(Adds estimated value of deal, analyst comment, shares)
AMSTERDAM, Oct 2 (Reuters) - Dutch insurer Delta Lloyd said it will sell its Belgian banking operations, which analysts estimate to be worth about 300 million euros ($406 million), so it can build up its Belgian life insurance and pensions business.
Delta Lloyd Bank Belgium had total assets of 6.9 billion euros at the end of 2012 and reported first-half net income of 12.4 million euros. The proposed sale of the bank - which has 570 employees, about 171,000 customers, and a network of 55 branches - came as a welcome surprise.
"We see this decision as part of a strategic process to create a sustainable Belgian life and pension franchise with a focus on capital efficiency," ING analyst Albert Ploegh said in a research note.
"We expect further add-on transactions in coming years to strengthen its position. The Belgian bank was a fully fledged activity but in our view the scale was too small to be sustainable over the long-term."
Last month, Delta Lloyd said it had agreed to acquire the Belgium-based insurer ZA Verzekeringen NV, which specialises in term life insurance and which has annual gross written premiums of about 50 million euros, as it wants to become a leading player in the Belgian market.
Delta Lloyd said the proposed sale would not affect the use of the bank's network as a distribution channel for its pension and life insurance products in Belgium, as it intends to have a long-term distribution agreement between Delta Lloyd Life and the bank.
Matthias De Wit, analyst at KBC Securities, put the bank's book value at 300 million euros, adding he assumed the sale would go ahead at a discount - at 0.7 times the book value, or about 200 million euros.
"This is a logical move, as it will free up a significant amount of capital and give it a better buffer against a difficult market backdrop," De Wit said.
Delta Lloyd has appointed Moelis & Company as financial adviser on the sale, but did not put a value on the bank.
Analysts said there were no obvious buyers for the business, and that a private equity deal would be likely to attract more scrutiny from the regulator than another industry peer.
Delta Lloyd shares were down 0.58 percent at 15.465 euros at 0747 GMT. (Reporting by Sara Webb; Editing by Mark Potter and Louise Heavens)