ING announced on Monday that it will divest ING Direct USA, the Amsterdam-based financial services giant's US-based Internet bank, as part of a restructuring plan under which it is separating its insurance and banking operations.
The move is a required part of a restructuring agreement between ING, the Dutch government and the European Commission (EC), under which the company plans to repay a $14.9 billion (10 billion Euros) bailout. To receive EC approval on the plan, ING needs to divest ING Direct USA by 2013 and the company says it will take until then to complete the divestment.
Splitting the company's insurance and banking operations was not a decision ING took lightly, CEO Jan Hommen said in a press release. "ING has a proud history as a global financial services leader and has been a strong advocate for combining banking and insurance in one company. The combination provided us with advantages of scale, capital efficiency and earnings stability through a diversified portfolio of businesses," Hommen said. "However, the financial crisis has diminished these benefits. Now, the widespread demand for greater simplicity, reliability and transparency has made a split the optimal course of action."
All of ING's insurance and investment management operations will be divested over time as part of the required restructuring plan. "A little over one year ago, ING began to experience the direct impact of the financial crisis, resulting in two instances of government support to strengthen our capital position and to mitigate risk," Hommen stated. "Over the last six months, we have worked tirelessly -- both inside ING and with the Dutch Government and the European Commission -- to devise a plan that will enable us to pay back the Dutch State, address the EC's requirements for viability and fair competition, and return our focus to the business and what matters most to our customers."