(Repeats, with no change to text)
* Pension deal essential for separation of bank, insurance
* Paves way for listing of insurance business
* Group has been divesting assets to repay state
By Sara Webb and Anthony Deutsch
AMSTERDAM, Jan 9 ING Group NV said it
will make its defined-benefit pension fund financially
independent, resulting in an after-tax charge of about 1.2
billion euros ($1.6 billion) and paving the way for a stock
market listing of its insurance business.
The charge will be booked as a special item in the first
quarter of 2014, of which 800 million euros will be attributed
to ING Bank and 400 million to ING Insurance.
The Dutch banking and insurance group required a 10 billion
euro bailout during the 2008 financial crisis. It was forced to
separate its banking and insurance operations and has since been
divesting assets in order to repay the state.
Cutting free of the state is seen as an important step for
ING, removing a European ban on acquisitions and giving it
greater pricing flexibility so it can better compete.
The ring-fencing of the pension fund is an essential part of
the disentangling of its banking and insurance arms. The
divestment of its European/Asian insurance unit is expected this
year, either via an initial public offering (IPO), spin-off,
trade sale or some combination.
"To put the (1.2 billion euro) charge in perspective, ING
makes a quarterly profit of nearly one billion euros, while its
European insurance company has (shareholders') equity of about
16 billion euros," said Nico van Geest, analyst at Keijser
In November, ING reported a third-quarter underlying profit
before tax of 1.22 billion euros, and said it should complete
its restructuring two years ahead of schedule, which would mean
it was one of the first euro zone casualties of the 2008 crisis
to emerge from a state rescue.
ING said the pension fund agreement with various parties,
including labour unions and the fund, would separate the
obligations ahead of the planned IPO, releasing ING from future
financial obligations under the Dutch defined-benefit pension
"This agreement represents a significant milestone in the
separation of bank and insurance as we prepare for the base case
IPO of ING Insurance planned for this year," said ING Chief
Executive Ralph Hamers in a statement.
"The agreement will greatly reduce the current volatility in
our equity and will further simplify the group."
The 1.2 billion euro one-off charge is made up of a 400
million euro payment to the pension fund, plus 800 million euros
to remove the pension assets from ING's balance sheet.
Cor Kluis, analyst at Rabobank, said that while the
agreement was costly in the short term, longer term it would
eliminate hundreds of millions of euros in annual supplementary
"Of course it's a large sum of money ... but on the positive
side it will remove the need for future pension premium payments
and reduce volatility and risk exposure."
In a research note published on Thursday following ING's
announcement, Rabobank's Kluis forecast full-year net income for
the group of 4.13 billion euros.
ING's shares were up 0.9 percent at 10.66 euros, after
briefly hitting 10.67 euros - their highest level since the 2008
crisis - while the broader index was up 0.16 percent.
By late last year, ING had raised about 25 billion euros as
it shed a host of insurance, investment management and other
assets around the world through disposals or listings, and cut
thousands of jobs to raise funds with which to repay aid and
bolster its capital.
So far, it has repaid 11.3 billion euros, including premiums
and interest, to the state, leaving another 2.25 billion euros
in principal and interest still to be repaid in two tranches in
March 2014 and May 2015.
ING's European/Asian insurance business had shareholders'
equity - total assets minus total liabilities - of 16 billion at
the end of September 2013, while ING Bank had 35 billion euros.
($1 = 0.7353 euros)
(Editing by David Holmes and Pravin Char)