Australia and New Zealand Banking Group Ltd. (ANZBY) said Friday it will buy ING Groep NV's (ING) 51% stake in their Australia and New Zealand wealth management and life insurance joint venture for EUR1.1 billion.

The cash deal makes good on ANZ's ambitions to boost its exposure to the fast growing wealth management sector, where it has been underweight compared with many of its peers.

It will also free up capital for ING, which is selling assets as part of its "Back to Basics" program as it looks to repay a government lifeline.

ING expects a profit of around EUR300 million on the sale, which will improve its debt to equity ratio. It will also free up an estimated EUR900 million of capital for the firm, it said in a statement.

"The sale of our insurance and wealth management operations in Australia and New Zealand is further proof of our determination to simplify the organization by focusing on fewer, strong franchises that form a coherent group," ING Chief Executive Jan Hommen said.

The group is targeting EUR6 billion-EUR8 billion in asset sales to help pay down a EUR10 billion lifeline it received from the Dutch government last October to underpin its core capital.

It has put its Asian and Swiss private banking assets up for sale, either to be bought together or separately. Offers for both are estimated at around US$2 billion and ING is likely to decide on the winning bidders next month, a person familiar with the situation said Thursday.

ANZ Chief Executive Mike Smith said he wasn't interested in the ING private banking business in Asia, but expects more opportunities to emerge around the region as the fallout from the global financial crisis forces more banks to shift their focus back to their home markets.

ANZ said it expects the deal, which is expected to close by the end of the year, to boost its earnings per share in the 2010 financial year, even before taking into account "significant" synergies.

ANZ's Smith said that he'd approached ING about buying out the joint venture, in which ANZ currently holds 49%, for some time. ING's regional CEO for Investment Management Alan Harden told Dow Jones Newswires that the two had started talks "a few months ago."

ING will retain its ING Direct, ING Investment Management, ING Wholesale Banking and ING Real Estate operations in Australia.

The deal remains subject to regulatory approval.

It fits well with ING's strategy to shrink and simplify the company, said KBC Securities analyst Dirk Peeters. He said it is also good for the group's cash position and debt/equity ratio and will free up EUR900 million of capital. He kept his reduce rating and a EUR11 target price on the stock.

ING shares closed Thursday at EUR11.18. They have risen by 53% since the beginning of 2009 but are down by around 37% from a year ago.

Company Web site: www.ing.com }

-By Lyndal McFarland, Dow Jones Newswires; 61-3-9292-2093; lyndal.mcfarland@dowjones.com

(Robin Van Daalen in Amsterdam and Ellen Sheng in Hong Kong contributed to this article)
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