Ciara Linnane; Editing by Jonathan Oatis)