Dutch bank ING Groep (ING) has warned that the planned disposal of its EUR43 billion Asian fund business could fetch less than half the EUR500 million anticipated in May.
In its second-quarter results statement, ING confirmed the book value of its business is EUR200 million.
ING sources said the takeover price could be even lower. In the second quarter, the business made a loss of EUR2 million, against a profit of EUR2 million in the same period last year.
An investment banker who has inspected the ING fund business said he would not even pay €100m for it: "More than half of it is work done for ING insurers in Korea and Taiwan. There is too much uncertainty over the fees they will pay in future."
He pointed out that ING's Asian insurance businesses were up for sale, leading to further uncertainty. Credit Suisse, advising on the investment sale, declined to comment.
An ING spokesman declined to comment on the talks beyond confirming sales needed to be finalised by the end of 2013, to comply with European Union requirements. An initial public offering for its European insurance and investment businesses planned. US reinsurance businesses have been sold.
Reduced expectations at ING follow difficulties experienced by other banks selling investment businesses.
Deutsche Bank (DB), UniCredit (UCG.MI) and Santander (SAN) have pulled disposals. Last week, Societe Generale (GLE.FR) sold majority control of U.S. asset manager TCW at a price said to value it at $700 million. In 2001, SG paid $880 million for a 51% share of the business, which at that time was a far smaller business.
Last week, Dai-ichi Life Insurance of Japan confirmed it would buy up to 20% of U.S.-listed manager Janus Capital struck on a share price that has fallen 75% over five years.
Executives at Dexia Asset Management, owned by troubled Franco-Belgian bank Dexia, had expected to achieve bids worth EUR750 million for their business earlier this year, according to media reports. But talks with Chinese private equity firms are unlikely to produce offers much higher than EUR500 million. Neither Dexia nor the Chinese would comment. But private equity managers said prices had dropped to a level where purchases could now make sense.
ING also confirmed last week that it intends to break up its Asian insurance businesses. The book value of its Japanese business was EUR2.1 billion; Korea was worth EUR2.5 billion and the rest of south-east Asia EUR1.5 billion.
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