AMSTERDAM Dutch financial services group ING Groep ING.AS has scrapped plans for a separate trade sale of its Belgian insurance business, worth 500 to 750 million euros, a person familiar with the deal said on Wednesday.
Instead, ING's Belgian insurance operations will be included in the European and Asian business, which is being readied for an eventual listing, the person told Reuters.
European Commission regulators seeking payback for the state bailout the bank received in the 2008 financial crisis have insisted ING dispose of its 19 billion euro insurance business by the end of 2013.
But economic uncertainty and depressed financial markets provide a poor backdrop for such divestments.
Analysts said it was unlikely ING had been able to attract a good offer for its Belgian insurance business, which research houses had valued at 500 million euros to 750 million euros back in July, before markets deteriorated further.
ING's Belgian insurance business ranks seventh in that country and is closely intertwined with its banking operations.
"Belgium is one of the few places where insurance is fully integrated with the banking side because they sell the insurance through the banks," said Nico van Geest, head of research at Keijser Capital.
"It was logical to try to sell it separately to a bank, but in this market, every price is too low," he added.
The Dutch bancassurer is spinning off its U.S. as well as its European/Asian insurance operations in two initial public offerings as part of a mandatory split-up imposed because of its bailout in the 2008 financial crisis when it received a 10 billion euro capital injection from the Dutch state.
ING has already sold off some of its insurance operations separately and put its Belgian insurance business up for sale in July. Dutch insurer Delta Lloyd DLL.AS said in early August it was interested in buying the business.
"We are ordered by the European Commission to divest all our insurance operations via two IPOs," Raymond Vermeulen, spokesman for ING, said in response to media reports that ING no longer planned to sell its Belgian insurance operations separately.
Since receiving state aid in 2008, ING has sold off assets worth billions of euros, including its Asian private banking business, car leasing unit, its U.S. online bank, and its Latin American insurance and investment management business.
(Reporting by Sara Webb; Editing by Will Waterman)