ING Reviews Strategic Options For Latin America Insurance Operations

Dutch financial giant ING NV (ING) is reviewing all strategic options for its insurance business in Latin America, a company spokesman said Friday.

The European Commission ordered ING to nearly halve its balance sheet by selling its global insurance arm and some smaller banking assets as a condition for receiving state funds during the financial crisis.

ING was one of Europe's biggest casualties in the financial crisis and received a EUR10 billion rescue package from the Dutch government.

After repaying one half from the proceeds of a rights issue late 2009, ING still owes EUR5 billion in state funds. It also has to pay a 50% penalty of EUR2.5 billion in return for receiving government support.

The company said Monday that it will repay the first chunk--EUR2 billion and a EUR1 billion penalty--on May 13. The remainder will be repaid "ultimately by May 2012," it said, adding that it aims to complete both transactions through retained earnings.

According to a report from Reuters late Thursday, citing people familiar with the matter, a sale of ING's insurance operations in Latin America could raise about $3 billion. It said U.S.-based companies Prudential Financial Inc. (PRU) and MetLife Inc. (MET) are seen as potential bidders.

One option would be to include ING's Latin American insurance operations in one of two initial public offerings planned by the company. The ING spokesman declined to elaborate on the company's strategic options currently under review.

The news about ING's insurance operations in Latin America comes as ING is also preparing to divest its online bank in the U.S., ING Direct USA. According to media reports, ING is in talks with Citigroup Inc. (C) and CIT Group Inc. (CIT) to explore options for the business, which the Dutch company is required to divest by 2013.

In a note, SNS Securities said ING is well able to record a profit on the actual sale proceeds of its Latin America insurance operations due to the portfolio characteristics and beneficial market conditions. SNS Securities rates ING buy with a EUR11 target price.

At 0823 GMT ING shares were down 1.5% at EUR8.87, while Amsterdam's benchmark index was down 0.8% at that time.

-By Archibald Preuschat and Maarten van Tartwijk, Dow Jones Newswires; +31 20 5715 218; archibald.preuschat@dowjones.com

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